----

----

----

| SENTINEL OMAHA LIMITED LIABILITY COMPANY AND SUBSIDIARIES                                                                                                                                                                                              |              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
|                                                                                                                                                                                                                                                   |              |   |   |   |
|                                 CONSOLIDATED STATEMENT OF ASSETS AND  LIABILITIES |              |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
| December 31, 2010                                                                                                                                                                                                                                      |              |
|                                                                                                                                                                                                                                                   |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
| ASSETS                                                                                                                                                                                                                                                 |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |
| Investment in real estate properties, at fair value                                                                                                                                                                                                    |              | $ | 348,750,000 |   |
|    (cost - $452,522,388)                                                                                                                                                                                                                |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                                                                              |              |   | 3,164,721 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Restricted cash                                                                                                                                                                                                                                        |              |   | 1,153,010 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Cash held in escrow by lenders                                                                                                                                                                                                                         |              |   | 4,564,889 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Prepaid expenses and other assets                                                                                                                                                                                                                      |              |   | 1,302,106 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Tenant security deposits                                                                                                                                                                                                                               |              |   | 95,278 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Deferred costs (net of accumulated amortization of $601,813)                                                                                                                                                                                           |              |   | 158,371 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   | Total assets      |   |   | 359,188,375 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| LIABILITIES                                                                                                                                                                                                                                            |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Mortgage notes, bonds and credit facilities payable                                                                                                                                                                                                    |              | $ | 337,935,461 |   |
|    (cost-$350,421,793)                                                                                                                                                                                                                  |              |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                                  |              |   | 6,007,162 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Prepaid rent                                                                                                                                                                                                                                           |              |   | 416,973 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Tenant security deposits payable                                                                                                                                                                                                                       |              |   | 1,042,426 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| Deferred revenue                                                                                                                                                                                                                                       |              |   | 89,432 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   | Total liabilities |   |   | 345,491,454 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| NET ASSETS                                                                                                                                                                                                                                             |              | $ | 13,696,921 |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
|                                                                                                                                                                                                                                                   |              |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                                                                                                                                                                |              |

----

|                                SENTINEL OMAHA LIMITED LIABILITY COMPANY AND SUBSIDIARIES |              |   |     |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|--------|----------|--------|
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED SCHEDULE OF INVESTMENTS                                                                                                                                                                                                           |              |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                                                                                                                                                                                                                              |              |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
| INVESTMENT IN REAL                                                                                                                                                                                                                             |              |   | NUMBER   |   | HISTORICAL |   | FAIR |   |   |   |   |
| ESTATE PROPERTIES                                                                                                                                                                                                                              | LOCATION          |   | OF UNITS |   | COST (1) |   |   | VALUE |   |   |   |   |
| Residential:                                                                                                                                                                                                                                   |              |   |     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |
| Arbor Hill                                                                                                                                                                                                                                     | Antioch, TN       |   |     | 548    |   |   | $ | 33,617,037 |   |   | $ | 28,700,000 |   |   |   | (2 | ) |
| Arbors of Dublin                                                                                                                                                                                                                               | Dublin, OH        |   |     | 288    |   |   |   | 18,114,293 |   |   |   | 15,600,000 |   |   |   | (2 | ) |
| Bluff Ridge                                                                                                                                                                                                                                    | Jacksonville, NC  |   |     | 108    |   |   |   | 8,975,819 |   |   |   | 9,100,000 |   |   |   | (3 | ) |
| Brentwood Oaks                                                                                                                                                                                                                                 | Nashville, TN     |   |     | 262    |   |   |   | 21,206,467 |   |   |   | 16,700,000 |   |   |   | (2 | ) |
| Coral Point                                                                                                                                                                                                                                    | Mesa, AZ          |   |     | 337    |   |   |   | 26,404,533 |   |   |   | 14,500,000 |   |   |   | (2 | ) |
| Cornerstone Apartments                                                                                                                                                                                                                         | Independence, MO  |   |     | 420    |   |   |   | 36,922,702 |   |   |   | 31,500,000 |   |   |   | (2 | ) |
| Covey at Fox Valley                                                                                                                                                                                                                            | Aurora, IL        |   |     | 216    |   |   |   | 24,656,393 |   |   |   | 18,500,000 |   |   |   | (2 | ) |
| Fox Hollow                                                                                                                                                                                                                                     | High Point, NC    |   |     | 184    |   |   |   | 8,421,830 |   |   |   | 6,000,000 |   |   |   | (2 | ) |
| Greenhouse Apartments                                                                                                                                                                                                                          | Omaha, NE         |   |     | 129    |   |   |   | 18,241,287 |   |   |   | 15,000,000 |   |   |   | (2 | ) |
| Highland Park Apartments                                                                                                                                                                                                                       | Reynoldsburg, OH  |   |     | 238    |   |   |   | 11,442,039 |   |   |   | 11,200,000 |   |   |   | (2 | ) |
| Hunt's View Apartments                                                                                                                                                                                                                         | Greensboro, NC    |   |     | 240    |   |   |   | 14,772,847 |   |   |   | 11,000,000 |   |   |   | (2 | ) |
| Jackson Park Place I                                                                                                                                                                                                                           | Fresno, CA        |   |     | 296    |   |   |   | 33,151,074 |   |   |   | 18,900,000 |   |   |   | (3 | ) |
| Jackson Park Place II                                                                                                                                                                                                                          | Fresno, CA        |   |     | 80     |   |   |   | 12,658,903 |   |   |   | 6,750,000 |   |   |   | (3 | ) |
| Lakes of Northdale                                                                                                                                                                                                                             | Tampa, FL         |   |     | 216    |   |   |   | 18,000,815 |   |   |   | 13,600,000 |   |   |   | (2 | ) |
| Littlestone of Village Green                                                                                                                                                                                                                   | Gallatin, TN      |   |     | 200    |   |   |   | 15,318,881 |   |   |   | 11,600,000 |   |   |   | (2 | ) |
| Misty Springs                                                                                                                                                                                                                                  | Daytona Beach, FL |   |     | 128    |   |   |   | 9,664,192 |   |   |   | 6,200,000 |   |   |   | (2 | ) |
| Morganton Place                                                                                                                                                                                                                                | Fayetteville, NC  |   |     | 280    |   |   |   | 20,007,853 |   |   |   | 21,600,000 |   |   |   | (2 | ) |
| Oakhurst Apartments                                                                                                                                                                                                                            | Ocala, FL         |   |     | 214    |   |   |   | 17,837,638 |   |   |   | 8,500,000 |   |   |   | (2 | ) |
| Oakwell Farms                                                                                                                                                                                                                                  | Hermitage, TN     |   |     | 414    |   |   |   | 29,390,694 |   |   |   | 23,800,000 |   |   |   | (2 | ) |
| The Park at Countryside                                                                                                                                                                                                                        | Port Orange, FL   |   |     | 120    |   |   |   | 9,664,448 |   |   |   | 5,500,000 |   |   |   | (2 | ) |
| The Reserve at Wescott                                                                                                                                                                                                                         | Summerville, SC   |   |     | 192    |   |   |   | 16,627,369 |   |   |   | 13,700,000 |   |   |   | (2 | ) |
| The Reserve at Wescott II                                                                                                                                                                                                                      | Summerville, SC   |   |     | 96     |   |   |   | 9,974,358 |   |   |   | 7,400,000 |   |   |   | (2 | ) |
| Village at Cliffdale                                                                                                                                                                                                                           | Fayetteville, NC  |   |     | 356    |   |   |   | 24,813,045 |   |   |   | 23,700,000 |   |   |   | (2 | ) |
| Woodberry Apartments                                                                                                                                                                                                                           | Asheville, NC     |   |     | 168    |   |   |   | 12,637,871 |   |   |   | 9,700,000 |   |   |   | (2 | ) |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                                                                                                                                                          |              |   |     | 5,730  |   |   | $ | 452,522,388 |   |   | $ | 348,750,000 |   |   |   | (4 | ) |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)  Historical cost equals the purchase price allocation plus capital improvements made from the acquisition date through                                                                                                                |              |
|        December 31, 2010.                                                                                                                                                                                   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (2)  Fair value is as determined by the Manager at December 31, 2010.                                                                                                                                                                     |              |   |     |   |   |   |   |   |
| (3)  Fair value is as determined by independent appaiser at December 31, 2010.                                                                                                                                                            |              |   |     |   |   |
| (4) Fair value of the investments in real estate as a percentage of net assets is 2,546.2%                                                                                                                                                |              |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                                                                                                                                                        |              |
|                                                                                                                                                                                                                                           |              |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| SENTINEL OMAHA LIMITED LIABILITY COMPANY AND SUBSIDIARIES                                                                                                                                                           |                               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                |                               |   |   |   |
|                              CONSOLIDATED STATEMENT OF OPERATIONS       |                               |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
|                               For the year ended December 31, 2010 |                               |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
| INVESTMENT INCOME:                                                                                                                                                                                                  |                               |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |
| Base rent                                                                                                                                                                                                           |                               |   | $ | 42,758,871 |   |
| Other rental income                                                                                                                                                                                                 |                               |   |   | 3,713,185 |   |
| Interest income                                                                                                                                                                                                     |                               |   |   | 6,578 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                | Total investment income            |   |   | 46,478,634 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| EXPENSES:                                                                                                                                                                                                           |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| Payroll and related costs                                                                                                                                                                                           |                               |   |   | 6,868,000 |   |
| Repairs and maintenance                                                                                                                                                                                             |                               |   |   | 4,927,012 |   |
| Real property taxes                                                                                                                                                                                                 |                               |   |   | 4,509,988 |   |
| Utilities                                                                                                                                                                                                           |                               |   |   | 3,238,322 |   |
| Property management fees                                                                                                                                                                                            |                               |   |   | 2,092,388 |   |
| General and administrative                                                                                                                                                                                          |                               |   |   | 1,204,619 |   |
| Insurance                                                                                                                                                                                                           |                               |   |   | 1,113,138 |   |
| Advertising                                                                                                                                                                                                         |                               |   |   | 918,086 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                | Total expenses                     |   |   | 24,871,553 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| NET INVESTMENT INCOME BEFORE OTHER EXPENSES                                                                                                                                                                         |                               |   | 21,607,081 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| OTHER EXPENSES:                                                                                                                                                                                                     |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| Interest on mortgage notes, bonds and credit facilities payable                                                                                                                                                     |                               |   | (16,431,284 | ) |
| Amortization of deferred financing costs                                                                                                                                                                            |                               |   | (557,609 | ) |
| Professional fees                                                                                                                                                                                                   |                               |   |   | (689,916 | ) |
| Office rent                                                                                                                                                                                                         |                               |   |   | (61,951 | ) |
|                                                                                                                                                                                                                | Total other expenses               |   |   | (17,740,760 | ) |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| NET INVESTMENT INCOME                                                                                                                                                                                               |                               |   | 3,866,321 |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| Net unrealized appreciation of investment in real estate properties                                                                                                                                                 |                               |   | 17,128,747 |   |
| Net unrealized depreciation on fair value of mortgage notes and bonds                                                                                                                                               |                               |   | (7,760,760 | ) |
| Net unrealized appreciation of interest rate cap and swap agreements                                                                                                                                                |                               |   | 339,340 |   |
| Realized loss on sale of real estate properties                                                                                                                                                                     |                               |   | (14,961,448 | ) |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                | Net realized and unrealized (loss) |   |   | (5,254,121 | ) |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| NET DECREASE IN NET ASSETS RESULTNG FROM OPERATIONS                                                                                                                                                                 |                               | $ | (1,387,800 | ) |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
|                                                                                                                                                                                                                |                               |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                                                                                                                             |                               |

----

|                                        SENTINEL OMAHA LIMITED LIABILITY COMPANY AND SUBSIDIARIES |   |     |       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|--------|
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
| For the year ended December 31, 2010                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   | Member I |       |   | Member II |   |   | Member III |   |   | Total |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |
| Net assets at beginning of year                                                                                                                                                                                                                                                                |   | $        | 5,279,652  |   |   | $ | 5,279,652 |   |   | $ | 4,525,417 |   |   | $ | 15,084,721 |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net investment income                                                                                                                                                                                                                                                                          |   |     | 1,353,212  |   |   |   | 1,353,212 |   |   |   | 1,159,897 |   |   |   | 3,866,321 |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized appreciation of investment                                                                                                                                                                                                                                                      |   |     | 5,995,061  |   |   |   | 5,995,061 |   |   |   | 5,138,625 |   |   |   | 17,128,747 |   |
|   in real estate properties                                                                                                                                                                                                                                                          |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized depreciation on fair value                                                                                                                                                                                                                                                      |   |     | (2,716,266 | )      |   |   | (2,716,266 | ) |   |   | (2,328,228 | ) |   |   | (7,760,760 | ) |
|   of mortgage notes and bonds                                                                                                                                                                                                                                                        |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized appreciation of interest                                                                                                                                                                                                                                                        |   |     | 118,769    |   |   |   | 118,769 |   |   |   | 101,802 |   |   |   | 339,340 |   |
|   rate cap and swap agreements                                                                                                                                                                                                                                                       |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Realized loss on sales of real estate properties                                                                                                                                                                                                                                               |   |     | (5,236,507 | )      |   |   | (5,236,507 | ) |   |   | (4,488,434 | ) |   |   | (14,961,448 | ) |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net assets at end of year                                                                                                                                                                                                                                                                      |   | $        | 4,793,921  |   |   | $ | 4,793,921 |   |   | $ | 4,109,079 |   |   | $ | 13,696,921 |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                                                                                                                                                                                                        |   |     |       |   |   |
|                                                                                                                                                                                                                                                                                           |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| SENTINEL OMAHA LIMITED LIABILITY COMPANY AND SUBSIDIARIES                               |      |
|-----------------------------------------------------------------------------------------|-----------|
|                                                                                    |      |   |   |   |
| CONSOLIDATED STATEMENT OF CASH FLOWS                                                    |      |
|                                                                                    |      |   |   |   |
| For the year ended December 31, 2010                                                    |      |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                   |      |   |   |   |
|                                                                                    |      |   |   |   |
| Net decrease in net assets resulting from operations                                    |      | $ | (1,387,800) |   |
| Adjustments to reconcile net decrease in net assets to                             |      |   |   |   |
|      net cash provided by operating activities:                |      |   |   |   |
| Net unrealized appreciation of investment in real estate properties                     |      | (17,128,747) |   |
| Net unrealized depreciation on fair value of mortgage notes payable and bonds           | 7,760,760 |   |
| Net unrealized appreciation of interest rate cap and swap agreements                    |      | (339,340) |   |
|     Realized loss on sale of investment in real estate              |      |   | 14,961,448 |   |
|     Amortization of deferred financing costs                        |      |   | 557,609 |   |
|      Increase (decrease) in operating assets and liabilities:  |      |   |   |   |
| Cash held in escrow by lenders                                                          |      |   | 1,909,476 |   |
| Prepaid expenses and other assets                                                       |      |   | (146,122) |   |
| Tenant security deposits payable                                                        |      |   | (72,554) |   |
| Accounts payable and accrued expenses                                                   |      |   | (1,469,050) |   |
| Deferred revenue                                                                        |      |   | (37,682) |   |
| Prepaid rent                                                                            |      |   | (66,085) |   |
|                                                                                    |      |   |   |   |
|     Net cash provided by operating activities                       |      |   | 4,541,913 |   |
|                                                                                    |      |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                              |      |   |   |   |
|                                                                                    |      |   |   |   |
| Capital additions to real estate properties                                             |      |   | (5,132,886) |   |
| Cash paid into restricted cash                                                          |      |   | 2,702,465 |   |
| Net proceeds from sale of investment in real estate                                     |      |   | 13,750,185 |   |
| Increase in tenant security deposits                                                    |      |   | (10,391) |   |
|                                                                                    |      |   |   |   |
|     Net cash provided by investing activities             |      |   | 11,309,373 |   |
|                                                                                    |      |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                   |      |   |   |   |
|                                                                                    |      |   |   |   |
| Payments of mortgage notes, bonds and credit facilities                                 |      |   | (16,686,617) |   |
| Proceeds from mortgage notes, bonds and credit facilities                               |      |   | 2,500,000 |   |
| Payments of deferred financing costs                                                    |      |   | (274,592) |   |
|                                                                                    |      |   |   |   |
|     Net used in financing activities                      |      |   | (14,461,209) |   |
|                                                                                    |      |   |   |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                               |      |   | 1,390,077 |   |
|                                                                                    |      |   |   |   |
| CASH AND CASH EQUIVALENTS                                                               |      |   |   |   |
|    Beginning of year                                                     |      |   |      1,774,644 |   |
|                                                                                    |      |   |   |   |
|    End of year                                                           |      | $ | 3,164,721 |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                       |      |   |   |
| Cash paid during the period for interest                                                | $         | 16,707,507 |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
|                                                                                    |      |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |      |   |

----

| 1. | ORGANIZATION |
|----|--------------|

| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------|

----

----

|   | On March 11, 2010, investment in Elliot’s Crossing was sold for $11,850,000 in an all cash transaction.  The cost basis of the property on the date of sale was $20,239,270 and resulted in a net loss of $8,604,767 after transaction closing costs of $225,497.  The proceeds of the sale were used to retire the mortgage on the property. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On November 15, 2010, investment in The Exchange at Palm Bay was sold for $2,500,000 in an all cash transaction.  The cost basis of the property on the date of sale was $8,432,363 and resulted in a net loss of $6,356,681 after transaction closing costs of $374,318.  The proceeds of the sale were used to retire the mortgage on the property. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4. | MORTGAGE NOTES, BONDS AND CREDIT FACILITIES PAYABLE |
|----|-----------------------------------------------------|

|   |   |                    |                              | INTEREST                            |   | MATURITY                           |     |       MONTHLY |   |         |        PRINCIPAL |   |
|--------|--------|-------------------------|-----------------------------------|-------------------------------------|--------|------------------------------------|----------|----------------------------------------|--------|--------------|-------------------------------------------|--------|
|   |   | PROPERTY                |                              |       RATE |   |      DATE |     |       PAYMENT |   |         |      AT 12/31/10      |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |
|   |   | Mortgage Notes Payable: |                              |                                |   |                               |     |                                   |   |         |                                      |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |
|   |   | Fox Hollow              |                              |                                | 6.91   | %                                  | 03/01/11 |                                   | $      | 41,072       |                                      |   | $ | 5,450,122 |   |
|   |   | Bluff Ridge             |                              |                                | 5.84   | %                                  | 09/01/13 |                                   |   | 31,704       |                                      |   |   | 5,231,142 |   |
|   |   | Highland Park           |                              |                                | 4.69   | %                                  | 09/01/13 |                                   |   |  36,263 |                                      |   |   | 5,254,894 |   |
|   |   |                    | Hunt’s View Apartments      |                                |   | 5.83                               | %        | 01/01/12                               |   |         | 42,384                                    |   |   |   | 6,230,049 |   |
|   |   |                    | Misty Springs                     |                                |   | 5.37                               | %        | 01/01/13                               |   |         | 32,893                                    |   |   |   | 7,120,000 |   |
|   |   |                    | Oakwell Farms                     |                                |   | 5.63                               | %        | 02/01/14                               |   |         | 91,038                                    |   |   |   | 15,435,987 |   |
|   |   |                    | Park at Countryside               |                                |   | 5.46                               | %        | 02/01/14                               |   |         | 16,901                                    |   |   |   | 2,917,595 |   |
|   |   |                    | The Reserve at Wescott Plantation |                                |   | 5.75                               | %        | 11/01/44                               |   |         | 65,635                                    |   |   |   | 11,740,258 |   |
|   |   |                    | Coral Point                       |                                |   | 5.22                               | %        | 03/01/13                               |   |         | 72,172                                    |   |   |   | 16,056,000 |   |
|   |   |                    | Jackson Park Place I              |                                |   | 5.23                               | %        | 12/01/12                               |   |         | 107,438                                   |   |   |   | 18,675,113 |   |
|   |   |                    | Oakhurst Apartments               |                                |   | 5.37                               | %        | 01/01/13                               |   |         | 54,330                                    |   |   |   | 11,760,000 |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    | Total Mortgage Notes Payable      |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |   |   | 105,871,160 |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    | Bonds Payable:                    |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    | Arbor Hill (1) (2)                |                                |   | 1.47                               | %        | 12/01/25                               |   |         | 33,586                                    |   |   |   | 26,150,000 |   |
|   |   |                    | Brentwood Oaks (2)                |                                |   | 1.29                               | %        | 07/15/31                               |   |         | 11,984                                    |   |   |   | 11,320,000 |   |
|   |   |                    | Covey at Fox Valley (2)           |                                |   | 1.29                               | %        | 10/15/27                               |   |         | 12,244                                    |   |   |   | 12,410,000 |   |
|   |   |                    | Lakes of Northdale (2)            |                                |   | 1.29                               | %        | 05/15/12                               |   |         | 10,096                                    |   |   |   | 9,610,000 |   |
|   |   |                    |                              |                                |   |                               |     |                                   |   |         |                                      |   |   |   |   |   |
|   |   |                    | Total Bonds Payable               |                                |   |                               |     |                                   |   |         |                                      |   |   |   | 59,490,000 |   |

|   |   Subtotal                                                                           |   |   |   |   |   |   |   |   |   |      165,361,160 |            |
|--------|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------------------------------|-----------------|
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      |            |
|   | Secured Credit Facility (3)                                                               |   |   |   |   |   |   |   |   |   |                                      | 84,718,000      |   |
|   | Construction Credit Facility for The Reserve at Wescott Phase II (4)                 |   |   |   |   |   |   |   |   |   |                                      |  5,902,165 |   |
|   | Promissory note for Jackson Park Place II (5)                                             |   |   |   |   |   |   |   |   |   |                                      | 2,500,000       |   |
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      |            |   |
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      | 258,481,325     |   |
|   | Plus: Net unrealized appreciation on Mortgage Notes, Bonds and                            |   |   |   |   |   |   |   |   |   |                                      |            |   |
|   |           Credit facilities payable (6) |   |   |   |   |   |   |   |   |   |                                      | (12,486,332     | ) |
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      |            |   |
|   | Mortgage Notes, Bonds and Secured Credit Facilities Payable, at Fair Value                |   |   |   |   |   |   |   |   |   |                                      |            |  245,994,993 |   |
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      |            |   |   |
|   | Unsecured Credit Facility (7)                                                             |   |   |   |   |   |   |   |   |   |                                      |            |  91,940,468 |   |
|   |                                                                                      |   |   |   |   |   |   |   |   |   |                                      |            |   |   |
|   | Total Mortgage Notes, Bonds and Credit Facilities Payable                                 |   |   |   |   |   |   |   |   |   |                                      |  $         |           337,935,461 |   |

| (1)   | The bond is also collateralized with Littlestone at Village Green. |
|-----------------|--------------------------------------------------------------------|

| (2)   | The interest rate is based on a weekly variable rate, which is determined by a highly rated bond composite variable rate. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| (3)   | The secured credit facility (the “Facility”) in the amount of $84,718,000 is collateralized by Arbors of Dublin, Cornerstone, Morganton Place, The Greenhouse, Village at Cliffdale and Woodberry.  The Facility provides for interest only monthly payments which are based upon a fixed rate through 2012, after which time it shall include principal to amortize the outstanding balance over a 30 year period and each draw matures on dates ranging from October 2016 to October, 2017.  The interest rates for each draw vary from 5.44% to 5.68%.   The outstanding amount of the Facility is $84,718,000 at December 31, 2010.  The Facility may be prepaid with penalty. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | In connection with the construction of The Reserve at Wescott Phase II, APRO entered into a construction credit facility with a bank, in the amount of $6,314,000 with a maturity date of April 11, 2010. On July 14, 2010, the Company executed a second loan modification agreement to extend the maturity date to January 16, 2012.  The loan provides interest of LIBOR plus 1.65%.  The LIBOR rate in effect as of December 31, 2010 was 0.25%.  The Company is further required to make principal payments equal to 100% of excess cash flow after debt service each month.  The outstanding balance of the loan is $5,902,165 at December 31, 2010. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | The promissory note in the amount of $2,500,000 was entered into on April 14, 2010 with an entity (the “Entity”) managed by an affiliate of the Manager.  The note provides interest of annual LIBOR plus 2.5% which is deferred until maturity. The note matures on November 30, 2012 with one automatic 1-year extension. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (6)   | This amount is the net unrealized appreciation of the mortgages, bonds and credit facilities for the period from inception to December 31, 2010 and the mark to market adjustment of debt at the time of the APRO acquisition. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)   | In connection with the acquisition of APRO, the Company entered into an unsecured credit facility (the “Loan”) with a bank in the amount of $175,000,000. On April 14, 2010, the Company executed the Fourth Amendment to the Loan Agreement, which reduced the blended interest rate on the loan from LIBOR plus 5.85% to LIBOR plus 3.86%, as of February 1, 2010.  The effective rate at December 31, 2010 was 4.15%. Additionally, the Company’s financial ratio requirements, which require the Company to maintain minimum Debt Service Coverage Ratio and minimum Debt Leverage Ratio, were waived at December 31, 2009 and March 31, 2010.  Furthermore, the maturity date was extended from May 31, 2011 to May 31, 2012, with an option for an additional one year extension, at which time an extension fee is to be paid on a portion of any remaining balances. The Loan may be prepaid without penalty, requires mandatory repayments from the proceeds of sales, and restricts distributions until the loan is paid in full.  As of and for the year ended December 31, 2010, the Company is in compliance with certain financial ratios which must be maintained during the life of the Loan. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   Type            | Maturity |   | Notional Amount |       |   | Cap Rate |   |   | Pay Rate |   |   | Fair Value |   |   |
|------------------------|----------|--------|-----------------|------------|--------|----------|--------|--------|----------|--------|--------|------------|--------|--------|
|                   |     |   |            |       |   |     |   |   |     |   |   |       |   |   |
| Variable to fixed swap | 01/15/12 |   | $               | 11,320,000 |   |     |   | 3.44   | %        |   |   | 3.69       | %      |   | $ | (369,383 | ) |   |
| Variable to fixed swap | 12/15/16 |   |            | 12,410,000 |   |     |   | 3.44   | %        |   |   | 3.69       | %      |   |   | (1,147,352 | ) |   |
| LIBOR Cap              | 01/01/15 |   |            | 13,400,000 |   |     |   | 6.00   | %        |   |   | n/a        |   |   |   | 49,376 |   |   |
| LIBOR Cap              | 01/01/15 |   |            | 12,750,000 |   |     |   | 6.00   | %        |   |   | n/a        |   |   |   | 46,981 |   |   |
| LIBOR Cap              | 09/15/11 |   |            | 11,320,000 |   |     |   | 6.22   | %        |   |   | n/a        |   |   |   | 5 |   |   |
| LIBOR Cap              | 09/19/12 |   |            | 9,610,000  |   |     |   | 7.30   | %        |   |   | n/a        |   |   |   |  491 |   |   |
|                   |     |   |            |       |   |     |   |   |     |   |   |       |   |   |   |   |   |   |
|                   |     |   | $               | 70,810,000 |   |     |   |   |     |   |   |       |   |   | $ | (1,419,882 | ) |   |

----

|   | Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value is calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The levels of fair value hierarchy are described below: |
|--------|---------------------------------------------------------|

| ·   | Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 2 – Quoted prices in active markets for similar assets and liabilities or quoted prices in less active, dealer or broker markets; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

|                                 |   | Level 3:     |        |   | Level 2:                             |   |      |   |   |
|--------------------------------------|--------|--------------|-------------|--------|--------------------------------------|--------|-----------|--------|--------|
|                                 |   | Significant  |        |   |     Significant Other |   |
|                                 |   | Unobservable |        |   | Observable                           |   |      | 2010   |   |
|                                 |   | Inputs       |        |   | Inputs                               |   |      | Total  |   |
| Assets                               |   |         |        |   |                                 |   |      |   |   |
| Investment in real estate properties |   | $            | 348,750,000 |   |                                 | $      | -         |   |   | $ | 348,750,000 |   |
| Total assets                         |   | $            | 348,750,000 |   |                                 | $      | -         |   |   | $ | 348,750,000 |   |
|                                 |   |         |        |   |                                 |   |      |   |   |   |   |   |
| Liabilities                          |   |         |        |   |                                 |   |      |   |   |   |   |   |
| Mortgage notes, bonds and credit     |   |         |        |   |                                 |   |      |   |   |
| facilities payable                   |   | $            | 245,994,993 |   |                                 | $      | -         |   |   | $ | 245,994,993 |   |
| Interest rate derivatives            |   |         | -           |   |                                 |   | 1,419,882 |   |   |   | 1,419,882 |   |
| Total liabilities                    |   | $            | 245,994,993 |   |                                 | $      | 1,419,882 |   |   | $ | 247,414,875 |   |

|                                                   |                                                                                       |                                                                                                                                                                                        | Investment in                                                                                                                                    | Mortgage notes,                                                                                                                                                                                                                       |
|--------------------------------------------------------|--------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                   |                                                                                       |                                                                                                                                                                                        | Real Estate                                                                                                                                                                                                                           |                                                                                                                                                                                                                                  | bonds and credit |
|                                                   |                                                                                       |                                                                                                                                                                                        | Properties                                                                                                                                                                                                                            |                                                                                                                                                                                                                                  | facilities payable |
|                                                   |                                                                                       |                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |   |
| Balance at January 1, 2010                             |                                                                                       |  $      355,200,000                                                                                                                                      |                                                                                                                                                                                                                                  |  $            (250,636,319)                                                                                                                                          |
|                                                   |                                                                                       |                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |   |
| Net unrealized gain (loss) included in net decrease in |                                                                                       |                                                                                                                                                                                        |
|                                                   | net assets resulting from operations                                                       |                                                                                                                                                                                        |                17,128,747                                                                                                                                  |                                                                                                                                                                                                                                  |                     (7,760,760) |
| Realized loss included in net decrease in              |                                                                                       |                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |
|                                                   | net assets resulting from operations                                                       |                                                                                                                                                                                        |              (14,961,448)                                                                                                                                            |                                                                                                                                                                                                                                  |                                       - |
| Capital additions                                      |                                                                                       |                 5,132,886                                                                                   |                                                                                                                                                                                                                                  |                                       - |
| Proceeds from sale of real estate properties           |              (13,750,185) |                                                                                                                                                                                        |                                       - |
| Proceeeds from mortgage notes payable                  |                                                                                       |                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                     (2,500,000)                                                                                                   |
| Repayment of mortgage notes payable                    |                                                                                       |                                - |                                                                                                                                                                                                                                  |                      14,902,086                                                                                              |
| Balance at December 31, 2010                           |                                                                                       |  $      348,750,000                                                                                                                                      |                                                                                                                                                                                                                                  |  $           (245,994,993)                                                                                                                                                |
|                                                   |                                                                                       |                                                                                                                                                                                        |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |   |

----

| (1)   | Weighted average net assets are calculated for the Members based upon the weighted average of the beginning and ending net assets for the year ending December 31, 2010 and using the actual date of capital contributions and distributions during the year ended December 31, 2010. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Net investment income includes income less all expenses other than any realized gains or losses on investments in real estate properties and unrealized appreciation or depreciation.                                  14 |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3)   | Internal rate of return net of all fees was calculated using the actual date of capital contributions and distributions since inception, and net assets at December 31, 2010 and December 31, 2009 of the Members’ aggregate capital as of each measurement date. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | As of December 31, 2010, the Company has called and received cumulative $124 million of committed capital from the Members. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------|