Document:

EX-10.7

Prepared by, and after recording

return to:

Closing Department

PNC ARCS LLC

26901 Agoura Road, Suite 200

Calabasas Hills, California 91301

Attn: Closing Dept.

ARCS #: 310229166

FNMA #: 854544

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS 

AND SECURITY AGREEMENT AND FIXTURE FILING

(TEXAS)

1

Notice of Confidentiality Rights: If you are a natural person, you may remove or strike any of the

following information from this instrument before it is filed for record in the Public Records:

Your social security number or your driver’s license number.TABLE OF CONTENTS

PAGE

	 	 	 	 	 	 	 	 	 
	1.
	 	DEFINITIONS1	 	 	 	 
	2.
	 	UNIFORM COMMERCIAL CODE SECURITY AGREEMENT	 	 	6	 

3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER;

LENDER IN POSSESSION 7

4. ASSIGNMENT OF LEASES; LEASES AFFECTING

THE MORTGAGED PROPERTY 9

5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	DOCUMENTS; PREPAYMENT PREMIUM11	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6.
	 	EXCULPATION11	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7.	 	DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES	 	 	 	 	 	 	 	 	 	 	12	 
	8.
	 	COLLATERAL AGREEMENTS	 	 	 	 	 	 	13	 	 	 	 	 	 	 	 	 
	9.
	 	APPLICATION OF PAYMENTS	 	 	 	 	 	 	13	 	 	 	 	 	 	 	 	 
	10.
	 	COMPLIANCE WITH LAWS	 	 	 	 	 	 	13	 	 	 	 	 	 	 	 	 
	11.
	 	USE OF PROPERTY13	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12.
	 	PROTECTION OF LENDER'S SECURITY14	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	13.
	 	INSPECTION14	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	14.	 	BOOKS AND RECORDS; FINANCIAL REPORTING	 	 	 	 	 	 	16	 	 	 	 	 
	15.
	 	TAXES; OPERATING EXPENSES	 	 	 	 	 	 	17	 	 	 	 	 	 	 	 	 
	16.
	 	LIENS; ENCUMBRANCES	 	 	17	 	 	 	 	 	 	 	 	 	 	 	 	 

17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	MORTGAGED PROPERTY18	 	 	 	 
	18.	 	ENVIRONMENTAL HAZARDS24	 	 	 	 
	19.	 	PROPERTY AND LIABILITY INSURANCE	 	 	25	 
	20.
	 	CONDEMNATION	 	 	26	 	 	 	 	 

21. TRANSFERS OF THE MORTGAGED PROPERTY OR

	 	 	 	 	 	 	 	 	 
	 
	 	INTERESTS IN BORROWER29	 	 	 	 
	22.
	 	EVENTS OF DEFAULT30	 	 	 	 
	23.
	 	REMEDIES CUMULATIVE31	 	 	 	 
	24.
	 	FORBEARANCE31	 	 	 	 
	25.
	 	INTENTIONALLY DELETED31	 	 	 	 
	26.
	 	WAIVER OF STATUTE OF LIMITATIONS31	 	 	 	 
	27.
	 	WAIVER OF MARSHALLING32	 	 	 	 
	28.
	 	FURTHER ASSURANCES32	 	 	 	 
	29.
	 	ESTOPPEL CERTIFICATE32	 	 	 	 
	30.
	 	GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE32	 	 	 	 
	31.
	 	NOTICE33	 	 	 	 
	32.
	 	SALE OF NOTE; CHANGE IN SERVICER33	 	 	 	 
	33.
	 	SINGLE ASSET BORROWER33	 	 	 	 
	34.
	 	SUCCESSORS AND ASSIGNS BOUND33	 	 	 	 
	35.
	 	JOINT AND SEVERAL LIABILITY33	 	 	 	 
	36.
	 	RELATIONSHIPOF PARTIES; NO THIRD PARTY BENEFICIARY33	 	 	 	 
	37.
	 	SEVERABILITY; AMENDMENTS34	 	 	 	 
	38.
	 	CONSTRUCTION34	 	 	 	 
	39.
	 	LOAN SERVICING34	 	 	 	 
	40.
	 	DISCLOSURE OF INFORMATION34	 	 	 	 
	41.
	 	NO CHANGE IN FACTS OR CIRCUMSTANCES34	 	 	 	 
	42.
	 	SUBROGATION35	 	 	 	 
	43.
	 	ACCELERATION; REMEDIES.35	 	 	 	 
	44.
	 	RELEASE.38	 	 	 	 
	45.
	 	TRUSTEE38	 	 	 	 
	46.
	 	VENDOR’S LIEN; RENEWAL AND EXTENSION39	 	 	 	 
	47.
	 	NO FIDUCIARY DUTY39	 	 	 	 
	48.
	 	FIXTURE FILING39	 	 	 	 
	49.
	 	ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS	 	 	39	 

50. LOAN CHARGES 40

51. PROPERTY AND LIABILITY INSURANCE — DELIVERY OF

	 	 	 	 	 	 	 	 	 
	 
	 	POLICY TO LENDER40	 	 	 	 
	52.
	 	ENTIRE AGREEMENT40	 	 	 	 
	53.
	 	WAIVER OF TRIAL BY JURY	 	 	41	 

MULTIFAMILY DEED OF TRUST,

ASSIGNMENT OF RENTS AND

SECURITY AGREEMENT AND FIXTURE FILING

THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT AND FIXTURE FILING
(the “Instrument”) is dated as of the 31st day of March, 2008, by G&E Apartment REIT Arboleda, LLC,
a Delaware limited liability company organized and existing under the laws of Delaware, whose
address is 1551 North Tustin Avenue, Santa Ana, CA 92705, as trustor (“Borrower”), to Lawyers
Title Insurance Corporation, as trustee (“Trustee”), for the benefit of PNC ARCS LLC, a Delaware
limited liability company organized and existing under the laws of the State of Delaware, whose
address is 26901 Agoura Road, Suite 200, Calabasas Hills, California 91301, as beneficiary
(“Lender”).

Borrower, in consideration of the Indebtedness and the trust created by this Instrument,
irrevocably grants, conveys and assigns to Trustee, in trust, with power of sale, the Mortgaged
Property, including the Land located in Williamson County, State of Texas and described in Exhibit
A attached to this Instrument. To have and to hold the Mortgaged Property unto Trustee, Trustee’s
successor in trust and Trustee’s assigns forever.

TO SECURE TO LENDER the repayment of the Indebtedness evidenced by Borrower’s Multifamily Note
payable to Lender, dated as of the date of this Instrument, and maturing on

April 1, 2015, in the principal amount of $17,651,000.00, and all renewals, extensions and
modifications of the Indebtedness, and the performance of the covenants and agreements of Borrower
contained in the Loan Documents.

Borrower warrants and represents that Borrower is lawfully seized of the Mortgaged Property
and has the right, power and authority to grant, convey and assign the Mortgaged Property, and that
the Mortgaged Property is unencumbered. Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and demands, subject to any
easements and restrictions listed in a schedule of exceptions to coverage in any title insurance
policy issued to Lender contemporaneously with the execution and recordation of this Instrument and
insuring Lender’s interest in the Mortgaged Property.

Covenants. Borrower and Lender covenant and agree as follows:

1. DEFINITIONS. The following terms, when used in this Instrument (including when used in the
above recitals), shall have the following meanings:

(a) "Borrower” means all persons or entities identified as “Borrower” in the first paragraph
of this Instrument, together with their successors and assigns.

(b) "Collateral Agreement” means any separate agreement between Borrower and Lender for the
purpose of establishing replacement reserves for the Mortgaged Property, establishing a fund to
assure completion of repairs or improvements specified in that agreement, or assuring reduction of
the outstanding principal balance of the Indebtedness if the occupancy of or income from the
Mortgaged Property does not increase to a level specified in that agreement, or any other agreement
or agreements between Borrower and Lender which provide for the establishment of any other fund,
reserve or account.

(c) "Environmental Permit” means any permit, license, or other authorization issued under any
Hazardous Materials Law with respect to any activities or businesses conducted on or in relation to
the Mortgaged Property.

(d) "Event of Default” means the occurrence of any event listed in Section 22.

(e) "Fixtures” means all property which is so attached to the Land or the Improvements as to
constitute a fixture under applicable law, including: machinery, equipment, engines, boilers,
incinerators, installed building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring and
conduits used in connection with radio, television, security, fire prevention, or fire detection or
otherwise used to carry electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems and apparatus;
security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other
appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens, blinds,
shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and wall coverings;
fences, trees and plants; swimming pools; and exercise equipment.

(f) "Governmental Authority” means any board, commission, department or body of any municipal,
county, state or federal governmental unit, or any subdivision of any of them, that has or acquires
jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged
Property.

(g) "Hazardous Materials” means petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any substance; any substance
the presence of which on the Mortgaged Property is prohibited by any federal, state or local
authority; any substance that requires special handling; and any other material or substance now or
in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic
substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of any Hazardous
Materials Law.

(h) "Hazardous Materials Laws” means all federal, state, and local laws, ordinances and
regulations and standards, rules, policies and other governmental requirements, administrative
rulings and court judgments and decrees in effect now or in the future and including all
amendments, that relate to Hazardous Materials and apply to Borrower or to the Mortgaged Property.
Hazardous Materials Laws include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous
Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their state analogs.

(i) "Impositions” and “Imposition Deposits” are defined in Section 7(a).

(j) "Improvements” means the buildings, structures, improvements, and alterations now
constructed or at any time in the future constructed or placed upon the Land, including any future
replacements and additions.

(k) "Indebtedness” means the principal of, interest on, and all other amounts due at any time
under, the Note, this Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances as provided in Section 12 to protect the security of this
Instrument.

(l) [Intentionally omitted]

(m) "Key Principal” means the natural person(s) or entity identified as such at the foot of
this Instrument, and any person or entity who becomes a Key Principal after the date of this
Instrument and is identified as such in an amendment or supplement to this Instrument.

(n) "Land” means the land described in Exhibit A.

(o) "Leases” means all present and future leases, subleases, licenses, concessions or grants
or other possessory interests now or hereafter in force, whether oral or written, covering or
affecting the Mortgaged Property, or any portion of the Mortgaged Property (including proprietary
leases or occupancy agreements if Borrower is a cooperative housing corporation), and all
modifications, extensions or renewals.

(p) "Lender” means the entity identified as “Lender” in the first paragraph of this Instrument
and its successors and assigns, or any subsequent holder of the Note.

(q) "Loan Documents” means the Note, this Instrument, all guaranties, all indemnity
agreements, all Collateral Agreements, O&M Programs, and any other documents now or in the future
executed by Borrower, Key Principal, any guarantor or any other person in connection with the loan
evidenced by the Note, as such documents may be amended from time to time.

(r) "Loan Servicer” means the entity that from time to time is designated by Lender to collect
payments and deposits and receive notices under the Note, this Instrument and any other Loan
Document, and otherwise to service the loan evidenced by the Note for the benefit of Lender.
Unless Borrower receives notice to the contrary, the Loan Servicer is the entity identified as
“Lender” in the first paragraph of this Instrument.

(s) "Mortgaged Property” means all of Borrower’s present and future right, title and interest
in and to all of the following:

	 	(1)	 	the Land;

	 	(2)	 	the Improvements;

	 	(3)	 	the Fixtures;

	 	(4)	 	the Personalty;

	 	(5)	 	all current and future rights, including air rights,
development rights, zoning rights and other similar rights or interests,
easements, tenements, rights-of-way, strips and gores of land, streets, alleys,
roads, sewer rights, waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all rights-of-way,
streets, alleys and roads which may have been or may in the future be vacated;

	 	(6)	 	all proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;

	 	(7)	 	all awards, payments and other compensation made or to be made
by any municipal, state or federal authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, including any awards or settlements resulting from condemnation
proceedings or the total or partial taking of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property under the
power of eminent domain or otherwise and including any conveyance in lieu
thereof;

	 	(8)	 	all contracts, options and other agreements for the sale of the
Land, the Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future, including
cash or securities deposited to secure performance by parties of their
obligations;

	 	(9)	 	all proceeds from the conversion, voluntary or involuntary, of
any of the above into cash or liquidated claims, and the right to collect such
proceeds;

	 	(10)	 	all Rents and Leases;

	 	(11)	 	all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of the Mortgaged
Property, and all undisbursed proceeds of the loan secured by this Instrument
and, if Borrower is a cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;

	 	(12)	 	all Imposition Deposits;

	 	(13)	 	all refunds or rebates of Impositions by any municipal, state
or federal authority or insurance company (other than refunds applicable to
periods before the real property tax year in which this Instrument is dated);

	 	(14)	 	all tenant security deposits which have not been forfeited by
any tenant under any Lease; and

	 	(15)	 	all names under or by which any of the above Mortgaged Property
may be operated or known, and all trademarks, trade names, and goodwill
relating to any of the Mortgaged Property.

(t) "Note” means the Multifamily Note described on page 1 of this Instrument, including the
Acknowledgment and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse
Liability (if any), and all schedules, riders, allonges and addenda, as such Multifamily Note may
be amended from time to time.

(u) "O&M Program” is defined in Section 18(a).

(v) "Personalty” means all equipment, inventory, general intangibles which are used now or in
the future in connection with the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the Improvements, including furniture, furnishings,
machinery, building materials, appliances, goods, supplies, tools, books, records (whether in
written or electronic form), computer equipment (hardware and software) and other tangible personal
property (other than Fixtures) which are used now or in the future in connection with the
ownership, management or operation of the Land or the Improvements or are located on the Land or in
the Improvements, and any operating agreements relating to the Land or the Improvements, and any
surveys, plans and specifications and contracts for architectural, engineering and construction
services relating to the Land or the Improvements and all other intangible property and rights
relating to the operation of, or used in connection with, the Land or the Improvements, including
all governmental permits relating to any activities on the Land.

(w) "Property Jurisdiction” is defined in Section 30(a).

(x) "Rents” means all rents (whether from residential or non-residential space), revenues and
other income of the Land or the Improvements, including subsidy payments received from any sources
(including, but not limited to payments under any Housing Assistance Payments Contract), parking
fees, laundry and vending machine income and fees and charges for food, health care and other
services provided at the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants.

(y) "Taxes” means all taxes, assessments, vault rentals and other charges, if any, general,
special or otherwise, including all assessments for schools, public betterments and general or
local improvements, which are levied, assessed or imposed by any public authority or quasi-public
authority, and which, if not paid, will become a lien, on the Land or the Improvements.

(z) "Transfer” means (A) a sale, assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of law); (B) the granting, creating or attachment of a lien,
encumbrance or security interest (whether voluntary, involuntary or by operation of law); (C) the
issuance or other creation of an ownership interest in a legal entity, including a partnership
interest, interest in a limited liability company or corporate stock; (D) the withdrawal,
retirement, removal or involuntary resignation of a partner in a partnership or a member or manager
in a limited liability company; or (E) the merger, dissolution, liquidation, or consolidation of a
legal entity. “Transfer” does not include (i) a conveyance of the Mortgaged Property at a judicial
or non-judicial foreclosure sale under this Instrument or (ii) the Mortgaged Property becoming part
of a bankruptcy estate by operation of law under the United States Bankruptcy Code. For purposes
of defining the term “Transfer,” the term “partnership” shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and the term “partner” shall mean
a general partner, a limited partner and a joint venturer.

2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is also a security agreement
under the Uniform Commercial Code for any of the Mortgaged Property which, under applicable law,
may be subject to a security interest under the Uniform Commercial Code, whether acquired now or in
the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC
Collateral”), and Borrower hereby grants to Lender a security interest in the UCC Collateral.
Borrower hereby authorizes Lender to file financing statements, continuation statements and
financing statement amendments in such form as Lender may require to perfect or continue the
perfection of this security interest and Borrower agrees, if Lender so requests, to execute and
deliver to Lender such financing statements, continuation statements and amendments. Borrower
shall pay all filing costs and all costs and expenses of any record searches for financing
statements that Lender may require. Without the prior written consent of Lender, Borrower shall
not create or permit to exist any other lien or security interest in any of the UCC Collateral. If
an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured
party under the Uniform Commercial Code, in addition to all remedies provided by this Instrument or
existing under applicable law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in any way affecting
the availability of Lender’s other remedies. This Instrument constitutes a financing statement
with respect to any part of the Mortgaged Property which is or may become a Fixture.

3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

(a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally
assigns and transfers to Lender all Rents. It is the intention of Borrower to establish a present,
absolute and irrevocable transfer and assignment to Lender of all Rents and to authorize and
empower Lender to collect and receive all Rents without the necessity of further action on the part
of Borrower. Promptly upon request by Lender, Borrower agrees to execute and deliver such further
assignments as Lender may from time to time require. Borrower and Lender intend this assignment of
Rents to be immediately effective and to constitute an absolute present assignment and not an
assignment for additional security only. For purposes of giving effect to this absolute assignment
of Rents, and for no other purpose, Rents shall not be deemed to be a part of the “Mortgaged
Property,” as that term is defined in Section 1(s). However, if this present, absolute and
unconditional assignment of Rents is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and perfect a lien on
Rents in favor of Lender, which lien shall be effective as of the date of this Instrument.

(b) After the occurrence of an Event of Default, Borrower authorizes Lender to collect, sue
for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or
as directed by, Lender, and Borrower shall, upon Borrower’s receipt of any Rents from any sources
(including, but not limited to subsidy payments under any Housing Assistance Payments Contract),
pay the total amount of such receipts to the Lender. However, until the occurrence of an Event of
Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to
hold all Rents in trust for the benefit of Lender and to apply all Rents to pay the installments of
interest and principal then due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs
and expenses of managing, operating and maintaining the Mortgaged Property, including utilities,
Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of Default, and without the
necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and
Lender shall without notice be entitled to all Rents as they become due and payable, including
Rents then due and unpaid. Borrower shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time after the occurrence of an Event of Default, Lender may give, and Borrower
hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged Property
instructing them to pay all Rents to Lender; provided, however, that the giving of any such notice
by Lender shall not affect, in any way, Lender’s entitlement to the Rents as of the date on which
the Event of Default occurs. No tenant shall be obligated to inquire further as to the occurrence
or continuance of an Event of Default, and no tenant shall be obligated to pay to Borrower any
amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender
shall be delivered to each tenant personally, by mail or by delivering such demand to each rental
unit. Borrower shall not interfere with and shall cooperate with Lender’s collection of such
Rents.

(c) Borrower represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing indebtedness that will be paid off
and discharged with the proceeds of the loan evidenced by the Note), that Borrower has not
performed, and Borrower covenants and agrees that it will not perform, any acts and has not
executed, and shall not execute, any instrument which would prevent Lender from exercising its
rights under this Section 3, and that at the time of execution of this Instrument there has been no
anticipation or prepayment of any Rents for more than two months prior to the due dates of such
Rents. Borrower shall not collect or accept payment of any Rents more than two months prior to the
due dates of such Rents.

(d) If an Event of Default has occurred and is continuing, Lender may, regardless of the
adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter
upon and take and maintain full control of the Mortgaged Property in order to perform all acts that
Lender in its discretion determines to be necessary or desirable for the operation and maintenance
of the Mortgaged Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and the execution or
termination of contracts providing for the management, operation or maintenance of the Mortgaged
Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable. Alternatively, if an Event of Default
has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to
Borrower’s solvency and without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in the preceding sentence. If
Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an
Event of Default has occurred and is continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the appointment of a receiver ex
parte if permitted by applicable law. Lender or the receiver, as the case may be, shall be
entitled to receive a reasonable fee for managing the Mortgaged Property. Immediately upon
appointment of a receiver or immediately upon the Lender’s entering upon and taking possession and
control of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to
Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the
case may be, all documents, records (including records on electronic or magnetic media), accounts,
surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and
prepaid Rents. In the event Lender takes possession and control of the Mortgaged Property, Lender
may exclude Borrower and its representatives from the Mortgaged Property. Borrower acknowledges
and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall
not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and Improvements.

(e) If Lender enters the Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received. Lender shall not be liable to Borrower,
anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Property,
by reason of any act or omission of Lender under this Section 3, and Borrower hereby releases and
discharges Lender from any such liability to the fullest extent permitted by law.

(f) If the Rents are not sufficient to meet the costs of taking control of and managing the
Mortgaged Property and collecting the Rents, any funds expended by Lender for such purposes shall
become an additional part of the Indebtedness as provided in Section 12.

(g) Any entering upon and taking of control of the Mortgaged Property by Lender or the
receiver, as the case may be, and any application of Rents as provided in this Instrument shall not
cure or waive any Event of Default or invalidate any other right or remedy of Lender under
applicable law or provided for in this Instrument.

4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

(a) As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally
assigns and transfers to Lender all of Borrower’s right, title and interest in, to and under the
Leases, including Borrower’s right, power and authority to modify the terms of any such Lease, or
extend or terminate any such Lease. It is the intention of Borrower to establish a present,
absolute and irrevocable transfer and assignment to Lender of all of Borrower’s right, title and
interest in, to and under the Leases. Borrower and Lender intend this assignment of the Leases to
be immediately effective and to constitute an absolute present assignment and not an assignment for
additional security only. For purposes of giving effect to this absolute assignment of the Leases,
and for no other purpose, the Leases shall not be deemed to be a part of the “Mortgaged Property,”
as that term is defined in Section 1(s). However, if this present, absolute and unconditional
assignment of the Leases is not enforceable by its terms under the laws of the Property
Jurisdiction, then the Leases shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of this Instrument.

(b) Until the occurrence of an Event of Default, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right, power and authority to modify the terms
of any Lease or extend or terminate any Lease. Upon the occurrence of an Event of Default, the
permission given to Borrower pursuant to the preceding sentence to exercise all rights, power and
authority under Leases shall automatically terminate. Borrower shall comply with and observe
Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the
maintenance and disposition of tenant security deposits.

(c) Borrower acknowledges and agrees that the exercise by Lender, either directly or by a
receiver, of any of the rights conferred under this Section 4 shall not be construed to make Lender
a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into
actual possession of the Land and the Improvements. The acceptance by Lender of the assignment of
the Leases pursuant to Section 4(a) shall not at any time or in any event obligate Lender to take
any action under this Instrument or to expend any money or to incur any expenses. Lender shall not
be liable in any way for any injury or damage to person or property sustained by any person or
persons, firm or corporation in or about the Mortgaged Property. Prior to Lender’s actual entry
into and taking possession of the Mortgaged Property, Lender shall not (i) be obligated to perform
any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation
with respect to any Lease); (ii) be obligated to appear in or defend any action or proceeding
relating to the Lease or the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged
Property. The execution of this Instrument by Borrower shall constitute conclusive evidence that
all responsibility for the operation, control, care, management and repair of the Mortgaged
Property is and shall be that of Borrower, prior to such actual entry and taking of possession.

(d) From and after the occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property directly, by a receiver,
or by any other manner or proceeding permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted to Borrower under any Lease,
including the right, power and authority to modify the terms of any such Lease, or extend or
terminate any such Lease.

(e) Borrower shall, promptly upon Lender’s request, deliver to Lender an executed copy of each
residential Lease then in effect. All Leases for residential dwelling units shall be on forms
approved by Lender, shall be for initial terms of at least six months and not more than two years,
and shall not include options to purchase. If customary in the applicable market, residential
Leases with terms of less than six months may be permitted with Lender’s prior written consent.

(f) Borrower shall not lease any portion of the Mortgaged Property for non-residential use
except with the prior written consent of Lender and Lender’s prior written approval of the Lease
agreement. Borrower shall not modify the terms of, or extend or terminate, any Lease for
non-residential use (including any Lease in existence on the date of this Instrument) without the
prior written consent of Lender. Borrower shall, without request by Lender, deliver an executed
copy of each non-residential Lease to Lender promptly after such Lease is signed. All
non-residential Leases, including renewals or extensions of existing Leases, shall specifically
provide that (1) such Leases are subordinate to the lien of this Instrument (unless waived in
writing by Lender); (2) the tenant shall attorn to Lender and any purchaser at a foreclosure sale,
such attornment to be self-executing and effective upon acquisition of title to the Mortgaged
Property by any purchaser at a foreclosure sale or by Lender in any manner; (3) the tenant agrees
to execute such further evidences of attornment as Lender or any purchaser at a foreclosure sale
may from time to time request; (4) the Lease shall not be terminated by foreclosure or any other
transfer of the Mortgaged Property; (5) after a foreclosure sale of the Mortgaged Property, Lender
or any other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s option, accept
or terminate such Lease; and (6) the tenant shall, upon receipt after the occurrence of an Event of
Default of a written request from Lender, pay all Rents payable under the Lease to Lender.

(g) Borrower shall not receive or accept Rent under any Lease (whether residential or
non-residential) for more than two months in advance.

5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM. Borrower
shall pay the Indebtedness when due in accordance with the terms of the Note and the other Loan
Documents and shall perform, observe and comply with all other provisions of the Note and the other
Loan Documents. Borrower shall pay a prepayment premium in connection with certain prepayments of
the Indebtedness, including a payment made after Lender’s exercise of any right of acceleration of
the Indebtedness, as provided in the Note.

6. EXCULPATION. Borrower’s personal liability for payment of the Indebtedness and for
performance of the other obligations to be performed by it under this Instrument is limited in the
manner, and to the extent, provided in the Note.

7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

(a) Borrower shall deposit with Lender on the day monthly installments of principal or
interest, or both, are due under the Note (or on another day designated in writing by Lender),
until the Indebtedness is paid in full, an additional amount sufficient to accumulate with Lender
the entire sum required to pay, when due (1) any water and sewer charges which, if not paid, may
result in a lien on all or any part of the Mortgaged Property, (2) the premiums for fire and other
hazard insurance, rent loss insurance and such other insurance as Lender may require under
Section 19, (3) Taxes, and (4) amounts for other charges and expenses which Lender at any time
reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on
the Mortgaged Property, or otherwise to protect Lender’s interests, all as reasonably estimated
from time to time by Lender. The amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the “Imposition Deposits”. The obligations of Borrower for which
the Imposition Deposits are required are collectively referred to in this Instrument as
“Impositions". The amount of the Imposition Deposits shall be sufficient to enable Lender to pay
each Imposition before the last date upon which such payment may be made without any penalty or
interest charge being added. Lender shall maintain records indicating how much of the monthly
Imposition Deposits and how much of the aggregate Imposition Deposits held by Lender are held for
the purpose of paying Taxes, insurance premiums and each other obligation of Borrower for which
Imposition Deposits are required. Any waiver by Lender of the requirement that Borrower remit
Imposition Deposits to Lender may be revoked by Lender, in Lender’s discretion, at any time upon
notice to Borrower.

(b) Imposition Deposits shall be held in an institution (which may be Lender, if Lender is
such an institution) whose deposits or accounts are insured or guaranteed by a federal agency.
Lender shall not be obligated to open additional accounts or deposit Imposition Deposits in
additional institutions when the amount of the Imposition Deposits exceeds the maximum amount of
the federal deposit insurance or guaranty. Lender shall apply the Imposition Deposits to pay
Impositions so long as no Event of Default has occurred and is continuing. Unless applicable law
requires, Lender shall not be required to pay Borrower any interest, earnings or profits on the
Imposition Deposits. Borrower hereby pledges and grants to Lender a security interest in the
Imposition Deposits as additional security for all of Borrower’s obligations under this Instrument
and the other Loan Documents. Any amounts deposited with Lender under this Section 7 shall not be
trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that
purpose under Section 7(e).

(c) If Lender receives a bill or invoice for an Imposition, Lender shall pay the Imposition
from the Imposition Deposits held by Lender. Lender shall have no obligation to pay any Imposition
to the extent it exceeds Imposition Deposits then held by Lender. Lender may pay an Imposition
according to any bill, statement or estimate from the appropriate public office or insurance
company without inquiring into the accuracy of the bill, statement or estimate or into the validity
of the Imposition.

(d) If at any time the amount of the Imposition Deposits held by Lender for payment of a
specific Imposition exceeds the amount reasonably deemed necessary by Lender, the excess shall be
credited against future installments of Imposition Deposits. If at any time the amount of the
Imposition Deposits held by Lender for payment of a specific Imposition is less than the amount
reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the amount of the
deficiency within 15 days after notice from Lender.

(e) If an Event of Default has occurred and is continuing, Lender may apply any Imposition
Deposits, in any amounts and in any order as Lender determines, in Lender’s discretion, to pay any
Impositions or as a credit against the Indebtedness. Upon payment in full of the Indebtedness,
Lender shall refund to Borrower any Imposition Deposits held by Lender.

8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such amounts as may be required
by any Collateral Agreement and shall perform all other obligations of Borrower under each
Collateral Agreement.

9. APPLICATION OF PAYMENTS. If at any time Lender receives, from Borrower or otherwise, any
amount applicable to the Indebtedness which is less than all amounts due and payable at such time,
then Lender may apply that payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender’s discretion. Neither Lender’s acceptance of an amount which is
less than all amounts then due and payable nor Lender’s application of such payment in the manner
authorized shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an
accord and satisfaction. Notwithstanding the application of any such amount to the Indebtedness,
Borrower’s obligations under this Instrument and the Note shall remain unchanged.

10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws, ordinances, regulations and
requirements of any Governmental Authority and all recorded lawful covenants and agreements
relating to or affecting the Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety, construction of improvements on the
Mortgaged Property, fair housing, zoning and land use, and Leases. Borrower also shall comply with
all applicable laws that pertain to the maintenance and disposition of tenant security deposits.
Borrower shall at all times maintain records sufficient to demonstrate compliance with the
provisions of this Section 10. Borrower shall take appropriate measures to prevent, and shall not
engage in or knowingly permit, any illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the
Mortgaged Property, or otherwise materially impair the lien created by this Instrument or Lender’s
interest in the Mortgaged Property. Borrower represents and warrants to Lender that no portion of
the Mortgaged Property has been or will be purchased with the proceeds of any illegal activity.

11. USE OF PROPERTY. Unless required by applicable law, Borrower shall not (a) except for any
change in use approved by Lender, allow changes in the use for which all or any part of the
Mortgaged Property is being used at the time this Instrument was executed, (b) convert any
individual dwelling units or common areas to commercial use, (c) initiate or acquiesce in a change
in the zoning classification of the Mortgaged Property, or (d) establish any condominium or
cooperative regime with respect to the Mortgaged Property.

12. PROTECTION OF LENDER’S SECURITY.

(a) If Borrower fails to perform any of its obligations under this Instrument or any other
Loan Document, or if any action or proceeding is commenced which purports to affect the Mortgaged
Property, Lender’s security or Lender’s rights under this Instrument, including eminent domain,
insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials
Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender’s option may make such appearances, disburse such sums and take such actions
as Lender reasonably deems necessary to perform such obligations of Borrower and to protect
Lender’s interest, including (1) payment of fees and out-of-pocket expenses of attorneys,
accountants, inspectors and consultants, (2) entry upon the Mortgaged Property to make repairs or
secure the Mortgaged Property, (3) procurement of the insurance required by Section 19, and (4)
payment of amounts which Borrower has failed to pay under Sections 15 and 17.

(b) Any amounts disbursed by Lender under this Section 12, or under any other provision of
this Instrument that treats such disbursement as being made under this Section 12, shall be added
to, and become part of, the principal component of the Indebtedness, shall be immediately due and
payable and shall bear interest from the date of disbursement until paid at the “Default Rate”, as
defined in the Note.

(c) Nothing in this Section 12 shall require Lender to incur any expense or take any action.

13. INSPECTION. Lender, its agents, representatives, and designees may make or cause to be
made entries upon and inspections of the Mortgaged Property (including environmental inspections
and tests) during normal business hours, or at any other reasonable time.

14. BOOKS AND RECORDS; FINANCIAL REPORTING.

(a) Borrower shall keep and maintain at all times at the Mortgaged Property or the management
agent’s offices, and upon Lender’s request shall make available at the Mortgaged Property, complete
and accurate books of account and records (including copies of supporting bills and invoices)
adequate to reflect correctly the operation of the Mortgaged Property, and copies of all written
contracts, Leases, and other instruments which affect the Mortgaged Property. The books, records,
contracts, Leases and other instruments shall be subject to examination and inspection at any
reasonable time by Lender.

(b) Borrower shall furnish to Lender all of the following:

	 	(1)	 	within 120 days after the end of each fiscal year of Borrower,
a statement of income and expenses for Borrower’s operation of the Mortgaged
Property for that fiscal year, a statement of changes in financial position of
Borrower relating to the Mortgaged Property for that fiscal year and, when
requested by Lender, a balance sheet showing all assets and liabilities of
Borrower relating to the Mortgaged Property as of the end of that fiscal year;

	 	(2)	 	within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender’s request, a rent schedule for the Mortgaged
Property showing the name of each tenant, and for each tenant, the space
occupied, the lease expiration date, the rent payable for the current month,
the date through which rent has been paid, and any related information
requested by Lender;

	 	(3)	 	within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender’s request, an accounting of all security
deposits held pursuant to all Leases, including the name of the institution (if
any) and the names and identification numbers of the accounts (if any) in which
such security deposits are held and the name of the person to contact at such
financial institution, along with any authority or release necessary for Lender
to access information regarding such accounts;

	 	(4)	 	within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender’s request, a statement that identifies all
owners of any interest in Borrower and the interest held by each, if Borrower
is a corporation, all officers and directors of Borrower, and if Borrower is a
limited liability company, all managers who are not members;

	 	(5)	 	upon Lender’s request, a monthly property management report for
the Mortgaged Property, showing the number of inquiries made and rental
applications received from tenants or prospective tenants and deposits received
from tenants and any other information requested by Lender;

	 	(6)	 	upon Lender’s request, a balance sheet, a statement of income
and expenses for Borrower and a statement of changes in financial position of
Borrower for Borrower’s most recent fiscal year; and

	 	(7)	 	if required by Lender, a statement of income and expense for
the Mortgaged Property for the prior month or quarter.

(c) Each of the statements, schedules and reports required by Section 14(b) shall be certified
to be complete and accurate by an individual having authority to bind Borrower, and shall be in
such form and contain such detail as Lender may reasonably require. Lender also may require that
any statements, schedules or reports be audited at Borrower’s expense by independent certified
public accountants acceptable to Lender.

(d) If Borrower fails to provide in a timely manner the statements, schedules and reports
required by Section 14(b), Lender shall have the right to have Borrower’s books and records
audited, at Borrower’s expense, by independent certified public accountants selected by Lender in
order to obtain such statements, schedules and reports, and all related costs and expenses of
Lender shall become immediately due and payable and shall become an additional part of the
Indebtedness as provided in Section 12.

(e) If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender
upon written demand all books and records relating to the Mortgaged Property or its operation.

(f) Borrower authorizes Lender to obtain a credit report on Borrower at any time.

(g) If an Event of Default has occurred and Lender has not previously required Borrower to
furnish a quarterly statement of income and expense for the Mortgaged Property, Lender may require
Borrower to furnish such a statement within 45 days after the end of each fiscal quarter of
Borrower following such Event of Default.

15. TAXES; OPERATING EXPENSES.

(a) Subject to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or cause
to be paid, all Taxes when due and before the addition of any interest, fine, penalty or cost for
nonpayment.

(b) Subject to the provisions of Section 15(c), Borrower shall pay the expenses of operating,
managing, maintaining and repairing the Mortgaged Property (including insurance premiums,
utilities, repairs and replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added.

(c) As long as no Event of Default exists and Borrower has timely delivered to Lender any
bills or premium notices that it has received, Borrower shall not be obligated to pay Taxes,
insurance premiums or any other individual Imposition to the extent that sufficient Imposition
Deposits are held by Lender for the purpose of paying that specific Imposition. If an Event of
Default exists, Lender may exercise any rights Lender may have with respect to Imposition Deposits
without regard to whether Impositions are then due and payable. Lender shall have no liability to
Borrower for failing to pay any Impositions to the extent that any Event of Default has occurred
and is continuing, insufficient Imposition Deposits are held by Lender at the time an Imposition
becomes due and payable or Borrower has failed to provide Lender with bills and premium notices as
provided above.

(d) Borrower, at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other than insurance
premiums, if (1) Borrower notifies Lender of the commencement or expected commencement of such
proceedings, (2) the Mortgaged Property is not in danger of being sold or forfeited, (3) Borrower
deposits with Lender reserves sufficient to pay the contested Imposition, if requested by Lender,
and (4) Borrower furnishes whatever additional security is required in the proceedings or is
reasonably requested by Lender, which may include the delivery to Lender of the reserves
established by Borrower to pay the contested Imposition.

(e) Borrower shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall promptly furnish to
Lender receipts evidencing such payments.

16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent provided in Section 21,
the grant, creation or existence of any mortgage, deed of trust, deed to secure debt, security
interest or other lien or encumbrance (a “Lien”) on the Mortgaged Property (other than the lien of
this Instrument) or on certain ownership interests in Borrower, whether voluntary, involuntary or
by operation of law, and whether or not such Lien has priority over the lien of this Instrument, is
a “Transfer” which constitutes an Event of Default.

17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

(a) Borrower (1) shall not commit waste or permit impairment or deterioration of the Mortgaged
Property, (2) shall not abandon the Mortgaged Property, (3) shall restore or repair promptly, in a
good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition, or such other condition as Lender may approve in writing, whether or not
insurance proceeds or condemnation awards are available to cover any costs of such restoration or
repair, (4) shall keep the Mortgaged Property in good repair, including the replacement of
Personalty and Fixtures with items of equal or better function and quality, (5) shall provide for
professional management of the Mortgaged Property by a residential rental property manager
satisfactory to Lender under a contract approved by Lender in writing, and (6) shall give notice to
Lender of and, unless otherwise directed in writing by Lender, shall appear in and defend any
action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s
rights under this Instrument. Borrower shall not (and shall not permit any tenant or other person
to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged Property except
in connection with the replacement of tangible Personalty.

(b) If, in connection with the making of the loan evidenced by the Note or at any later date,
Lender waives in writing the requirement of Section 17(a)(5) above that Borrower enter into a
written contract for management of the Mortgaged Property and if, after the date of this
Instrument, Borrower intends to change the management of the Mortgaged Property, Lender shall have
the right to approve such new property manager and the written contract for the management of the
Mortgaged Property and require that Borrower and such new property manager enter into an Assignment
of Management Agreement on a form approved by Lender. If required by Lender (whether before or
after an Event of Default), Borrower will cause any Affiliate of Borrower to whom fees are payable
for the management of the Mortgaged Property to enter into an agreement with Lender, in a form
approved by Lender, providing for subordination of those fees and such other provisions as Lender
may require. “Affiliate of Borrower” means any corporation, partnership, joint venture, limited
liability company, limited liability partnership, trust or individual controlled by, under common
control with, or which controls Borrower (the term “control” for these purposes shall mean the
ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to make management decisions on behalf of, or
independently to select the managing partner of, a partnership, or otherwise to have the power
independently to remove and then select a majority of those individuals exercising managerial
authority over an entity, and control shall be conclusively presumed in the case of the ownership
of 50% or more of the equity interests).

18. ENVIRONMENTAL HAZARDS.

(a) Except for matters covered by a written program of operations and maintenance approved in
writing by Lender (an “O&M Program”) or matters described in Section 18(b), Borrower shall not
cause or permit any of the following:

	 	(1)	 	the presence, use, generation, release, treatment, processing,
storage (including storage in above ground and underground storage tanks),
handling, or disposal of any Hazardous Materials on or under the Mortgaged
Property or any other property of Borrower that is adjacent to the Mortgaged
Property;

	 	(2)	 	the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;

	 	(3)	 	any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged Property, which
occurrence or condition is or may be in violation of Hazardous Materials Laws;
or

	 	(4)	 	any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or any property of
Borrower that is adjacent to the Mortgaged Property.

The matters described in clauses (1) through (4) above are referred to collectively in this
Section 18 as “Prohibited Activities or Conditions”.

(b) Prohibited Activities and Conditions shall not include the safe and lawful use and storage
of quantities of (1) pre-packaged supplies, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable multifamily properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for consumer use and used
by tenants and occupants of residential dwelling units in the Mortgaged Property; and (3) petroleum
products used in the operation and maintenance of motor vehicles from time to time located on the
Mortgaged Property’s parking areas, so long as all of the foregoing are used, stored, handled,
transported and disposed of in compliance with Hazardous Materials Laws.

(c) Borrower shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this Instrument) to prevent its
employees, agents, and contractors, and all tenants and other occupants from causing or permitting
any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use of
all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by
any user that, in the ordinary course of its business, would cause or permit any Prohibited
Activity or Condition.

(d) If an O&M Program has been established with respect to Hazardous Materials, Borrower shall
comply in a timely manner with, and cause all employees, agents, and contractors of Borrower and
any other persons present on the Mortgaged Property to comply with the O&M Program. All costs of
performance of Borrower’s obligations under any O&M Program shall be paid by Borrower, and Lender’s
out-of-pocket costs incurred in connection with the monitoring and review of the O&M Program and
Borrower’s performance shall be paid by Borrower upon demand by Lender. Any such out-of-pocket
costs of Lender which Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.

(e) Borrower represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing:

	 	(1)	 	Borrower has not at any time engaged in, caused or permitted
any Prohibited Activities or Conditions;

	 	(2)	 	to the best of Borrower’s knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist or have existed;

	 	(3)	 	except to the extent previously disclosed by Borrower to Lender
in writing, the Mortgaged Property does not now contain any underground storage
tanks, and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground storage tanks
in the past. If there is an underground storage tank located on the Property
which has been previously disclosed by Borrower to Lender in writing, that tank
complies with all requirements of Hazardous Materials Laws;

	 	(4)	 	Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of Hazardous
Materials. Without limiting the generality of the foregoing, Borrower has
obtained all Environmental Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in effect and all such
Environmental Permits are in full force and effect;

	 	(5)	 	no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving of notice would
constitute, noncompliance with the terms of any Environmental Permit;

	 	(6)	 	there are no actions, suits, claims or proceedings pending or,
to the best of Borrower’s knowledge after reasonable and diligent inquiry,
threatened that involve the Mortgaged Property and allege, arise out of, or
relate to any Prohibited Activity or Condition; and

	 	(7)	 	Borrower has not received any complaint, order, notice of
violation or other communication from any Governmental Authority with regard to
air emissions, water discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the Mortgaged Property
or any other property of Borrower that is adjacent to the Mortgaged Property.

The representations and warranties in this Section 18 shall be continuing representations and
warranties that shall be deemed to be made by Borrower throughout the term of the loan evidenced by
the Note, until the Indebtedness has been paid in full.

(f) Borrower shall promptly notify Lender in writing upon the occurrence of any of the
following events:

	 	(1)	 	Borrower’s discovery of any Prohibited Activity or Condition;

	 	(2)	 	Borrower’s receipt of or knowledge of any complaint, order,
notice of violation or other communication from any Governmental Authority or
other person with regard to present or future alleged Prohibited Activities or
Conditions or any other environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is adjacent to the
Mortgaged Property; and

	 	(3)	 	any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.

Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any
obligation under this Instrument, the Note, or any other Loan Document.

(g) Borrower shall pay promptly the costs of any environmental inspections, tests or audits
(“Environmental Inspections”) required by Lender in connection with any foreclosure or deed in lieu
of foreclosure, or as a condition of Lender’s consent to any Transfer under Section 21, or required
by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions
may exist. Any such costs incurred by Lender (including the fees and out-of-pocket costs of
attorneys and technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of Lender and Lender shall have
no obligation to disclose or otherwise make available to Borrower or any other party such results
or any other information obtained by Lender in connection with its Environmental Inspections.
Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make
available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged
Property, the results of any Environmental Inspections made by Lender with respect to the Mortgaged
Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or
otherwise) of the results of any of Lender’s Environmental Inspections. Borrower acknowledges that
Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any of its
Environmental Inspections and that the release of such results to prospective bidders at a
foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount
which a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever
as a result of delivering the results of any of its Environmental Inspections to any third party,
and Borrower hereby releases and forever discharges Lender from any and all claims, damages, or
causes of action, arising out of, connected with or incidental to the results of, the delivery of
any of Lender’s Environmental Inspections.

(h) If any investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is necessary to comply with any Hazardous Materials Law or order of
any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the
use, operation or improvement of the Mortgaged Property under any Hazardous Materials Law, Borrower
shall, by the earlier of (1) the applicable deadline required by Hazardous Materials Law or (2) 30
days after notice from Lender demanding such action, begin performing the Remedial Work, and
thereafter diligently prosecute it to completion, and shall in any event complete the work by the
time required by applicable Hazardous Materials Law. If Borrower fails to begin on a timely basis
or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial
Work to be completed, in which case Borrower shall reimburse Lender on demand for the cost of doing
so. Any reimbursement due from Borrower to Lender shall become part of the Indebtedness as
provided in Section 12.

(i) Borrower shall cooperate with any inquiry by any Governmental Authority and shall comply
with any governmental or judicial order which arises from any alleged Prohibited Activity or
Condition.

(j) Borrower shall indemnify, hold harmless and defend (i) Lender, (ii) any prior owner or
holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v) the officers,
directors, shareholders, partners, employees and trustees of any of the foregoing, and (vi) the
heirs, legal representatives, successors and assigns of each of the foregoing (collectively, the
"Indemnitees”) from and against all proceedings, claims, damages, penalties and costs (whether
initiated or sought by Governmental Authorities or private parties), including fees and
out-of-pocket expenses of attorneys and expert witnesses, investigatory fees, and remediation
costs, whether incurred in connection with any judicial or administrative process or otherwise,
arising directly or indirectly from any of the following:

	 	(1)	 	any breach of any representation or warranty of Borrower in
this Section 18;

	 	(2)	 	any failure by Borrower to perform any of its obligations under
this Section 18;

	 	(3)	 	the existence or alleged existence of any Prohibited Activity
or Condition;

	 	(4)	 	the presence or alleged presence of Hazardous Materials on or
under the Mortgaged Property or any property of Borrower that is adjacent to
the Mortgaged Property; and

	 	(5)	 	the actual or alleged violation of any Hazardous Materials Law.

(k) Counsel selected by Borrower to defend Indemnitees shall be subject to the approval of
those Indemnitees. However, any Indemnitee may elect to defend any claim or legal or
administrative proceeding at the Borrower’s expense.

(l) Borrower shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”), settle or compromise the
Claim if the settlement (1) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender; or (2) may materially and
adversely affect Lender, as determined by Lender in its discretion.

(m) Lender agrees that the indemnity under this Section 18 shall be limited to the assets of
Borrower and Lender shall not seek to recover any deficiency from any natural persons who are
general partners of Borrower.

(n) Borrower shall, at its own cost and expense, do all of the following:

	 	(1)	 	pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or administrative proceeding
incident to any matters against which Indemnitees are entitled to be
indemnified under this Section 18;

	 	(2)	 	reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are entitled to be
indemnified under this Section 18; and

	 	(3)	 	reimburse Indemnitees for any and all expenses, including fees
and out-of-pocket expenses of attorneys and expert witnesses, paid or incurred
in connection with the enforcement by Indemnitees of their rights under this
Section 18, or in monitoring and participating in any legal or administrative
proceeding.

(o) In any circumstances in which the indemnity under this Section 18 applies, Lender may
employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal
or administrative proceeding and Lender, with the prior written consent of Borrower (which shall
not be unreasonably withheld, delayed or conditioned), may settle or compromise any action or legal
or administrative proceeding. Borrower shall reimburse Lender upon demand for all costs and
expenses incurred by Lender, including all costs of settlements entered into in good faith, and the
fees and out-of-pocket expenses of such attorneys and consultants.

(p) The provisions of this Section 18 shall be in addition to any and all other obligations
and liabilities that Borrower may have under applicable law or under other Loan Documents, and
each Indemnitee shall be entitled to indemnification under this Section 18 without regard to
whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any
other security, pursued any rights against any guarantor, or pursued any other rights available
under the Loan Documents or applicable law. If Borrower consists of more than one person or entity,
the obligation of those persons or entities to indemnify the Indemnitees under this Section 18
shall be joint and several. The obligation of Borrower to indemnify the Indemnitees under this
Section 18 shall survive any repayment or discharge of the Indebtedness, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release
of record of the lien of this Instrument.

19. PROPERTY AND LIABILITY INSURANCE.

(a) Borrower shall keep the Improvements insured at all times against such hazards as Lender
may from time to time require, which insurance shall include but not be limited to coverage against
loss by fire and allied perils, general boiler and machinery coverage, and business income
coverage. Lender’s insurance requirements may change from time to time throughout the term of the
Indebtedness. If Lender so requires, such insurance shall also include sinkhole insurance, mine
subsidence insurance, earthquake insurance, and, if the Mortgaged Property does not conform to
applicable zoning or land use laws, building ordinance or law coverage. If any of the Improvements
is located in an area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is available in that
area, Borrower shall insure such Improvements against loss by flood.

(b) All premiums on insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Lender has designated in writing another method of payment.
All such policies shall also be in a form approved by Lender. All policies of property damage
insurance shall include a non-contributing, non-reporting mortgage clause in favor of, and in a
form approved by, Lender. Lender shall have the right to hold the original policies or duplicate
original policies of all insurance required by Section 19(a). Borrower shall promptly deliver to
Lender a copy of all renewal and other notices received by Borrower with respect to the policies
and all receipts for paid premiums. At least 30 days prior to the expiration date of a policy,
Borrower shall deliver to Lender the original (or a duplicate original) of a renewal policy in
form satisfactory to Lender.

(c) Borrower shall maintain at all times commercial general liability insurance, workers’
compensation insurance and such other liability, errors and omissions and fidelity insurance
coverages as Lender may from time to time require.

(d) All insurance policies and renewals of insurance policies required by this Section 19
shall be in such amounts and for such periods as Lender may from time to time require, and shall be
issued by insurance companies satisfactory to Lender.

(e) Borrower shall comply with all insurance requirements and shall not permit any condition
to exist on the Mortgaged Property that would invalidate any part of any insurance coverage that
this Instrument requires Borrower to maintain.

(f) In the event of loss, Borrower shall give immediate written notice to the insurance
carrier and to Lender. Borrower hereby authorizes and appoints Lender as attorney-in-fact for
Borrower to make proof of loss, to adjust and compromise any claims under policies of property
damage insurance, to appear in and prosecute any action arising from such property damage insurance
policies, to collect and receive the proceeds of property damage insurance, and to deduct from such
proceeds Lender’s expenses incurred in the collection of such proceeds. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing contained in this
Section 19 shall require Lender to incur any expense or take any action. Lender may, at Lender’s
option, (1) hold the balance of such proceeds to be used to reimburse Borrower for the cost of
restoring and repairing the Mortgaged Property to the equivalent of its original condition or to a
condition approved by Lender (the “Restoration”), or (2) apply the balance of such proceeds to the
payment of the Indebtedness, whether or not then due. To the extent Lender determines to apply
insurance proceeds to Restoration, Lender shall do so in accordance with Lender’s then-current
policies relating to the restoration of casualty damage on similar multifamily properties.

(g) Lender shall not exercise its option to apply insurance proceeds to the payment of the
Indebtedness if all of the following conditions are met: (1) no Event of Default (or any event
which, with the giving of notice or the passage of time, or both, would constitute an Event of
Default) has occurred and is continuing; (2) Lender determines, in its discretion, that there will
be sufficient funds to complete the Restoration; (3) Lender determines, in its discretion, that the
rental income from the Mortgaged Property after completion of the Restoration will be sufficient to
meet all operating costs and other expenses, Imposition Deposits, deposits to reserves and loan
repayment obligations relating to the Mortgaged Property; (4) Lender determines, in its discretion,
that the Restoration will be completed before the earlier of (A) one year before the maturity date
of the Note or (B) one year after the date of the loss or casualty; and (5) upon Lender’s request,
Borrower provides Lender evidence of the availability during and after the Restoration of the
insurance required to be maintained by Borrower pursuant to this Section 19.

(h) If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the
Mortgaged Property, Lender shall automatically succeed to all rights of Borrower in and to any
insurance policies and unearned insurance premiums and in and to the proceeds resulting from any
damage to the Mortgaged Property prior to such sale or acquisition.

20. CONDEMNATION.

(a) Borrower shall promptly notify Lender of any action or proceeding relating to any
condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged
Property, whether direct or indirect (a “Condemnation”). Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in
writing. Borrower authorizes and appoints Lender as attorney-in-fact for Borrower to commence,
appear in and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any
Condemnation and to settle or compromise any claim in connection with any Condemnation. This power
of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained
in this Section 20 shall require Lender to incur any expense or take any action. Borrower hereby
transfers and assigns to Lender all right, title and interest of Borrower in and to any award or
payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii)
any damage to the Mortgaged Property caused by governmental action that does not result in a
Condemnation.

(b) Lender may apply such awards or proceeds, after the deduction of Lender’s expenses
incurred in the collection of such amounts, at Lender’s option, to the restoration or repair of the
Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower.
Unless Lender otherwise agrees in writing, any application of any awards or proceeds to the
Indebtedness shall not extend or postpone the due date of any monthly installments referred to in
the Note, Section 7 of this Instrument or any Collateral Agreement, or change the amount of such
installments. Borrower agrees to execute such further evidence of assignment of any awards or
proceeds as Lender may require.

21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

(a) The occurrence of any of the following events shall constitute an Event of Default under
this Instrument:

	 	(1)	 	a Transfer of all or any part of the Mortgaged Property or any
interest in the Mortgaged Property;

	 	(2)	 	a Transfer of a Controlling Interest in Borrower;

	 	(3)	 	a Transfer of a Controlling Interest in any entity which owns,
directly or indirectly through one or more intermediate entities, a Controlling
Interest in Borrower;

	 	(4)	 	a Transfer of all or any part of Key Principal’s ownership
interests (other than limited partnership interests) in Borrower, or in any
other entity which owns, directly or indirectly through one or more
intermediate entities, an ownership interest in Borrower;

	 	(5)	 	if Key Principal is an entity, (A) a Transfer of a Controlling
Interest in Key Principal, or (B) a Transfer of a Controlling Interest in any
entity which owns, directly or indirectly through one or more intermediate
entities, a Controlling Interest in Key Principal;

	 	(6)	 	if Borrower or Key Principal is a trust, the termination or
revocation of such trust; and

	 	(7)	 	a conversion of Borrower from one type of legal entity into
another type of legal entity, whether or not there is a Transfer.

Lender shall not be required to demonstrate any actual impairment of its security or any
increased risk of default in order to exercise any of its remedies with respect to an Event of
Default under this Section 21.

(b) The occurrence of any of the following events shall not constitute an Event of Default
under this Instrument, notwithstanding any provision of Section 21(a) to the contrary:

	 	(1)	 	a Transfer to which Lender has consented;

	 	(2)	 	a Transfer that occurs by devise, descent, or by operation of
law upon the death of a natural person;

	 	(3)	 	the grant of a leasehold interest in an individual dwelling
unit for a term of two years or less not containing an option to purchase;

	 	(4)	 	a Transfer of obsolete or worn out Personalty or Fixtures that
are contemporaneously replaced by items of equal or better function and
quality, which are free of liens, encumbrances and security interests other
than those created by the Loan Documents or consented to by Lender;

	 	(5)	 	the grant of an easement, if before the grant Lender determines
that the easement will not materially affect the operation or value of the
Mortgaged Property or Lender’s interest in the Mortgaged Property, and Borrower
pays to Lender, upon demand, all costs and expenses incurred by Lender in
connection with reviewing Borrower’s request; and

	 	(6)	 	the creation of a tax lien or a mechanic’s, materialman’s or
judgment lien against the Mortgaged Property which is bonded off, released of
record or otherwise remedied to Lender’s satisfaction within 30 days of the
date of creation.

(c) Lender shall consent, without any adjustment to the rate at which the Indebtedness secured
by this Instrument bears interest or to any other economic terms of the Indebtedness, to a Transfer
that would otherwise violate this Section 21 if, prior to the Transfer, Borrower has satisfied each
of the following requirements:

	 	(1)	 	the submission to Lender of all information required by Lender
to make the determination required by this Section 21(c);

	 	(2)	 	the absence of any Event of Default;

	 	(3)	 	the transferee meets all of the eligibility, credit, management
and other standards (including any standards with respect to previous
relationships between Lender and the transferee and the organization of the
transferee) customarily applied by Lender at the time of the proposed Transfer
to the approval of borrowers in connection with the origination or purchase of
similar mortgages, deeds of trust or deeds to secure debt on multifamily
properties;

	 	(4)	 	the Mortgaged Property, at the time of the proposed Transfer,
meets all standards as to its physical condition that are customarily applied
by Lender at the time of the proposed Transfer to the approval of properties in
connection with the origination or purchase of similar mortgages on multifamily
properties;

	 	(5)	 	in the case of a Transfer of all or any part of the Mortgaged
Property, direct or indirect ownership interests in Borrower or Key Principal
(if an entity), if transferor or any other person has obligations under any
Loan Document, the execution by the transferee or one or more individuals or
entities acceptable to Lender of an assumption agreement (including, if
applicable, an Acknowledgement and Agreement of Key Principal to Personal
Liability for Exceptions to Non-Recourse Liability) that is acceptable to
Lender and that, among other things, requires the transferee to perform all
obligations of transferor or such person set forth in such Loan Document, and
may require that the transferee comply with any provisions of this Instrument
or any other Loan Document which previously may have been waived by Lender;

	 	(6)	 	if a guaranty has been executed and delivered in connection
with the Note, this Instrument or any of the other Loan Documents, the Borrower
causes one or more individuals or entities acceptable to Lender to execute and
deliver to Lender a guaranty in a form acceptable to Lender; and

	 	(7)	 	Lender’s receipt of all of the following:

	 	(A)	 	a non-refundable review fee in the amount of
$3,000 and a transfer fee equal to 1 percent of the outstanding
Indebtedness immediately prior to the Transfer.

	 	(B)	 	In addition, Borrower shall be required to
reimburse Lender for all of Lender’s out-of-pocket costs (including
reasonable attorneys’ fees) incurred in reviewing the Transfer request,
to the extent such expenses exceed $3,000.

(d) For purposes of this Section, the following terms shall have the meanings set forth below:

	 	(1)	 	“Initial Owners” means, with respect to Borrower or any other
entity, the persons or entities who on the date of the Note own in the
aggregate 100% of the ownership interests in Borrower or that entity.

	 	(2)	 	A Transfer of a “Controlling Interest” shall mean, with respect
to any entity, the following:

	 	(i)	 	if such entity is a general partnership or a
joint venture, a Transfer of any general partnership interest or joint
venture interest which would cause the Initial Owners to own less than
51% of all general partnership or joint venture interests in such
entity;

	 	(ii)	 	if such entity is a limited partnership, a
Transfer of any general partnership interest;

	 	(iii)	 	if such entity is a limited liability company
or a limited liability partnership, a Transfer of any membership or
other ownership interest which would cause the Initial Owners to own
less than 51% of all membership or other ownership interests in such
entity;

	 	(iv)	 	if such entity is a corporation (other than a
Publicly-Held Corporation) with only one class of voting stock, a
Transfer of any voting stock which would cause the Initial Owners to
own less than 51% of voting stock in such corporation;

	 	(v)	 	if such entity is a corporation (other than a
Publicly-Held Corporation) with more than one class of voting stock, a
Transfer of any voting stock which would cause the Initial Owners to
own less than a sufficient number of shares of voting stock having the
power to elect the majority of directors of such corporation; and

	 	(vi)	 	if such entity is a trust, the removal,
appointment or substitution of a trustee of such trust other than (A)
in the case of a land trust, or (B) if the trustee of such trust after
such removal, appointment or substitution is a trustee identified in
the trust agreement approved by Lender.

	 	(3)	 	“Publicly-Held Corporation” shall mean a corporation the
outstanding voting stock of which is registered under Section 12(b) or 12(g) of
the Securities and Exchange Act of 1934, as amended.

22. EVENTS OF DEFAULT. The occurrence of any one or more of the following shall constitute an
Event of Default under this Instrument:

(a) any failure by Borrower to pay or deposit when due any amount required by the Note, this
Instrument or any other Loan Document;

(b) any failure by Borrower to maintain the insurance coverage required by Section 19;

(c) any failure by Borrower to comply with the provisions of Section 33;

(d) fraud or material misrepresentation or material omission by Borrower, or any of its
officers, directors, trustees, general partners or managers, Key Principal or any guarantor in
connection with (A) the application for or creation of the Indebtedness, (B) any financial
statement, rent roll, or other report or information provided to Lender during the term of the
Indebtedness, or (C) any request for Lender’s consent to any proposed action, including a request
for disbursement of funds under any Collateral Agreement;

(e) any Event of Default under Section 21;

(f) the commencement of a forfeiture action or proceeding, whether civil or criminal, which,
in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or
otherwise materially impair the lien created by this Instrument or Lender’s interest in the
Mortgaged Property;

(g) any failure by Borrower to perform any of its obligations under this Instrument (other
than those specified in Sections 22(a) through (f)), as and when required, which continues for a
period of 30 days after notice of such failure by Lender to Borrower, but no such notice or grace
period shall apply in the case of any such failure which could, in Lender’s judgment, absent
immediate exercise by Lender of a right or remedy under this Instrument, result in harm to Lender,
impairment of the Note or this Instrument or any other security given under any other Loan
Document;

(h) any failure by Borrower to perform any of its obligations as and when required under any
Loan Document other than this Instrument which continues beyond the applicable cure period, if any,
specified in that Loan Document; and

(i) any exercise by the holder of any other debt instrument secured by a mortgage, deed of
trust or deed to secure debt on the Mortgaged Property of a right to declare all amounts due under
that debt instrument immediately due and payable.

23. REMEDIES CUMULATIVE. Each right and remedy provided in this Instrument is distinct from
all other rights or remedies under this Instrument or any other Loan Document or afforded by
applicable law, and each shall be cumulative and may be exercised concurrently, independently, or
successively, in any order.

24. FORBEARANCE.

(a) Lender may (but shall not be obligated to) agree with Borrower, from time to time, and
without giving notice to, or obtaining the consent of, or having any effect upon the obligations
of, any guarantor or other third party obligor, to take any of the following actions: extend the
time for payment of all or any part of the Indebtedness; reduce the payments due under this
Instrument, the Note, or any other Loan Document; release anyone liable for the payment of any
amounts under this Instrument, the Note, or any other Loan Document; accept a renewal of the Note;
modify the terms and time of payment of the Indebtedness; join in any extension or subordination
agreement; release any Mortgaged Property; take or release other or additional security; modify the
rate of interest or period of amortization of the Note or change the amount of the monthly
installments payable under the Note; and otherwise modify this Instrument, the Note, or any other
Loan Document.

(b) Any forbearance by Lender in exercising any right or remedy under the Note, this
Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any other right or remedy. The acceptance by Lender of
payment of all or any part of the Indebtedness after the due date of such payment, or in an amount
which is less than the required payment, shall not be a waiver of Lender’s right to require prompt
payment when due of all other payments on account of the Indebtedness or to exercise any remedies
for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness
shall not constitute an election by Lender of remedies so as to preclude the exercise of any other
right available to Lender. Lender’s receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.

25. [INTENTIONALLY DELETED]. See Section 50.

26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to assert any statute
of limitations as a bar to the enforcement of the lien of this Instrument or to any action brought
to enforce any Loan Document.

27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other security interests in
the Mortgaged Property held by Lender or by any other party, Lender shall have the right to
determine the order in which any or all of the Mortgaged Property shall be subjected to the
remedies provided in this Instrument, the Note, any other Loan Document or applicable law. Lender
shall have the right to determine the order in which any or all portions of the Indebtedness are
satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party
who now or in the future acquires a security interest in the Mortgaged Property and who has actual
or constructive notice of this Instrument waives any and all right to require the marshalling of
assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation
or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the
exercise of any of the remedies permitted by applicable law or provided in this Instrument.

28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and deliver, at its sole cost
and expense, all further acts, deeds, conveyances, assignments, estoppel certificates, financing
statements, transfers and assurances as Lender may require from time to time in order to better
assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to
Lender under this Instrument and the Loan Documents.

29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender, Borrower shall deliver
to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any
person designated by Lender, as of the date of such statement, (i) that the Loan Documents are
unmodified and in full force and effect (or, if there have been modifications, that the Loan
Documents are in full force and effect as modified and setting forth such modifications); (ii) the
unpaid principal balance of the Note; (iii) the date to which interest under the Note has been
paid; (iv) that Borrower is not in default in paying the Indebtedness or in performing or observing
any of the covenants or agreements contained in this Instrument or any of the other Loan Documents
(or, if the Borrower is in default, describing such default in reasonable detail); (v) whether or
not there are then existing any setoffs or defenses known to Borrower against the enforcement of
any right or remedy of Lender under the Loan Documents; and (vi) any additional facts requested by
Lender.

30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

(a) This Instrument, and any Loan Document which does not itself expressly identify the law
that is to apply to it, shall be governed by the laws of the jurisdiction in which the Land is
located (the “Property Jurisdiction”).

(b) Borrower agrees that any controversy arising under or in relation to the Note, this
Instrument, or any other Loan Document shall be litigated exclusively in the Property Jurisdiction.
The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall
have exclusive jurisdiction over all controversies which shall arise under or in relation to the
Note, any security for the Indebtedness, or any other Loan Document. Borrower irrevocably consents
to service, jurisdiction, and venue of such courts for any such litigation and waives any other
venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

31. NOTICE.

(a) All notices, demands and other communications (“notice”) under or concerning this
Instrument shall be in writing. Each notice shall be addressed to the intended recipient at its
address set forth in this Instrument, and shall be deemed given on the earliest to occur of (1) the
date when the notice is received by the addressee; (2) the first Business Day after the notice is
delivered to a recognized overnight courier service, with arrangements made for payment of charges
for next Business Day delivery; or (3) the third Business Day after the notice is deposited in the
United States mail with postage prepaid, certified mail, return receipt requested. As used in this
Section 31, the term “Business Day” means any day other than a Saturday, a Sunday or any other day
on which Lender is not open for business.

(b) Any party to this Instrument may change the address to which notices intended for it are
to be directed by means of notice given to the other party in accordance with this Section 31.
Each party agrees that it will not refuse or reject delivery of any notice given in accordance with
this Section 31, that it will acknowledge, in writing, the receipt of any notice upon request by
the other party and that any notice rejected or refused by it shall be deemed for purposes of this
Section 31 to have been received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the courier service.

(c) Any notice under the Note and any other Loan Document which does not specify how notices
are to be given shall be given in accordance with this Section 31.

32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial interest in the Note (together
with this Instrument and the other Loan Documents) may be sold one or more times without prior
notice to Borrower. A sale may result in a change of the Loan Servicer. There also may be one or
more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the
Loan Servicer, Borrower will be given notice of the change.

33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full, Borrower (a) shall not
acquire any real or personal property other than the Mortgaged Property and personal property
related to the operation and maintenance of the Mortgaged Property; (b) shall not operate any
business other than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify.

34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the rights granted by this
Instrument shall inure to, the respective successors and assigns of Lender and Borrower. However,
a Transfer not permitted by Section 21 shall be an Event of Default.

35. JOINT AND SEVERAL LIABILITY. If more than one person or entity signs this Instrument as
Borrower, the obligations of such persons and entities shall be joint and several.

36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

(a) The relationship between Lender and Borrower shall be solely that of creditor and debtor,
respectively, and nothing contained in this Instrument shall create any other relationship between
Lender and Borrower.

(b) No creditor of any party to this Instrument and no other person shall be a third party
beneficiary of this Instrument or any other Loan Document. Without limiting the generality of the
preceding sentence, (1) any arrangement (a “Servicing Arrangement”) between the Lender and any Loan
Servicer for loss sharing or interim advancement of funds shall constitute a contractual obligation
of such Loan Servicer that is independent of the obligation of Borrower for the payment of the
Indebtedness, (2) Borrower shall not be a third party beneficiary of any Servicing Arrangement, and
(3) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.

37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any provision of this
Instrument shall not affect the validity or enforceability of any other provision, and all other
provisions shall remain in full force and effect. This Instrument contains the entire agreement
among the parties as to the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the party against whom
enforcement is sought.

38. CONSTRUCTION. The captions and headings of the sections of this Instrument are for
convenience only and shall be disregarded in construing this Instrument. Any reference in this
Instrument to an “Exhibit” or a “Section” shall, unless otherwise explicitly provided, be construed
as referring, respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are incorporated by
reference into this Instrument. Any reference in this Instrument to a statute or regulation shall
be construed as referring to that statute or regulation as amended from time to time. Use of the
singular in this Agreement includes the plural and use of the plural includes the singular. As
used in this Instrument, the term “including” means “including, but not limited to.”

39. LOAN SERVICING. All actions regarding the servicing of the loan evidenced by the Note,
including the collection of payments, the giving and receipt of notice, inspections of the
Property, inspections of books and records, and the granting of consents and approvals, may be
taken by the Loan Servicer unless Borrower receives notice to the contrary. If Borrower receives
conflicting notices regarding the identity of the Loan Servicer or any other subject, any such
notice from Lender shall govern.

40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding Borrower or the
Mortgaged Property to third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or securitization of the Indebtedness, including
trustees, master servicers, special servicers, rating agencies, and organizations maintaining
databases on the underwriting and performance of multifamily mortgage loans. Borrower irrevocably
waives any and all rights it may have under applicable law to prohibit such disclosure, including
any right of privacy.

41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the application for the loan
submitted to Lender (the “Loan Application”) and in all financial statements, rent rolls, reports,
certificates and other documents submitted in connection with the Loan Application are complete and
accurate in all material respects. There has been no material adverse change in any fact or
circumstance that would make any such information incomplete or inaccurate.

42. SUBROGATION. If, and to the extent that, the proceeds of the loan evidenced by the Note
are used to pay, satisfy or discharge any obligation of Borrower for the payment of money that is
secured by a pre-existing mortgage, deed of trust or other lien encumbering the Mortgaged Property
(a “Prior Lien”), such loan proceeds shall be deemed to have been advanced by Lender at Borrower’s
request, and Lender shall automatically, and without further action on its part, be subrogated to
the rights, including lien priority, of the owner or holder of the obligation secured by the Prior
Lien, whether or not the Prior Lien is released.

43. ACCELERATION; REMEDIES. At any time during the existence of an Event of Default, Lender,
at Lender’s option, may declare the Indebtedness to be immediately due and payable without further
demand, and may invoke the power of sale and any other remedies permitted by Texas law or provided
in this Instrument or in any other Loan Document. Borrower acknowledges that the power of sale
granted in this Instrument may be exercised by Lender without prior judicial hearing. Lender shall
be entitled to collect all costs and expenses incurred in pursuing such remedies, including
attorneys’ fees, costs of documentary evidence, abstracts and title reports.

If Lender invokes the power of sale, Lender may, by and through the Trustee, or otherwise,
sell or offer for sale the Mortgaged Property in such portions, order and parcels as Lender may
determine, with or without having first taken possession of the Mortgaged Property, to the highest
bidder for cash at public auction. Such sale shall be made at the courthouse door of the county in
which all or any part of the Land to be sold is situated (whether the parts or parcel, if any,
situated in different counties are contiguous or not, and without the necessity of having any
Personalty present at such sale) on the first Tuesday of any month between the hours of 10:00 a.m.
and 4:00 p.m., after advertising the time, place and terms of sale and that portion of the
Mortgaged Property to be sold by posting or causing to be posted written or printed notice of sale
at least twenty-one (21) days before the date of the sale at the courthouse door of the county in
which the sale is to be made and at the courthouse door of any other county in which a portion of
the Land may be situated, and by filing such notice with the County Clerk(s) of the county(s) in
which all or a portion of the Land may be situated, which notice may be posted and filed by the
Trustee acting, or by any person acting for the Trustee, and Lender has, at least twenty-one (21)
days before the date of the sale, served written or printed notice of the proposed sale by
certified mail on each debtor obligated to pay the Indebtedness according to Lender’s records by
the deposit of such notice, enclosed in a postpaid wrapper, properly addressed to such debtor at
debtor’s most recent address as shown by Lender’s records, in a post office or official depository
under the care and custody of the United States Postal Service. The affidavit of any person having
knowledge of the facts to the effect that such service was completed shall be prima facie evidence
of the fact of service.

Trustee shall deliver to the purchaser at the sale, within a reasonable time after the sale, a
deed conveying the Mortgaged Property so sold in fee simple with covenants of general warranty.
Borrower covenants and agrees to defend generally the purchaser’s title to the Mortgaged Property
against all claims and demands. The recitals in Trustee’s deed shall be prima facie evidence of
the truth of the statements contained in those recitals. Trustee shall apply the proceeds of the
sale in the following order: (a) to all reasonable costs and expenses of the sale, including
reasonable Trustee’s fees and attorneys’ fees and costs of title evidence; (b) to the Indebtedness
in such order as Lender, in Lender’s discretion, directs; and (c) the excess, if any, to the person
or persons legally entitled to the excess.

If all or any part of the Mortgaged Property is sold pursuant to this Section 43, Borrower
will be divested of any and all interest and claim to the Mortgaged Property, including any
interest or claim to all insurance policies, utility deposits, bonds, loan commitments and other
intangible property included as a part of the Mortgaged Property. Additionally, after a sale of
all or any part of the Land, Improvements, Fixtures and Personalty, Borrower will be considered a
tenant at sufferance of the purchaser of the same, and the purchaser shall be entitled to immediate
possession of such property. If Borrower shall fail to vacate the Mortgaged Property immediately,
the purchaser may and shall have the right, without further notice to Borrower, to go into any
justice court in any precinct or county in which the Mortgaged Property is located and file an
action in forcible entry and detainer, which action shall lie against Borrower or its assigns or
legal representatives, as a tenant at sufferance. This remedy is cumulative of any and all
remedies the purchaser may have under this Instrument or otherwise.

In any action for a deficiency after a foreclosure under this Instrument, if any person
against whom recovery is sought requests the court in which the action is pending to determine the
fair market value of the Mortgaged Property, as of the date of the foreclosure sale, the following
shall be the basis of the court’s determination of fair market value:

	 	(a)	 	the Mortgaged Property shall be valued “as is” and in its condition as of the
date of foreclosure, and no assumption of increased value because of post-foreclosure
repairs, refurbishment, restorations or improvements shall be made;

	 	(b)	 	any adverse effect on the marketability of title because of the foreclosure or
because of any other title condition not existing as of the date of this Instrument
shall be considered;

	 	(c)	 	the valuation of the Mortgaged Property shall be based upon an assumption that
the foreclosure purchaser desires a prompt resale of the Mortgaged Property for cash
within a six month-period after foreclosure;

	 	(d)	 	although the Mortgaged Property may be disposed of more quickly by the
foreclosure purchaser, the gross valuation of the Mortgaged Property as of the date of
foreclosure shall be discounted for a hypothetical reasonable holding period (not to
exceed 6 months) at a monthly rate equal to the average monthly interest rate on the
Note for the twelve months before the date of foreclosure;

	 	(e)	 	the gross valuation of the Mortgaged Property as of the date of foreclosure
shall be further discounted and reduced by reasonable estimated costs of disposition,
including brokerage commissions, title policy premiums, environmental assessment and
clean-up costs, tax and assessment, prorations, costs to comply with legal requirements
and attorneys’ fees;

	 	(f)	 	expert opinion testimony shall be considered only from a licensed appraiser
certified by the State of Texas and, to the extent permitted under Texas law, a member
of the Appraisal Institute, having at least five years’ experience in appraising
property similar to the Mortgaged Property in the county where the Mortgaged Property
is located, and who has conducted and prepared a complete written appraisal of the
Mortgaged Property taking into considerations the factors set forth in this Instrument;
no expert opinion testimony shall be considered without such written appraisal;

	 	(g)	 	evidence of comparable sales shall be considered only if also included in the
expert opinion testimony and written appraisal referred to in the preceding paragraph;
and

	 	(h)	 	an affidavit executed by Lender to the effect that the foreclosure bid accepted
by Trustee was equal to or greater than the value of the Mortgaged Property determined
by Lender based upon the factors and methods set forth in subparagraphs (a) through (g)
above before the foreclosure shall constitute prima facie evidence that the foreclosure
bid was equal to or greater than the fair market value of the Mortgaged Property on the
foreclosure date.

Lender may, at Lender’s option, comply with these provisions in the manner permitted or
required by Title 5, Section 51.002 of the Texas Property Code (relating to the sale of real
estate) or by Chapter 9 of the Texas Business and Commerce Code (relating to the sale of collateral
after default by a debtor), as those titles and chapters now exist or may be amended or succeeded
in the future, or by any other present or future articles or enactments relating to same subject.
Unless expressly excluded, the Mortgaged Property shall include Rents collected before a
foreclosure sale, but attributable to the period following the foreclosure sale, and Borrower shall
pay such Rents to the purchaser at such sale. At any such sale:

	 	(a)	 	whether made under the power contained in this Instrument, Section 51.002, the
Texas Business and Commerce Code, any other legal requirement or by virtue of any
judicial proceedings or any other legal right, remedy or recourse, it shall not be
necessary for Trustee to have physically present, or to have constructive possession
of, the Mortgaged Property (Borrower shall deliver to Trustee any portion of the
Mortgaged Property not actually or constructively possessed by Trustee immediately upon
demand by Trustee) and the title to and right of possession of any such property shall
pass to the purchaser as completely as if the property had been actually present and
delivered to the purchaser at the sale;

	 	(b)	 	each instrument of conveyance executed by Trustee shall contain a general
warranty of title, binding upon Borrower;

	 	(c)	 	the recitals contained in any instrument of conveyance made by Trustee shall
conclusively establish the truth and accuracy of the matters recited in the Instrument,
including nonpayment of the Indebtedness and the advertisement and conduct of the sale
in the manner provided in this Instrument and otherwise by law and the appointment of
any successor Trustee;

	 	(d)	 	all prerequisites to the validity of the sale shall be conclusively presumed to
have been satisfied;

	 	(e)	 	the receipt of Trustee or of such other party or officer making the sale shall
be sufficient to discharge to the purchaser or purchasers for such purchaser(s)’
purchase money, and no such purchaser or purchasers, or such purchaser(s)’ assigns or
personal representatives, shall thereafter be obligated to see to the application of
such purchase money or be in any way answerable for any loss, misapplication or
nonapplication of such purchase money;

	 	(f)	 	to the fullest extent permitted by law, Borrower shall be completely and
irrevocably divested of all of Borrower’s right, title, interest, claim and demand
whatsoever, either at law or in equity, in and to the property sold, and such sale
shall be a perpetual bar to any claim to all or any part of the property sold, both at
law and in equity, against Borrower and against any person claiming by, through or
under Borrower; and

	 	(g)	 	to the extent and under such circumstances as are permitted by law, Lender may
be a purchaser at any such sale.

44. RELEASE. Upon payment of the Indebtedness, Lender shall release this Instrument.
Borrower shall pay Lender’s reasonable costs incurred in releasing this Instrument.

45. TRUSTEE.

	 	(a)	 	Trustee may resign by giving of notice of such resignation in writing to
Lender. If Trustee shall die, resign or become disqualified from acting under this
Instrument or shall fail or refuse to act in accordance with this Instrument when
requested by Lender or if for any reason and without cause Lender shall prefer to
appoint a substitute trustee to act instead of the original Trustee named in this
Instrument or any prior successor or substitute trustee, Lender shall have full power
to appoint a substitute trustee and, if preferred, several substitute trustees in
succession who shall succeed to all the estate, rights, powers and duties of the
original Trustee named in this Instrument. Such appointment may be executed by an
authorized officer, agent or attorney-in-fact of Lender (whether acting pursuant to a
power of attorney or otherwise), and such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of any
action by Lender.

	 	(b)	 	Any successor Trustee appointed pursuant to this Section shall, without any
further act, deed or conveyance, become vested with all the estates, properties,
rights, powers and trusts of the predecessor Trustee with like effect as if originally
named as Trustee in this Instrument; but, nevertheless, upon the written request of
Lender or such successor Trustee, the Trustee ceasing to act shall execute and deliver
an instrument transferring to such successor Trustee, all the estates, properties,
rights, powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and monies held by the Trustee ceasing to act
to the successor Trustee.

	 	(c)	 	Trustee may authorize one or more parties to act on Trustee’s behalf to perform
the ministerial functions required of Trustee under this Instrument, including the
transmittal and posting of any notices.

46. [INTENTIONALLY DELETED].

47. NO FIDUCIARY DUTY. Lender owes no fiduciary or other special duty to Borrower.

48. FIXTURE FILING. This Instrument is also a fixture filing under the Uniform Commercial
Code of Texas.

49. ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS. In no event shall the assignment of
Rents or Leases in Section 3 and Section 4 cause the Indebtedness to be reduced by an amount
greater than the Rents actually received by Lender and applied by Lender to the Indebtedness,
whether before, during or after (i) an Event of Default, or (ii) a suspension or revocation of the
license granted to Borrower in Section 3(c) with regard to the Rents. Borrower and Lender
specifically intend that the assignment of Rents and Leases in Section 3 and Section 4 is not
intended to result in a pro tanto reduction of the Indebtedness. The assignment of Rents and
Leases in Section 3 and Section 4 is not intended to constitute a payment of, or with respect to,
the Indebtedness and, therefore, Borrower and Lender specifically intend that the Indebtedness
shall not be reduced by the value of the Rents and Leases assigned. Such reduction shall occur
only if, and to the extent that, Lender actually receives Rents pursuant to Section 3 and applies
such Rents to the Indebtedness. Borrower agrees that the value of the license granted with regard
to the Rents equals the value of the absolute assignment of Rents to Lender. The assignment of
Rents contained in Section 3 shall terminate upon the release of this Instrument.

50. LOAN CHARGES. Borrower and Lender intend at all times to comply with the laws of the
State of Texas governing the maximum rate or amount of interest payable on or in connection with
the Indebtedness (or applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, reserve or receive a greater amount of interest than under Texas law).
If the applicable law is ever judicially interpreted so as to render usurious any amount payable
under the Note, this Instrument or any other Loan Document, or contracted for, charged, taken,
reserved or received with respect to the Indebtedness, or if acceleration of the maturity of the
Indebtedness, or if any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by any applicable law, then Borrower and Lender expressly intend that all
excess amounts collected by Lender shall be applied to reduce the unpaid principal balance of the
Indebtedness (or, if the Indebtedness has been or would thereby be paid in full, shall be refunded
to Borrower), and the provisions of the Note, this Instrument and the other Loan Documents
immediately shall be deemed reformed and the amounts thereafter collectible under the Loan
Documents reduced, without the necessity of the execution of any new documents, so as to comply
with any applicable law, but so as to permit the recovery of the fullest amount otherwise payable
under the Loan Documents. The right to accelerate the maturity of the Indebtedness does not
include the right to accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Lender does not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Indebtedness shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Indebtedness until payment in full so that the
rate or amount of interest on account of the Indebtedness does not exceed the applicable usury
ceiling. Notwithstanding any provision contained in the Note, this Instrument or any other Loan
Document that permits the compounding of interest, including any provision by which any accrued
interest is added to the principal amount of the Indebtedness, the total amount of interest that
Borrower is obligated to pay and Lender is entitled to receive with respect to the Indebtedness
shall not exceed the amount calculated on a simple (i.e., noncompounded) interest
basis at the maximum rate on principal amounts actually advanced to or for the account of Borrower,
including all current and prior advances and any advances made pursuant to the Instrument or any
other Loan Document (such as for the payment of Impositions and similar expenses or costs).

51. PROPERTY AND LIABILITY INSURANCE — DELIVERY OF POLICY TO LENDER. Notwithstanding the
provisions of Section 19(b), Borrower shall not be required to deliver the original (or a duplicate
original) of any renewal policy of insurance to Lender more than 15 days prior to the expiration
date of the policy then held by Lender.

52. ENTIRE AGREEMENT. THIS INSTRUMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

53. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:

	 	 	 	 	 	 	 
	 

	 	

	 

	 	

2

IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or has caused this
Instrument to be signed and delivered by its duly authorized representative.

BORROWER:

G&E Apartment REIT Arboleda, LLC,

a Delaware limited liability company

	 	 	 
	By:

Its:

	 	Grubb & Ellis Apartment REIT Holdings, LP,

a Virginia limited partnership

Manager
	By:

Its:

	 	Grubb & Ellis Apartment REIT, Inc.,

a Maryland corporation

General Partner

By: /s/ Gus G. Remppies

Name: Gus G. Remppies

Title: Executive Vice-President

ACKNOWLEDGMENT

THE COMMONWEALTH OF VIRGINIA

CITY/COUNTY OF HENRICO, to-wit:

I, MARGARETE L. SCOTT, a notary public of the City/County of HENRICO, Commonwealth of Virginia, do
hereby certify that GUS G. REMPPIES, whose name is signed to the writing above bearing date on the
     day of March, 2008, has acknowledged the same before me in my State aforesaid in his capacity
as the/a EXECUTIVE VICE PRESIDENT of Grubb & Ellis Apartment REIT, Inc., in its capacity as the
General Partner of Grubb & Ellis Apartment REIT Holdings, LP, a Virginia limited partnership, in
its capacity as the Manager of G&E Apartment REIT Arboleda, LLC, a Delaware limited liability
company, on behalf of said limited liability company.

Given under my hand this 27th day of March, 2008.

[Seal] Margarete L. Scott /s/ Margarete L. Scott

[Seal] Notary Public

[Seal] Reg #7103331

[Seal] My Commission Expires 5/31/2011

[Seal] Commonwealth of Virginia

3EX-10.8

SECOND AMENDMENT TO AND WAIVER OF LOAN AGREEMENT

THIS SECOND AMENDMENT TO AND WAIVER OF LOAN AGREEMENT (this “Amendment”), executed and
delivered as of March 31, 2008, is between GRUBB & ELLIS APARTMENT REIT, INC. (formerly known as
NNN Apartment REIT, Inc.), a Maryland corporation (the “Company”), and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association (the “Lender”).

RECITALS:

A. Pursuant to that certain Loan Agreement between the Company and the Lender dated as of
November 1, 2007, as amended by that certain First Amendment to and Waiver of Loan Agreement dated
as of December 21, 2007 (as so amended, the “Loan Agreement”), the Lender made available to
the Company a revolving line of credit in an outstanding aggregate principal amount not to exceed
$10,000,000.00, as evidenced by that certain Promissory Note dated November 1, 2007 made by the
Company and payable to the order of the Lender (the “Note”).

B. The Company has notified the Lender that it intends to acquire (the “Proposed
Acquisition”), through its subsidiary Grubb & Ellis Apartment REIT Holdings, L.P. (formerly
known as NNN Apartment REIT Holdings, L.P.), G&E Apartment REIT Arboleda, LLC, a Delaware limited
liability company (the “New Property Owner”), which New Property Owner will own a
multi-family property known as Arboleda Luxury Apartment Homes, located in Cedar Park, Texas. The
Company has requested an Advance under the Loan Agreement to finance, in part, the Proposed
Acquisition, which Advance shall require the temporary increase of the aggregate principal amount
available under the Loan Agreement. The Lender has agreed to make such Advance, to agree to such
temporary increase, and to continue to make available to the Company the credit facilities provided
for in the Loan Agreement, on the terms and conditions stated herein.

C. Capitalized terms not otherwise defined herein shall have such meaning as assigned to them
in the Loan Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the mutual promises herein contained and for other
valuable consideration, the parties hereto agree as follows:

Section 1. Amendments to Loan Agreement.

(a) Paragraphs 1(a) and 1(b) of the Loan Agreement are hereby deleted in their entireties and
the following paragraphs are hereby substituted in lieu thereof:

“1(a) Loan. Subject to the conditions set forth herein, so long as no
Event of Default has occurred and is continuing, Lender may elect, in Lender’s sole
and absolute discretion, to advance to the Company, from time to time from the date
hereof until the day immediately preceding the Maturity Date, an aggregate principal
amount up to the Aggregate Availability (collectively, the “Loan” and each, an
“Advance”). If the Lender, in its sole and absolute discretion, refuses to fund a
requested Advance, the Lender shall use its best efforts to provide notice thereof
to the Company. So long as no Event of Default has occurred and is continuing,
amounts repaid by the Company prior to the Maturity Date may, in Lender’s sole and
absolute discretion, be reborrowed by the Company, provided that (i) the
aggregate principal amount outstanding at any time shall not exceed the Aggregate
Availability, and (ii) the Arboleda Advance Overage, once repaid in accordance with
the terms hereof, may not be reborrowed. In the event that in connection with any
Advance made hereunder, the Company has not commenced repayment of such Advance
within three (3) months following the applicable Advance Date by a principal amount
of at least $500,000, such amount to consist of Equity Proceeds, such failure to
repay such Advance in such amount shall constitute an Event of Default hereunder.

1(b) Interest Rate. The Loan shall bear interest as follows: (i) the
outstanding principal amount of that portion of the Loan consisting of the Arboleda
Advance Overage shall bear interest at a fixed rate equal to fifteen percent (15%)
per annum, and (ii) the remaining outstanding principal amount of the Loan shall
bear interest at the Applicable LIBOR Rate, except as otherwise provided herein.”

(b) Paragraph 2(a) of the Loan Agreement is hereby amended by deleting the last sentence of
such Section in its entirety and substituting the following sentence in lieu thereof:

“It is hereby acknowledged and agreed that notwithstanding the foregoing,
(i) the proceeds of the Loan made available to the Company pursuant to the
Myrtles and Heights Advance shall finance those required acquisition costs
on the Properties acquired thereby which are in excess of the costs funded
through each Property Loan related thereto in the approximate principal
amount of fifty-six percent (56%) of each Property’s appraised value;
provided that the sum of such Property Loan proceeds and any
proceeds disbursed hereunder pursuant to the Myrtles and Heights Advance
shall not exceed seventy-four percent (74%) of each such Property’s
appraised value; and (ii) the above percentages shall not apply to the
proceeds of the Loan made available to the Company pursuant to the Arboleda
Advance or the Arboleda Property Loan.”

(c) Paragraph 2(k)(6) of the Loan Agreement is hereby deleted in its entirety and the
following paragraph is hereby substituted in lieu thereof:

"(6) Each prepayment or repayment of principal shall be applied as
follows: (i) to the outstanding amount of the Arboleda Advance Overage,
until the Arboleda Advance Overage has been repaid in full, any excess
principal being applied to the Advance then outstanding which was made on
the earliest date as among all remaining outstanding Advances; (ii) then, to
the Advance then outstanding which was made on the earliest date as among
all outstanding Advances, until such Advance is paid in full, any excess
principal being applied to the Advance then outstanding which was made on
the earliest date as among all remaining outstanding Advances; (iii) and
continuing on in like manner until all outstanding Advances have been paid
in full.”

(d) The following paragraph is hereby added as a new Paragraph 9(j) to the Loan Agreement:

“9(j) Acknowledgments and Agreements Regarding Arboleda Property
Loan and Pledge of Equity interests in G&E Apartment REIT Arboleda, LLC.
The parties hereto agree and acknowledge that: (i) the Arboleda Property
Loan is being made to G&E Apartment REIT Arboleda, LLC by PNC ARCS, (ii) PNC
ARCS intends to sell the Arboleda Property Loan to Fannie Mae, who will
become the lender thereunder, (iii) pursuant to the Pledge Agreement, the
Pledgor has pledged in favor of the Lender all right, title and interest in
the “Class B Interest” the Pledgor owns in G&E Apartment REIT Arboleda, LLC
(as the term “Class B Interest” is defined in the operating agreement of
such limited liability company), (iv) the “Class B Interest” so pledged
constitutes a forty-nine percent (49%) interest in G&E Apartment REIT
Arboleda, LLC, and (v) Fannie Mae, as the lender under the Arboleda Property
Loan, has not agreed to permit the pledge by the Pledgor of any interest in
G&E Apartment REIT Arboleda, LLC other than the pledge of the “Class B
Interest.”

(e) Paragraph 10 of the Loan Agreement is hereby amended by amending and restating the
following defined terms in their entirety:

"Aggregate Availability” shall mean, as of any date of determination,
(a) from the date of the making of the Arboleda Advance until the Arboleda Advance
Overage has been repaid in full, the sum of (i) $10,000,000.00 and (ii) the
outstanding principal amount of the Arboleda Advance Overage (provided, that the sum
of (i) and (ii) shall not exceed $16,250,000.00 at any time), and (b) after such
time as the Arboleda Advance Overage has been repaid in full, the lesser of (i)
$10,000,000.00 and (ii) the difference of (A) ninety percent (90%) of the aggregate
Appraised Value for all the Properties (other than the Arboleda Property) as of such
date, minus (B) the aggregate outstanding principal amount of the Property
Loans (other than the Arboleda Property Loan) as of such date.

"Facility Interest Expense” shall mean, for any period, that portion of
Interest Expense attributable solely to interest due and payable on the credit
facility evidenced by the Loan Documents; provided, that for the purpose of this
definition, the principal amount outstanding under this Agreement at any time shall
be deemed to be the sum of (i) $10,000,000.00 plus (ii) the outstanding principal
amount, if any, of the Arboleda Advance Overage at such time.

"LIBOR Rate Loan” shall mean the Loan, or any portion thereof, at such
time as it is bearing interest at the Applicable LIBOR Rate.

"LIBOR Spread” shall mean (i) solely with respect to (A) the Myrtles
and Heights Advance and (B) that portion of the Arboleda Advance which is not
bearing interest at the fixed rate provided for in Paragraph 1(b) above, five
percent (5.00%), and (b) otherwise, four and fifty one hundredths percent (4.50%).”

"Prime Rate Loan” shall mean the Loan, or any portion thereof, at such
time as it is bearing interest at the Applicable Prime Rate or at a fixed rate of
interest.

“Property Owners” shall mean the collective reference to: Apartment
REIT Walker Ranch, L.P., Apartment REIT Hidden Lakes, L.P., Apartment REIT Park at
North Gate, L.P., Apartment REIT Residences at Braemar, LLC, Apartment REIT Bay
Point Resort, LLC, Apartment REIT Towne Crossing, L.P., Apartment REIT Villas of El
Dorado, LLC, G&E Apartment REIT The Myrtles at Olde Towne, LLC, G&E Apartment REIT
The Heights at Olde Towne, LLC, G&E Apartment REIT Arboleda, LLC and to any other
Person which may become the fee owner of a Property on or after the date hereof.

(f) Paragraph 10 of the Loan Agreement is hereby amended by adding the following new
definitions in appropriate alphabetical order:

"Arboleda Advance” means that certain Advance in an aggregate principal
amount not to exceed $11,550,000.00 made to the Company on      , 2008 to
finance the acquisition of a multi-family property known as Arboleda Luxury
Apartment Homes, located in Cedar Park, Texas, which Property shall be owned by G&E
Apartment REIT Arboleda, LLC.

"Arboleda Advance Overage” means that portion of the outstanding
principal amount of the Loan which is in excess of $10,000,000.00; provided
that such excess amount shall not exceed $6,250,000.00 at any time.

"Arboleda Property” means that certain multi-family property known as
Arboleda Luxury Apartment Homes, located in Cedar Park, Texas, which Property shall
be owned by G&E Apartment REIT Arboleda, LLC.

"Arboleda Property Loan” means that certain first priority real
estate-secured loan made or to be made by a financial institution to G&E Apartment
REIT Arboleda, LLC , which loan is secured by a first priority lien on the Arboleda
Property.

Section 2. Waiver. Pursuant to Paragraph 9(b) of the Loan Agreement and solely with
respect to the Proposed Acquisition, the Lender hereby waives (a) the requirement set forth in
Paragraph 6(i)(i) of the Loan Agreement that Pledgor pledge of all of the Ownership Interests in
the New Property Owner in favor of Lender, and (b) the requirement set forth in Paragraph 6(i)(ii)
of the Loan Agreement that the provisions of the Property Loan Documents to which the New Property
Owner is a party specifically permit and consent to the pledge of one hundred percent (100%) of
the Ownership Interests in the New Property Owner in favor of Lender; provided, that not
less than forty-nine (49%) of the Ownership Interests in the New Property Owner shall be pledged
in favor of Lender pursuant to and in accordance with the terms of Paragraph 6(i) of the Loan
Agreement, and all other provisions of Paragraph 6(i) of the Loan Agreement shall apply. For
avoidance of doubt, this waiver shall apply solely with respect to the Proposed Acquisition and
shall not apply to the acquisition of any Property or of any Property Owner after the date of this
Amendment.

Section 3. Amendment to Schedules to Loan Agreement. Each of Schedule II and
Schedule 5(d) to the Loan Agreement are hereby amended and restated in their
entirety as set forth on Exhibit A to this Agreement.

Section 4. Conditions Precedent to Closing of Amendment. In addition to such other
requirements as may be set forth in the Loan Documents, the Lender’s obligation to close this
Amendment (the “Closing”), and to continue to make the Loan available, is subject to
satisfaction of the following conditions:

(a) Executed Documents. Delivery to the Lender of a duly executed counterpart
of (i) this Agreement from the Company and the Pledgor, (ii) the Note, as amended and
restated as of the date hereof, from the Company, and (ii) the Pledge Agreement, as amended
and restated as of the date hereof, from the Pledgor.

(b) Officer’s Certificates. Delivery to the Lender of:

(1) a certificate of the Secretary or Assistant Secretary of the Company
certifying (i) that the Articles of Incorporation and Bylaws or Certificate of
Limited Partnership and Limited Partnership Agreement, as applicable, of each Credit
Party previously delivered to the Lender remain accurate and complete and in full
force and effect, (ii) that the Resolutions of each Credit Party previously
delivered to the Lender remain in full force and effect and authorize the execution
and delivery of this Amendment, the amended and restated Note, and the amended and
restated Pledge Agreement, as applicable, and the consummation of the transactions
contemplated hereby and thereby and (iii) as to such other items and conditions as
the Lender may reasonably request, and otherwise in form and content reasonably
acceptable to the Lender; and

(2) a certificate in form and substance satisfactory to the Lender from a
Responsible Officer of the Company certifying that as of the date hereof and after
giving effect to the Advance requested in connection with the Proposed Acquisition,
each Credit Party is in compliance with the covenants set forth in Paragraphs 6 and
7 of the Loan Agreement.

(c) Good Standing Certificates. Delivery to the Lender of (i) a certificate of
the Secretary of State of the State of Maryland, certifying as of a recent date that the
Company is in good standing and (ii) a certificate of the State Corporation Commission of
the Commonwealth of Virginia, certifying as of a recent date that the Pledgor is in good
standing.

(d) Property Loan Documents and Organization Documents. Delivery to the Lender
of (i) the Property Loan Documents executed in connection with the acquisition of the
Property owned by the New Property Owner and (ii) the organizational documents of the New
Property Owner, in each case, which documents shall be on terms and conditions reasonably
satisfactory to the Lender.

(e) Opinion of Counsel. Delivery to the Lender of an opinion of counsel to the
Company and the Pledgor, in form and content reasonably satisfactory to the Lender.

(f) Payment of Fees, Costs and Expenses. Payment by the Company of (i) a fee
in connection with the increase in Aggregate Availability provided hereunder, such fee to be
in an amount equal to one-half of one percent (0.005%)of the Arboleda Advance Overage as of
the date of funding of the Arboleda Advance, which fee shall be fully earned as of the date
of Closing and shall be non-refundable, (ii) any and all other fees, if any, due the Lender
or otherwise due and payable under the terms of the Loan Documents and (iii) all costs,
expenses, and fees (including without limitation, the Lender’s attorneys’ fees and expenses)
associated with this Amendment or otherwise due and payable.

(g) Repayment of Outstanding Advances. The Company shall have repaid the
outstanding Advances under the Loan in an amount sufficient to cause the outstanding
principal amount of the Loan to be less than or equal to Four Million Seven Hundred Thousand
Dollars ($4,700,000.00) prior to the making of the Arboleda Advance.

(h) No Event of Default. No Event of Default shall exist under the Loan
Documents, nor would occur as a result of the execution and performance of this Amendment to
the Loan Agreement, as amended hereby.

(i) Representations and Warranties. The representations and warranties
contained in the Loan Documents shall be true and correct in all material respects as of the
date of Closing.

(j) Additional Documentation. Delivery to Lender of such other documentation or
information as may reasonably be required by the Lender and its counsel.

Section 5. Representations, Warranties and Covenants. The Company hereby acknowledges
and agrees that:

(a) Loan Balance. As of the Closing date, the outstanding aggregate principal
amount of the Loan, after making the payment required under Section 4(g) above, is
$4,700,000.00.

(b) Aggregate Availability. Following the funding of the requested Advance,
the aggregate principal amount outstanding under the Loan Documents shall not exceed the
Aggregate Availability.

(c) Reaffirmation of Representations, Warranties and Covenants. The Company
reaffirms and remakes as of the date hereof (taking into consideration the effects of the
transactions contemplated in this Amendment), each of the representations and warranties
contained in the Loan Agreement, as amended hereby, as being true and correct in all
respects. The Company agrees that until payment in full of all Obligations, the Company
shall comply with all covenants as set forth in the Loan Agreement, as amended hereby.

Section 6. Miscellaneous.

(a) Representations and Warranties Accurate; Compliance; No Material Adverse
Effect. Each of the representations and warranties of the Credit Parties contained in
the Loan Documents, as such Loan Documents may have been amended, modified, replaced,
restated, renewed or extended from time to time, including by this Amendment and by any
documents, instruments or agreements executed in connection with the Amendment, is true,
accurate and complete on and as of the date hereof with the same effect as though such
representations and warranties had been made on and as of the date hereof (except for
representations and warranties which relate to a specific date, in which case such
representations and warranties shall be true, accurate and complete as of such date). Each
Credit Party has performed all its obligations under the Loan Documents, as so amended,
modified, replaced, restated, renewed or extended, required to be performed by such Credit
Party at or prior to the date hereof. Each Credit Party is in compliance with all the terms
and provisions set forth in the Loan Documents, as so amended, modified, replaced, restated,
renewed or extended, on its part to be observed and performed. No proceedings are pending
or threatened which might materially adversely affect the ability of the any Credit Party to
perform (a) its obligations under the Loan Documents, as amended, modified, replaced,
restated, renewed or extended as set forth above, or (b) its contractual obligations with
any other person or entity.

(b) No Event of Default. The Company hereby represents and warrants that as of
the effective date hereof, there exists no Event of Default, and no Credit Party has any
claim or cause of action against the Lender arising out of or relating in any way to the
Loan Agreement (as amended hereby) or the other Loan Documents, and each Credit Party hereby
waives and releases any and all claims or causes of action which such Credit Party may have
as of the effective date hereof against the Lender arising out of or relating in any way to
the Loan Agreement (as amended hereby) or the other Loan Documents.

(c) Limited Effect. Except as expressly provided herein, the Loan Agreement
and each other Loan Document shall continue to be, and shall remain, in full force and
effect. This Amendment shall not be deemed (i) to be a waiver of, or consent to, or a
modification or amendment of, any other term or condition of the Loan Agreement or any other
Loan Document or (ii) to prejudice any right or rights which the Lender may now have or may
have in the future under or in connection with the Loan Agreement or the other Loan
Documents or any of the instruments or agreements referred to therein, as the same may be
amended or modified from time to time. References in the Loan Agreement to “this Agreement”
(and indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and in any
Loan Document to the “Loan Agreement” shall be deemed to be references to the Loan Agreement
as modified hereby.

(d) Counterparts. This Amendment may be executed in any number of counterparts
by the different parties hereto on separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of which together shall constitute one
and the same instrument. A complete set of counterparts shall be lodged with the Company
and the Lender.

(e) Governing Law. This Amendment and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the laws of the
State of North Carolina.

(k) Electronic Transmission. A facsimile, telecopy or other reproduction of
this Amendment may be executed by one or more parties hereto, and an executed copy of this
Amendment may be delivered by one or more parties hereto by facsimile or similar
instantaneous electronic transmission device pursuant to which the signature of or on behalf
of such party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Amendment as well as any facsimile, telecopy or
other reproduction hereof.

(l) WAIVER OF JURY TRIAL. THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER TO ENTER INTO THIS AMENDMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and year
first above written.

COMPANY:

	 	 	GRUBB & ELLIS APARTMENT REIT, INC. (formerly known as NNN Apartment REIT, Inc.), a Maryland
corporation

By: /s/ Gus G. Remppies

Name: Gus G. Remppies

Title: Chief Investment Officer

LENDER:

	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association

By: /s/ Bradford Chatigny

Name: Bradford Chatigny

Title: Vice President

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