Document:

EX-10.3

PREPARED BY AND AFTER RECORDING

RETURN TO:

J. Lindsay Stradley, Jr.

Epstein Becker & Green, P.C.

945 E. Paces Ferry Road., Suite 2700

Atlanta, GA 30326-1380

Loan Assumption and Modification Agreement

THIS LOAN ASSUMPTION AND MODIFICATION AGREEMENT (the “Agreement”), is made and entered
into effective as of the 29th day of June, 2007 (the “Effective Date”), by and between APARTMENT
REIT RESIDENCES AT BRAEMAR, LLC, a North Carolina limited liability company (“Purchaser”), whose
principal place of business is located at c/o Triple Net Properties, LLC, 1606 Santa Rosa Drive,
Suite 109, Richmond, Virginia 23229, and TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, an Iowa
corporation (“Lender”), whose address is c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood Road,
N.E., Cedar Rapids, Iowa 52499, and is joined in by BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio
limited partnership (“Seller”), having an office at 3103 Camden Drive, Troy, Michigan 48084 and by
PHILLIP I. LEVIN, BRADLEY J. SCHRAM AND NORMAN A. PAPPAS (collectively, the “Original Carveout
Obligor”), having an office at 3103 Camden Drive, Troy, Michigan 48084.

W I T N E S S E T H:

WHEREAS, effective as of May 25, 2005 (the “Original Loan Date”), the Lender funded a loan to
Seller in the principal amount of $10,000,000.00 (the “Loan”) as evidenced by that certain Secured
Promissory Note dated as of the Original Loan Date in the original principal amount of
$10,000,000.00 (the “Note”);

WHEREAS, the Note is secured by (a) that certain Deed of Trust, Security Agreement and Fixture
Filing executed by Seller for the benefit of Lender and recorded in Book 18849, Page 135,
Mecklenburg County, North Carolina, Registry (the “Deed of Trust”), and (b) that certain Absolute
Assignment of Leases and Rents recorded in Book 18849, Page 187, Mecklenburg County, North
Carolina, Registry (the “Lease Assignment”);

WHEREAS, the Deed of Trust and the Lease Assignment hereinafter are sometimes collectively
referred to as the “Original Security Instruments”;

WHEREAS, the Original Security Instruments encumber that certain real and personal property
that is more particularly described therein (collectively, the “Property”);

WHEREAS, Seller and Original Carveout Obligor also executed and delivered to Lender in
connection with the Loan that Environmental Indemnity Agreement dated as of the Original Loan Date
(the “Environmental Indemnity”);

WHEREAS, Original Carveout Obligor also executed and delivered to Lender in connection with
the Loan that certain Carveout Guarantee and Indemnity Agreement dated as of the Original Loan
Date (the “Carveout Indemnity”);

WHEREAS, the Note, the Original Security Instruments, the Environmental Indemnity, the
Carveout Indemnity and all other instruments or documents executed in connection with the Loan
hereinafter are sometimes collectively referred to in this Agreement as the “Original Loan
Documents”;

WHEREAS, by a certain deed dated as of the Effective Date and to be recorded in the
Mecklenburg County, North Carolina, Registry immediately prior to the recordation of this
Agreement, and by other instruments of transfer or conveyance of even date therewith, Seller has
transferred and conveyed all of the Property to Purchaser;

WHEREAS, Seller, Original Carveout Obligor and Purchaser have requested that Lender consent to
the above-described sale and conveyance of the Property to Purchaser, and Lender has agreed to
consent to such sale and conveyance provided that (i) Purchaser, Seller and Original Carevout
Obligor enter into this Agreement with Lender, whereby, inter alia, Purchaser assumes and agrees to
pay and perform all of the past, current and future obligations of Seller under the Original Loan
Documents, (ii) Purchaser and NNN Apartment REIT, Inc., a Maryland corporation (“New Carveout
Obligor”), execute and deliver to Lender that certain Supplemental Environmental Indemnity
Agreement dated as of the Effective Date (the “Supplemental Environmental Indemnity”), and
(iii) New Carveout Obligor executes and delivers to Lender that certain Supplemental Carveout
Guarantee and Indemnity Agreement dated as of the Effective Date (the “Supplemental Carveout
Indemnity”).

WHEREAS, Purchaser and Lender desire to modify the Original Loan Documents in the manner more
particularly hereinafter set forth; and

WHEREAS, the Original Loan Documents (as amended by this Agreement), this Agreement, the
Supplemental Environmental Indemnity, the Supplemental Carveout Indemnity and all other instruments
or documents executed and delivered by any one or more of Seller, Purchaser, Original Carveout
Obligor and/or the New Carveout Obligor to or with Lender hereinafter are collectively referred to
as the “Loan Documents”;

NOW, THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Purchaser, Seller,
Original Carveout Obligor, and Lender hereby covenant and agree as follows:

1. Recitals. The above recitals are true and correct and are incorporated herein by
reference. This Agreement is for the benefit of, and the recitals, covenants, representations, and
warranties in this Agreement may be relied upon by, each of the parties hereto and their respective
heirs, personal representatives, successors, and assigns.

2. Assumption of Original Loan Documents. Subject to the limitations on the personal
liability of “Borrower” under the limited exculpation provisions set forth in Section 13 of the
Note, Purchaser hereby assumes and agrees to promptly and faithfully pay and perform all of the
terms, covenants, agreements, representations, warranties, provisions, indemnifications,
liabilities, and obligations on the part of Seller and/or Original Carveout Obligor to be paid or
performed under the Note, the Deed of Trust, the Lease Assignment, or any one or more of the other
Original Loan Documents other than the Carveout Indemnity, whether to be paid or performed in the
past, currently, or in the future, all in accordance with the terms and conditions thereof, as
hereby amended, including, without limitation of the generality of the foregoing, all of the
Carveout Obligations (as defined in the Deed of Trust) that are exceptions to the nonrecourse
feature of the Loan and that are more particularly described in Section 14 of the Note and in
Section 21 of the Deed of Trust (the “Carveout Obligations”). Purchaser hereby agrees to be bound
by all of the Original Loan Documents as though Purchaser were and at all times had been the
Borrower, Grantor and the Original Carveout Obligor thereunder. The parties acknowledge and agree
that the unpaid principal balance of the Note as of July 1, 2007, is $9,721,916.77 and that
interest due on the Note has been paid through June 30, 2007. The parties to this Agreement
further acknowledge that as of July 1, 2007, escrow funds in the amount of $67,494.30 are now held
by Lender for the payment of taxes and insurance on the Property.

3. Consent to Purchase. Lender hereby consents to the acquisition of the Property by
Purchaser and the assumption by Purchaser of the Original Loan Documents in accordance with the
terms of this Agreement. Seller and Purchaser acknowledge that this Agreement is the one-time
assumption allowed by Lender under Subsection 14.1 of the Deed of Trust. Nothing contained herein,
however, shall in any manner be interpreted or construed as a consent by Lender to any further
sale, transfer, or conveyance of all or any portion of any interest in the Property or any portion
thereof.

4. Lender’s Rights. Seller, Purchaser, and Original Carveout Obligor acknowledge,
warrant and represent that Lender’s rights under the terms of this Agreement and any and all rights
of Lender pursuant to the other Loan Documents, or with respect to any collateral security for the
Loan, are cumulative, concurrent and exercisable by Lender as Lender may desire in its sole
discretion, from time to time, as set forth in such other Loan Documents. Any default by Seller,
Purchaser, or Original Carveout Obligor under this Agreement shall be deemed to be a “Default”
under, and as defined in, each of the other Loan Documents and any other document or instrument
creating any collateral security for the repayment of the Loan, and any “Default” under or with
respect to any of such other Loan Documents shall be deemed a default under this Agreement.

5. Amendments to Original Loan Documents. The Deed of Trust, the Lease Assignment,
and the Note are hereby respectively amended from and after the Effective Date hereof as follows:

(a) All references in the Deed of Trust, the Lease Assignment, and the Note to the “Seller” or
“Borrower” hereafter shall be deemed to refer to Purchaser.

(b) Subject to the provisions of Section 15 of this Agreement, all references in the Deed of
Trust, the Lease Assignment, and the Note to the “Environmental Indemnity Agreement” or the
“Unsecured Environmental Indemnity Agreement” hereafter shall be deemed to refer to the
Supplemental Environmental Indemnity.

(c) Subject to the provisions of Section 15 of this Agreement, all references in any of the
Loan Documents to the “Carveout Guarantee and Indemnity Agreement,” the “Carveout Guarantee and
Indemnity,” or “Guarantee and Indemnity Agreement” hereafter shall be deemed to refer to the
Supplemental Carveout Indemnity.

6. Amendment of Deed of Trust. The Deed of Trust is hereby further amended from and
after the Effective Date hereof as follows:

(a) All references in the Deed of Trust to the “Note,” the “Deed of Trust,” the “Absolute
Assignment of Leases and Rents,” or the other “Loan Documents” hereafter shall mean and refer to
the Note, the Deed of Trust, the Lease Assignment, or the other Loan Documents, as the case may be,
as amended by this Agreement.

(b) As used in the Deed of Trust, the term “Loan Documents” also shall be deemed to include,
without limitation, the Supplemental Environmental Indemnity and the Supplemental Carveout
Indemnity.

(c) The definition of “Carveout Obligors” in Section 3 of the Deed of Trust is hereby amended
to substitute “NNN Apartment REIT, Inc.” for “Phillip I. Levin, Joseph J. Recchie, Bradley J.
Schram and Norman A. Pappas”.

(d) The definition of “Qualified Property Manager” is added to Section 3 of the Deed of Trust
as follows:

“Qualified Property Manager” means either (A) a financially sound,
professional property management company, experienced in managing properties similar
in type, size and quality to the Real Property (“Similar Properties”), and which is
then currently managing no less than eight (8) Similar Properties in any of the
following states: Florida, Georgia, Alabama, Mississippi, Louisiana, Texas,
Arkansas, Tennessee, South Carolina, North Carolina, Kentucky and Maryland; (B)
another property management company approved in writing by the Lender; or (C) Triple
Net Properties Realty, Inc., a California corporation.

(e) The definitions of “Permitted Control Group Member,” “Prohibited Structural Change” and
“Recourse Release Conditions” in Section 3 of the Deed of Trust are hereby deleted, as are
Subsections 14.1, 14.2 and 14.4 and clause (b) of the first sentence in Section 21 of the Deed of
Trust. The following is inserted as Section 14:

14. DUE ON SALE EXCEPTIONS

The offering, sale or other transfer of capital stock or shares of
beneficial interests in or of the Carveout Obligors, or any distributions of
dividends to public shareholders of the Carveout Obligors shall constitute
Permitted Transfers for purposes of Section 13.

(f) Section 6.5 of the Deed of Trust is amended as follows:

	 	(i)	 	Paragraph (iii) is deleted and replaced with
the following:

“without Lender’s consent, merge into or consolidate with any Person,
or dissolve, terminate, liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure;”

	 	(ii)	 	Paragraph (viii) is amended by deleting the
reference to “financial statements”.

	 	(iii)	 	Paragraph (xiii) is deleted and replaced with
the following:

“fail to file its own tax returns (unless prohibited by Legal
Requirements from doing so, or an affiliate of Borrower files a
consolidated return);”

	 	(iv)	 	Paragraph (xvi) is deleted and replaced with
the following:

“fail to allocate shared expenses (including shared office space)
and, to the extent required for its operations, to use separate
stationery, invoices and checks;”

(g) Section 6.26 is added to Deed of Trust as follows:

MANAGEMENT OF THE REAL PROPERTY

The Real Property shall be managed at all times by a Qualified Property
Manager.

(h) Subsection 26.13 of the Deed of Trust is amended to provide that the notice address of the
Seller is as follows:

Apartment REIT Residences at Braemar, LLC

c/o Triple Net Properties, LLC

1606 Santa Rosa Drive, Suite 109

Richmond, Virginia 23229

Attn: Jorge Figueiredo

Fax Number: 804-285-1376

With a copy of any Notice of default or acceleration to:

McGuireWoods LLP

One James Center

901 E. Cary Street

Richmond, Virginia 23219

Attn: Nancy R. Little, Esq.

Fax Number: 804-698-2101

7. Amendment of Lease Assignment. The Lease Assignment is hereby amended from and
after the Effective Date hereof as follows:

(a) All references in the Lease Assignment to the “Note,” the “Deed of Trust,” the
“Assignment,” or the other “Loan Documents” hereafter shall mean and refer to the Note, the Deed of
Trust, the Assignment, or the other Loan Documents, as the case may be, as amended by this
Agreement.

(b) The definition of “Loan Documents” in Section 2 of the Lease Assignment is amended to
exclude from the documents to which that term refers both the Environmental Indemnity and the
Supplemental Environmental Indemnity.

(c) Section 17 of the Lease Assignment is amended to provide that the notice address of the
Borrower is as follows:

Apartment REIT Residences at Braemar, LLC

c/o Triple Net Properties, LLC

1606 Santa Rosa Drive, Suite 109

Richmond, Virginia 23229

Attn: Jorge Figueiredo

Fax Number: 804-285-1376

With a copy of any Notice of default or acceleration to:

McGuireWoods LLP

One James Center

901 E. Cary Street

Richmond, Virginia 23219

Attn: Nancy R. Little, Esq.

Fax Number: 804-698-2101

8. Amendment of Note. The Note is hereby amended from and after the Effective Date
hereof as follows:

(a) All references in the Note to the (a) “Note,” (b) the “Deed of Trust,” and (c) the
“Absolute Assignment of Leases and Rents”, or the “Assignment” hereafter shall mean the Note, the
Deed of Trust, and the Absolute Assignment of Leases and Rents, as the case may be, as amended by
this Agreement.

(b) Section 13 of the Note shall now read as follows:

“The Lender agrees that it shall not seek to enforce any monetary judgment with
respect to the indebtedness evidenced by this Note against the Borrower or NNN
Apartment REIT, Inc., except through recourse to the Property, unless the obligation
from which the judgment arises is one of the “Carveout Obligations” defined in
Section 14.

9. Waiver and Release. Seller, Purchaser, and Original Carveout Obligor, for
themselves and their respective members, managers and managing directors, and the respective heirs,
personal representatives, successors and assigns of all of them, acknowledge and agree that none of
them has any right of setoff or defense or any counterclaim with respect to any of the indebtedness
or other obligations evidenced or secured by any of the Loan Documents (or any other document or
instrument executed in connection therewith), and hereby release and discharge any counterclaim or
right of action that Seller, Purchaser, or the Original Carveout Obligor or any of their respective
partners, members, managers, managing directors, or the respective heirs, personal representatives,
successors or assigns of any of them, may have had, may now have, or may hereafter have against
Lender, its affiliates, successors, and/or assigns, arising from any cause or matter whatsoever
occurring or existing prior to and through the execution and delivery of this Agreement.

10. Lien. Seller, Purchaser, and Original Carveout Obligor, jointly and severally,
warrant and represent to, and agree with, Lender that the Original Security Instruments, as amended
by this Agreement, collectively constitute a valid first-priority lien and security title on the
Property, enforceable in accordance with their respective terms, except to the extent that the
enforceability or any of such instruments may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforceability of creditor’s
rights generally, or by equitable principles of general application (whether considered in an
action at law or in equity).

11. Representations and Warranties of Purchaser. Purchaser represents and warrants to
Lender that:

(a) The Note and the Original Security Instruments, as herein amended, are in full force and
effect and are enforceable in accordance with their respective terms.

(b) As of the Effective Date, Purchaser has no defense, counterclaim, or right of offset with
respect to any indebtedness to Lender.

(c) Purchaser is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of North Carolina, is authorized to transact business in the
State of North Carolina, and has full power and authority to enter into this Agreement and the
other Loan Documents to which it is a party. The execution and delivery of this Agreement and all
instruments and documents executed by Purchaser or any of its managing directors, managers,
members, or officers in connection therewith have been duly authorized and approved by all of the
members or managers of Purchaser, as required by its organizational documents and the
organizational documents of any entity through which the authority of any signatory to this
Agreement or any such instruments and documents derives his or her authority to execute them on
Purchaser’s behalf (collectively, “Purchaser’s Organizational Documents”).

(d) Neither the execution and delivery of this Agreement, nor the complete performance of the
provisions of this Agreement, nor the purchase, ownership or operation of the Property by
Purchaser, will result in the breach of, or constitute a default under, or, except as provided by
the Loan Documents, result in the creation of any lien, charge or encumbrance upon any property or
assets of Purchaser or under Purchaser’s Organizational Documents, or any court order,
administrative order, indenture, mortgage, security agreement, bank loan or credit agreement or
other instrument to which Purchaser is a party or by which Purchaser is bound.

(e) Purchaser possesses and has carefully examined copies of the Loan Documents.

(f) Purchaser owns good and marketable fee simple title to the Property, free and clear of all
liens and encumbrances whatsoever other than real estate taxes for the year 2007 and subsequent
years (which are not yet due and payable) and the other Permitted Encumbrances (as defined in the
Deed of Trust).

(g) The Deed of Trust, as amended by this Agreement, is and will remain a valid and
enforceable first lien and security title on the Property.

(h) All information and financial statements furnished to Lender by or on behalf of the
Purchaser and the New Carveout Obligor are true, correct, and complete in all material respects and
are not intentionally misleading. The financial statements of Purchaser heretofore furnished to
Lender present fairly the financial position, results of operations, and changes in financial
condition of the Purchaser and of the New Carveout Obligor at the respective dates or for the
respective periods to which they apply, and such statements and notes thereto have been prepared in
accordance with generally accepted accounting principles consistently applied throughout the
periods involved.

(i) There are no actions, suits, proceedings, or investigations pending or threatened against
or affecting Purchaser, at law or in equity, or before or by any governmental or administrative
agency or instrumentality which, if adversely determined, would have an adverse effect upon the
business or condition of the Purchaser or upon the Property.

(j) No judgment, decree, injunction, writ, or order of any court or governmental or
administrative agency or instrumentality has been issued against Purchaser which has or may have
any adverse effect upon the business or condition of Purchaser or upon the Property.

(k) No fact known to Purchaser exists which Purchaser has not disclosed to Lender in writing
which materially affects adversely nor, so far as Purchaser can now foresee, will materially
adversely affect the business prospects, profits or conditions (financial or otherwise) of
Purchaser, or Purchaser’s ability to perform Purchaser’s obligations under the transactions
contemplated by this Agreement or under the Loan Documents.

(l) Purchaser is not the subject of any pending or threatened bankruptcy or insolvency
proceeding.

(m) No consent or approval of any regulatory authority on the part of Purchaser is necessary
or required by law as a prerequisite to the execution and delivery of this Agreement.

(n) The only assets of Purchaser are its interests in the Property.

(o) Purchaser is indirectly controlled by the New Carveout Obligor, which indirectly owns
99.9% of the membership interests in Purchaser.

12. Covenants of Purchaser. Purchaser hereby covenants with Lender as follows:

(a) Purchaser shall not raise or otherwise exercise any right of setoff or defense or any
counterclaim with respect to any of the indebtedness or other obligations evidenced or secured by
any of the Loan Documents (or by any document or instrument executed in connection therewith) which
asserts that either any “Default” under (and as defined in) any of the Loan Documents or any event
that, with notice and/or the passage of time, would become a “Default” under any of the Loan
Documents has occurred or is in existence as of the Effective Date.

(b) Purchaser shall not raise or otherwise exercise any right of setoff or defense or any
counterclaim with respect to any of the indebtedness or other obligations evidenced or secured by
any of the Loan Documents (or by any document or instrument executed in connection therewith) which
challenges or otherwise questions the accuracy, as of the Effective Date, of any of the
representations and warranties in any one or more of the Original Loan Documents or in any other
agreement, document or instrument executed in connection therewith.

13. Representations and Warranties of Seller and Original Carveout Obligor. Seller
and Original Carveout Obligor, jointly and severally, represent and warrant to Lender that:

(a) To the best of Seller’s and Original Carveout Obligor’s knowledge, no “Default” under (and
as defined in) any of the Loan Documents has occurred or is in existence as of the Effective Date
hereof, nor has any event occurred that, with notice and/or the passage of time, would become a
“Default” under any of the Loan Documents.

(b) None of the representations and warranties made in any one or more of the Original Loan
Documents or any other agreement, document, and instrument executed in connection therewith is
untrue or incorrect in any material respect as of the time of delivery of this Agreement.

(c) The Original Loan Documents and all such other agreements, documents, and instruments are
in full force and effect and are enforceable in accordance with their respective terms, except to
the extent that the enforceability of any of such documents may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the
enforceability of creditor’s rights generally, or by equitable principles of general application
(whether considered in an action at law or in equity).

(d) Neither Seller nor the Original Carveout Obligor has any defense, counterclaim, or right
of offset with respect to any indebtedness to Lender.

(e) Seller is a limited partnership duly organized and validly existing under the laws of the
State of Ohio, with the requisite power and authority to enter into the transactions contemplated
by this Agreement.

(f) This Agreement and any other documents executed and delivered by Seller to Lender
concurrently herewith have been executed in accordance with the requirements of law and in
accordance with all requirements of its organizational documents and the organizational documents
of any entity through which the authority of any signatory to this Agreement or any other such
document derives his or her authority to execute them on Seller’s behalf (collectively, “Seller’s
Organizational Documents”), and are legal, valid and binding documents, enforceable against Seller
in accordance with their respective terms.

(g) The execution and delivery of this Agreement (i) have been duly authorized pursuant to the
terms of Seller’s Organizational Documents; (ii) will not violate Seller’s Organizational
Documents; and (iii) will not result in any breach of or constitute a default under any court
order, administrative order, indenture, mortgage, security agreement, bank loan or credit agreement
or other instrument to which Seller is a party or by which Seller is bound.

(h) All information provided by Seller to AEGON USA Realty Advisors, Inc. in connection with
the proposed sale of the Property from Seller to Purchaser and Purchaser’s proposed assumption of
the Loan is true, correct and complete in all material respects.

14. Indemnification. Purchaser hereby agrees to defend, indemnify, and hold Lender
harmless from and against any and all claims, demands, actions, or causes of action of any third
party against Lender in connection with or as a result of entering into this Agreement (including,
without limitation, all losses, damages, liabilities, costs, including reasonable attorneys’ fees,
and expenses whatsoever incurred or sustained by Lender in connection therewith), except to the
extent caused by the gross negligence or willful misconduct of Lender. Without limitation of the
generality of the foregoing, Purchaser agrees to defend, indemnify, and hold Lender harmless from
and against any and all recording, documentary stamp, intangible and other taxes, if any, imposed
upon Lender by virtue of the execution and delivery of this Agreement or any instrument or document
executed in connection therewith, including, without limitation, all penalties, interest, and
reasonable attorneys’ fees incurred by Lender in connection therewith. It is expressly understood
and agreed that the liability of Purchaser arising under this Section is not limited by any
limitation on the recourse of Lender for the Loan that may be provided in the Loan Documents and
that Lender shall have full recourse to all of the assets of Purchaser for the satisfaction of the
obligations arising under this Section. The provisions of this Section shall survive the repayment
of the Note and the indebtedness evidenced thereby, and the satisfaction of the Loan Documents, and
shall continue for so long as a claim may be asserted by any third party.

15. Release of Seller and Original Carveout Obligor. Upon the complete execution and
recordation of this Agreement, (a) Seller shall be deemed to have been released from (i) all
obligations under the Loan with respect to the payment of principal, interest and late fees under
the Loan arising after the Effective Date, and (ii) all obligations under the Loan Documents with
respect to any acts or omissions occurring after the Effective Date; and (b) Original Carveout
Obligor shall be deemed to have been released from all obligations under the Environmental
Indemnity and the Carveout Indemnity with respect to acts or omissions occurring after the
Effective Date. Nevertheless, Seller acknowledges and agrees that neither any of the transactions
described in this Agreement nor any provision of this Agreement shall be construed to release
Seller from any obligations under the Loan Documents which pertain to obligations, acts or
omissions arising or occurring (i) prior to the Effective Date or (ii) out of circumstances or
conditions existing as of the Effective Date, and Seller hereby acknowledges its continuing
liability for all such obligations. Furthermore, Original Carveout Obligor acknowledges and agrees
that neither any of the transactions described in this Agreement nor any provision of this
Agreement shall be construed to release Original Carveout Obligor from any obligations under the
Carveout Indemnity or the Environmental Indemnity which pertain to acts or omissions occurring or
arising prior to the Effective Date or arising out of circumstances or conditions existing as of
the Effective Date, and Original Carveout Obligor hereby acknowledges the continuing liability of
Original Carveout Obligor for all such obligations.

16. No Novation. All of the “Property” described in the Deed of Trust shall remain in
all respects subject to the liens, charges and encumbrances of the Deed of Trust, and no provision
contained in this Agreement, and no action taken pursuant to this Agreement, is intended to affect,
shall affect, or shall be construed as affecting the liens, charges or encumbrances of the Deed of
Trust, or the priority thereof over any other lien, charge or encumbrance, nor shall any provision
contained in this Agreement or any action taken pursuant to this Agreement affect or be construed
as affecting any other security or instrument held by Lender in connection with the Loan.
Accordingly, it is the intent of the parties that this instrument shall not constitute a novation,
and shall in no way adversely affect the priority of the lien or security title or effect of any of
the Original Security Instruments. In the event that this Agreement, or any part hereof, shall be
construed by a court of competent jurisdiction as operating to affect the priority of the lien or
security title of any of the Original Security Instruments over claims that would otherwise be
subordinate thereto, then to the extent that third parties acquiring an interest in the Property
between the time of execution and delivery of the Original Security Instruments and the execution
and delivery of this Agreement are prejudiced thereby, this Agreement or such portion hereof as
shall be so construed, shall be void and of no force and effect, and this Agreement shall
constitute, as to that portion, a subordinate lien on the collateral incorporating by reference the
terms of the Original Security Instruments, and which Original Security Instruments then shall be
enforced pursuant to the terms therein contained, independent of this Agreement; provided, however,
that notwithstanding the foregoing, the parties hereto agree as between themselves that they shall
be bound by all terms and conditions hereof until all indebtedness evidenced by any of the Loan
Documents has been satisfied in full.

17. Ratification. Except as herein amended or concurrently released, the Original
Loan Documents shall remain unaffected, unchanged, unmodified, and unimpaired, and the priority of
the lien and security interest of the Original Security Instruments on the Property shall not be
changed or in any way altered or affected hereby, and the Note and Original Security Instruments,
as herein amended, are hereby ratified and confirmed.

18. Subordination by Seller and Original Carveout Obligor. As inducement to Lender to
permit a transfer of the Property and the assumption of the Loan by Purchaser, Seller and Original
Carveout Obligor, jointly and severally, hereby subordinate any and all indebtedness of Purchaser
hereafter owed to Seller and/or Original Carveout Obligor to all indebtedness of Purchaser to
Lender, and covenant with Lender not to demand or accept any payment of principal or interest on
any such indebtedness or a return while any “Default” exists under the terms of any of the Loan
Documents.

19. Miscellaneous.

(a) Headings. Paragraph headings used herein are for convenience only and shall not
be construed as controlling the scope of any provision hereof.

(b) Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina.

(c) Time is of the Essence. Time is of the essence of this Agreement and of each
term, covenant, and condition hereof.

(d) Gender/Number. As used herein, the plural number shall include the singular and
vice versa, and the neuter gender shall include the masculine and feminine genders, and vice versa,
as the context demands.

(e) Attorneys’ Fees, Legal Assistants’ Fees and Costs. Purchaser agrees to pay to
Lender all reasonable costs and expenses incurred by Lender in connection with protecting,
defending, or enforcing Lender’s rights under this Agreement, including costs and reasonable
attorneys’ fees and legal assistants’ fees prior to trial, at trial, on appeal, and in any
bankruptcy, insolvency, or similar proceedings, and in collecting upon or enforcing any judgment.

(f) Security. All obligations on the part of Purchaser arising under this Agreement
shall be secured by the lien and security title of the Original Security Instruments, as herein
amended, and shall bear interest at the default rate under the Note from the date due until paid.

(g) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal representatives, successors,
and assigns.

(h) Notices. In order for any demand, consent, approval or other communication to be
effective under the terms of this Agreement, notice must be provided under the terms of this
Section. All notices must be in writing. Notices may be (a) delivered by hand, (b) transmitted by
facsimile (with a duplicate copy sent by first class mail, postage prepaid), (c) sent by certified
or registered mail, postage prepaid, return receipt requested, or (d) sent by reputable overnight
courier service, delivery charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Occidental Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E., MS #5224

Cedar Rapids, Iowa 52499-0001

Attn: Mortgage Loan Department

Reference: Loan # 89441

Fax Number: 319 298-4471

If to the Purchaser:

Apartment REIT Residences at Braemar, LLC

c/o Triple Net Properties, LLC

1606 Santa Rosa Drive, Suite 109

Richmond, Virginia 23229

Attn: Jorge Figueiredo

Fax Number: 804-285-1376

With a copy to:

McGuireWoods LLP

One James Center

901 E. Cary Street

Richmond, Virginia 23219

Attn: Nancy R. Little, Esq.

If to Seller:

Braemar Housing Limited Partnership

3103 Camden Drive

Troy, Michigan 48084

Attn: Phillip I. Levin

Fax Number: 248-822-2913

If to the Original Carveout Obligor:

c/o Phillip I. Levin

3103 Camden Drive

Troy, Michigan 48084

Fax Number: 248-822-2913

Notices delivered by hand or by overnight courier shall be deemed given when actually received or
when refused by their intended recipient. Telecopied Notices will be deemed delivered when a
legible copy has been received (provided receipt has been verified by telephone confirmation or one
of the other permitted means of giving Notices under this Subsection). Mailed Notices shall be
deemed received on the date received as evidenced by the returned receipt, or the date of the first
attempted delivery. Any party to this Agreement may change its address for notice by giving at
least fifteen (15) business days’ prior Notice of such change to the other parties.

(i) Entire Agreement; Amendment; Waiver. This Agreement embodies the entire
understanding and agreement among the parties relative to the matters contained herein, and
supersedes all prior negotiations, understandings or agreements in regard thereto, whether written
or oral. This Agreement may be amended, altered or revoked only by a written instrument executed
by Lender and any other party affected thereby. No provision of this Agreement may be waived by
Lender, except by an agreement in writing signed by Lender. A waiver of any term or provision
shall not be construed as a waiver of any other term or provision.

(j) Further Actions. Upon the reasonable request of any party hereto, from time to
time, any party shall execute and deliver such additional documents and instruments and take such
other actions as may be reasonably necessary to give effect to the intents and purposes of this
Agreement.

(k) No Third-Party Benefit. No third parties are intended to benefit by the
covenants, agreements, representations, warranties or any other terms or conditions of this
Agreement.

(l) Continued Effect. Except as expressly set forth in this Agreement, no provision
of this Agreement shall be deemed to modify or amend any of the Loan Documents, all of which shall
remain in full force and effect in accordance with their respective terms.

(m) Counterpart Execution. This instrument may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original, and such
counterparts together shall constitute one and the same instrument. Signature and acknowledgment
pages may be detached from the counterparts and attached to a single copy of this document to
physically form one document.

[Remainder of the Page Intentionally Blank]

1

PURCHASER:

APARTMENT REIT RESIDENCES AT BRAEMAR, LLC, a North
Carolina limited liability company

[SEAL]

	 	 	 	By: /s/
Shannon K S Johnson [SEAL]

	 
	 	 	Print Name: Shannon K.S. Johnson
	 	 	Title: Chief Financial Officer
	STATE OF
	COUNTY OF

I,      , a Notary Public of the County and State aforesaid, do hereby certify
that      personally came before me this day and after being duly sworn, says
that he/she is a of Apartment REIT Residences at Braemar, LLC, and that this instrument was signed
and sealed by him/her, on behalf of the aforementioned limited liability company by its authority
duly given, and further acknowledged this instrument to be the act and deed of the aforementioned
limited liability company.

WITNESS my hand and official stamp or seal, this      day of      , 2007.

Notary Public

My Commission Expires:

[NOTARIAL SEAL]

[see attached]

2

	 	 	 	 	 
	STATE OF CALIFORNIA
	 	 	)	 
	 
	 	 	)	 
	COUNTY OF ORANGE
	 	 	)	 
	 
	 	 	 	 

On June 29, 2007, before me, L.A. Forniss, Notary Public, personally appeared
Shannon K S Johnson, personally known to me whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized capacity, and the by
his signature on the instruction the person, or entity upon behalf of which person acted, executed
the instrument.

WITNESS my hand and official stamp or seal.

[Notarial Seal: L.A. Forniss

Commission # 1639895

Notary Public – California

Orange County

My Comm. Expires on Jan. 21, 2010]

Signature L.A. Forniss

My Commission Expires:

January 21, 2010

3

LENDER:

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, an
Iowa corporation

By: /s/ Stephen Noonan

Stephen Noonan

Vice President

STATE OF IOWA

COUNTY OF Linn

I,      Elaine E. Minor     , a Notary Public of the County and State aforesaid, do hereby
certify that Stephen Noonan personally came before me this day and after being duly sworn,
says that he/she is Vice President of Transamerica Occidental Life Insurance Company, an
Iowa corporation, and that this instrument was signed and sealed by him/her, on behalf of the
aforementioned corporation by its authority duly given, and further acknowledged this instrument to
be the act and deed of the aforementioned corporation.

WITNESS my hand and official stamp or seal, this 27 day of June, 2007.

/s/ Elaine E. Minor

	 	 	Notary Public

My Commission Expires:

2-12-08

[NOTARIAL SEAL]

[NOTARIAL SEAL IOWA ELAINE E. MINOR

COMMISSION NO. 220928

My Commission Expires

2-12-08]

4

SELLER:

BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio
partnership [SEAL]

	 	 	 	By:
Treyburn Housing, LLC, an Ohio limited liability
company, its sole General Partner

By: LPS Investments, L.L.C., a Michigan
limited liability company, its sole Managing
Member

	 	 	 
	By:

	 	/s/ Phillip I. Levin [SEAL]
	
 
	 	 
	
 
	 	Phillip I. Levin, Manager

STATE OF MICHIGAN

COUNTY OF OAKLAND

I, JULIE CORONADO, a Notary Public of the County and State aforesaid, do hereby certify
that Phillip I. Levin personally came before me this day and after being duly sworn, said that he
is the Manager of LPS Investments, L.L.C., a Michigan limited liability company, which is the sole
Managing Member of Treyburn Housing, LLC, an Ohio limited partnership, which is the sole General
Partner of Braemar Housing Limited Partnership, an Ohio limited partnership, and that this
instrument was signed and sealed by him, on behalf of the aforementioned limited liability
companies and limited partnership by their authority duly given, and further acknowledged this
instrument to be the act and deed of the aforementioned limited liability companies and limited
partnership.

	 	 	 
	WITNESS my hand and official stamp or seal, this 28th day of June, 2007.

	 

	/s/ Julie Coronado

	 	

	 

	 	

	Notary Public

Acting in: [JULIE CORONADO

NOTARY PUBLIC OAKLAND CO., MI

MY COMMISSION EXPIRES Nov 10, 2006

Acting In:

	 	

County, MI ]

	 	 	My Commission Expires:

[NOTARIAL SEAL]

5

ORIGINAL CARVEOUT OBLIGOR:

/s/ Phillip I. Levin [SEAL]

	 	 	Phillip I. Levin

STATE OF MICHIGAN

COUNTY OF OAKLAND

I, JULIE CORONADO, a Notary Public of the County and State aforesaid, do hereby certify
that Phillip I. Levin personally came before me this day and after being duly sworn, says that this
instrument was signed and sealed by him, and further acknowledged this instrument to be his free
act and deed.

WITNESS my hand and official stamp or seal, this 28th day of June , 2007.

/s/ Julie Coronado

	 	 	Notary Public

My Commission Expires:

[JULIE CORONADO

NOTARY PUBLIC OAKLAND CO., MI

MY COMMISSION EXPIRES Nov 10, 2006

Acting In: County, MI ]

[NOTARIAL SEAL]

6

/s/ Bradley J. Schram [SEAL]

	 	 	Bradley J. Schram

STATE OF MICHIGAN

COUNTY OF OAKLAND

I, Barbara Kraus, a Notary Public of the County and State aforesaid, do hereby certify that
Bradley J. Schram personally came before me this day and after being duly sworn, says that this
instrument was signed and sealed by him, and further acknowledged this instrument to be his free
act and deed.

WITNESS my hand and official stamp or seal, this 28th day of June, 2007.

/s/Barbara Kraus

	 	 	Notary Public

My Commission Expires:

[Barbara Kraus

Notary Public, Macomb co., MI

My Commission Expires: 08/14/2012

Acting in Oakland County, MI]

[NOTARIAL SEAL]

7

/s/ Norman A. Pappas [SEAL]

	 	 	Norman A. Pappas

STATE OF MICHIGAN

COUNTY OF OAKLAND

I, Jeanne L. Apple, a Notary Public of the County and State aforesaid, do hereby certify
that Norman A. Pappas personally came before me this day and after being duly sworn, says that this
instrument was signed and sealed by him, and further acknowledged this instrument to be his free
act and deed.

WITNESS my hand and official stamp or seal, this 27 day of June, 2007.

/s/ Jeanne L. Apple

	 	 	Notary Public

My Commission Expires:

[JEANNE L. APPLE

Notary Public, State of Michigan

County of Oakland

My Commission Expirex Mar. 17, 2013

Acting in the County of Oakland]

[NOTARIAL SEAL]

8

J. Lindsay Stradley, Jr., as Trustee under the Deed of Trust and Security Agreement
described in the within and foregoing Agreement, hereby joins in the execution of this Agreement
for the sole purpose of evidencing his consent to the amendments to such Deed of Trust and Security
Agreement effected by this Agreement.

/s/ J. Lindsay Stradley, Jr.

	J.	 	Lindsay Stradley, Jr., as Trustee aforesaid

I, Marjorie Jones, a Notary Public of the County and State aforesaid, do hereby certify
that J. Lindsay Stradley, Jr. personally came before me this day and after being duly sworn, says
that this instrument was signed and sealed by him, and further acknowledged this instrument to be
his free act and deed.

WITNESS my hand and official stamp or seal, this 27th day of June, 2007.

/s/ Marjorie Jones

	 	 	Notary Public

My Commission Expires: 1/15/2010

[NOTARIAL SEAL]

9EX-10.4

$10,000,000.00

May 25, 2005

Secured Promissory Note

FOR VALUE RECEIVED, the undersigned, BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio limited
partnership, whose address is 3103 Camden Drive, Troy, Michigan 48084 (the “Borrower”), promises to
pay Ten Million Dollars and No Cents ($10,000,000.00), together with interest according to the
terms of this secured promissory note (this “Note”), to the order of TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY, an Iowa corporation (together with any future holder, the “Lender”), whose
address is C/O AEGON USA Realty Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-5443. Capitalized terms used but not defined in this Note shall have the meanings assigned to
them in the Deed of Trust, as defined in Section 12 below.

1. CONTRACT INTEREST RATE

The principal balance of this Note shall bear interest at the rate of Five and Seventy-Two
One Hundredths percent (5.72%) per annum (the “Note Rate”). Interest shall he calculated in
arrears based on a 360-day year having twelve thirty-day months.

2. SCHEDULED PAYMENTS

2.1 PREPAYMENT OF INTEREST FOR THE MONTH OF FUNDING

Unless the funding of the loan evidenced by this Note (together with all additional
charges, advances and accruals, the “Loan”) occurs on the first day of a calendar
month, the Borrower shall prepay, on the date of the funding, interest due from the
date of the funding through and including the last day of the calendar month in
which the funding occurs.

2.2 MONTHLY PRINCIPAL AND INTEREST PAYMENTS

On the first day of July, 2005 and on the first day of each subsequent calendar
month through May, 2015, the Borrower shall pay an installment in the amount of
Fifty-Eight Thousand One Hundred Sixty-Six Dollars and Eighty-Five Cents
($58,166.85). Monthly installments of principal and interest shall be made when
due, regardless of the prior acceptance by the Lender of unscheduled payments.

2.3 FINAL PAYMENT

The Loan shall mature on the first day of June, 2015 (the “Maturity Date”), when
the Borrower shall pay its entire principal balance, together with all accrued
interest and any other amounts owed by the Borrower under this Note or under any of
the other documents entered into now or in the future in connection with the Loan
(the “Loan Documents”).

3. BALLOON PAYMENT ACKNOWLEDGMENT

The Borrower acknowledges that the scheduled monthly payments referred to in Section 2 will
not amortize fully the principal sum of this Note over its term, resulting in a “balloon”
payment at maturity. Any future agreement to extend this Note or refinance the indebtedness
it evidences may be made only by means of a writing executed by a duly authorized officer
of the Lender.

	4.	 	APPLICATION OF MONTHLY PRINCIPAL AND INTEREST PAYMENTS

When the Lender receives a monthly principal and interest payment, the Lender shall apply
it first to interest in arrears for the previous month and then to the amortization of the
principal amount of this Note, unless other amounts are then due under this Note or the
other Loan Documents. If other amounts are due when a regular monthly payment is received,
the Lender shall apply the payment first to accrued interest and then, at its discretion,
either to those other amounts or to principal.

5. DEFAULT INTEREST

If a Default exists (as defined in Section 9 below) the outstanding principal balance of
this Note shall, at the option of the Lender, bear interest at a rate (the “Default Rate”)
equal to the lesser of (i) eighteen percent (18%) per annum and (ii) the maximum rate
allowed by law. If interest has accrued at the Default Rate during any period, the
difference between such accrued interest and interest which would have accrued at the Note
Rate during such period shall be payable on demand. If a court of competent jurisdiction
determines that any interest charged has exceeded the maximum rate allowed by law, the
excess of the amount collected over the legal rate of interest will be applied to the
indebtedness as a principal prepayment without premium, retroactively, as of the date of
receipt, or returned to the Borrower if the Indebtedness bas been fully paid.

6. LATE CHARGE

Scheduled payments of principal and interest pursuant to Subsection 2.2 above are due on
the first day of each calendar month, and if not paid on or before that date, become past
due on the second day of each calendar month. If the Lender does not receive any scheduled
monthly principal and interest payment on or before the seventeenth (17th) day of the
calendar month in which it is due, the Lender will send the Borrower written notice that a
late charge equal to four percent (4%) of the late payment has accrued. Unless the Borrower
can show that the installment was paid in full and on time, the Borrower shall pay any such
late charge on or before the tenth day of the calendar month following the month during
which the late payment was scheduled to have been received.

7. PREPAYMENT

This Note may be prepaid upon not less than sixty (60) days’ prior written notice to the
Lender. At the time of any prepayment, the Borrower shall pay all accrued interest on the
principal balance of this Note and all other sums due to the Lender under the Loan
Documents. In addition, unless the prepayment is a “Permitted Par Prepayment” (as defined
in Section 8 below), the Borrower shall remit together with any prepayment a premium (the
“Prepayment Premium Amount”) equal to the greater of (A) one percent (1%) of the prepayment
and (B) the amount (the “Yield Protection Amount”) calculated in accordance with the next
succeeding paragraph of this Note.

The Yield Protection Amount shall be calculated as follows:

First, the Lender shall determine the annual percentage yield on U.S. Treasury securities
maturing at the end of the term of the Loan (the “Annual Treasury Instrument Yield”). The
Annual Treasury Instrument Yield shall be determined as of ten (10) Business Days before
the effective date of the prepayment. The Lender shall base its determination of the Annual
Treasury Inshument Yield on the yield on U.S. Treasury instruments, as published in The
Wall Sheet Journal (or, if The Wall Sheet Journal is not then being published
or if no such reports are then being published in The Wall Sheet Journal as
reported in another public source of information nationally recognized for accuracy in the
reporting of the trading of governmental securities). If no such instruments mature on the
exact maturity date of this Note, the Lender shall interpolate the Annual Treasury
Inshument Yield on a shaight-line basis using the yield on the instrument whose maturity
date most closely precedes that of this Note, and the yield on the instrument whose
maturity date most closely succeeds that of this Note.

Second, the Lender shall determine the monthly payment (the “Monthly Reinvestment
Payment”), based on a 360-day year and 30-day months, which would be payable on a
hypothetical interest-only promissory note having a principal balance equal to the prepaid
amount and bearing interest at the rate (the “Reinvestment Rate”) which, when compounded
monthly, would produce a yield equal to the Annual Treasury Instrument Yield.

Third, the Lender shall determine the hypothetical monthly interest-only payment (based on
a 360-day year and 30-day months) which would be payable on a promissory note having a
principal balance equal to the prepaid amount and bearing interest at this Note Rate (the
“Monthly Coupon Rate Payment”). Fourth, the Lender shall determine the present value of a
series of monthly payments, each equal in amount to the amount by which the Monthly Coupon
Rate Payment exceeds the Monthly Reinvestment Payment, received on the first day of each
calendar month from and including the first day of the first full calendar month
immediately following the effective date of prepayment to and including the Maturity Date,
using the Reinvestment Rate as the discount rate.

Voluntary partial prepayments shall be permitted only in minimum amounts of Five Hundred
Thousand Dollars ($500,000).

The Prepayment Premium Amount constitutes liquidated damages to compensate the Lender for
reinvestment costs, lost opportunity costs, and the loss by the Lender of its bargained-for
investment in the Loan. The Borrower agrees that such liquidated damages are not a penalty
but are a reasonable estimate in good faith of the actual damages sustained by the Lender
as a result of such prepayment, which actual damages are impossible to ascertain with
precision.

8. PERMITTED PAR PREPAYMENTS

The Lender shall not charge a prepayment premium on certain prepayments (the “Permitted Par
Prepayments”). Permitted Par Prepayments include:

	 	(a)	 	any prepayment in full of the Loan made no more than ninety
(90) days before the Maturity Date; and	 

	 	(b)	 	any prepayment made as the result of the Lender’s election
to apply insurance or condemnation proceeds to the principal balance of this
Note.	 

9. DEFAULT

A default on this Note (“Default”) shall exist if (a) the Lender fails to receive any
required installment of principal and interest on or before the tenth (10th) day of the
calendar month in which it is due, (b) the Borrower fails to pay the matured balance of
this Note on the Maturity Date or (c) a “Default” exists as defined in any other Loan
Document. If a Default exists and the Lender engages counsel to collect any amount due
under this Note or if the Lender is required to protect or enforce this Note in any
probate, bankruptcy or other proceeding, then any expenses incurred by the Lender in
respect of the engagement, including the reasonable fees and reimbursable expenses of
counsel and including such costs and fees which relate to issues that are particular to any
given proceeding, shall constitute indebtedness evidenced by this Note, shall he payable on
demand, and shall bear interest at the Default Rate. Such fees and expenses include those
incurred in connection with any action against the Borrower for a deficiency judgment after
a trustee’s sale of the Real Properly under the Deed of Trust (defined below), including
all of the Lender’s reasonable attorneys’ fees, property appraisal costs and witness fees.

The attorneys’ fees for which the Borrower shall be liable under this Section shall be
limited to the reasonable attorneys’ fees actually incurred by the Lender.

10. ACCELERATION

If a Default exists, the Lender may, at its option, declare the unpaid principal balance of
this Note to be immediately due and payable, together with all accrued interest on the
indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses)
and all other charges due and payable by the Borrower under this Note or any other Loan
Document. Nevertheless, if the subject Default has arisen from a failure by the Borrower to
make a regular monthly payment of principal and interest, the Lender shall not accelerate
the indebtedness unless the Lender shall have given the Borrower a cure period of at least
three (3) Business Days following Notice of its intent to do so. If the subject Default is
a “Curable Nonmonetary Default” as defined in the Deed of Trust, the Lender shall exercise
its option to accelerate only by delivering notice of acceleration to the Borrower. The
Lender shall not deliver any such notice of acceleration until (a) the Borrower has
received any required notice of the prospective Default and (b) any applicable cure period
has expired.

Except as expressly described in this Section, no notice of acceleration shall be required
in order for the Lender to exercise its option to accelerate the indebtedness in the event
of Default.

11. PREPAYMENT FOLLOWING ACCELERATION

Any Default resulting in the acceleration of the indebtedness evidenced by this Note shall
be presumed to be an attempt to avoid the provisions of Section 7 of this Note, which
prohibit prepayment or condition the Lender’s obligation to accept prepayment on the
payment of a prepayment premium. Accordingly, if the indebtedness is accelerated, any
amounts tendered to repay the accelerated indebtedness, or realized by the Lender through
its remedies following acceleration, shall be subject to the prepayment premium that would
have been applicable under Section 7 (calculated as if the prepayment had occurred on the
date of acceleration).

12. SECURITY

This Note is secured by a Deed of Trust, Security Agreement and Fixture Filing (the “Deed
of Trust”) granted by the Borrower to J. Lindsay Stradley, Jr., the Trustee, for the
benefit of the Lender, conveying the Real Property, which is located in the City of
Charlotte, Mecklenburg County, North Carolina, and granting a security interest in certain
fixtures and personal property, and by an Absolute Assignment of Leases and Rents made by
the Borrower to the Lender, assigning the landlord’s interest in all present and future
leases (the “Leases”) of all or any portion of the Real Property encumbered by the Deed of
Trust. Reference is made to the Loan Documents for a description of the security and rights
of the Lender. This reference shall not affect the absolute and unconditional obligation of
the Borrower to repay the Loan in accordance with its terms.

13. RECOURSE TO BORROWER

The Lender agrees that it shall not seek to enforce any monetary judgment with respect to
the indebtedness evidenced by this Note against the Borrower, the Borrower’s general
partner, Phillip I. Levin, Joseph J. Recchie, Bradley J. Schram or Norman A. Pappas (a)
except through recourse to the Property, unless the obligation from which the judgment
arises is one of the “Carveout Obligations” defined in Section 14, and (b) except to the
extent of an aggregate of Four Million Dollars and No Cents ($4,000,000.00), unless and
until the Recourse Release Conditions have been satisfied.

14. CARVEOUT OBLIGATIONS

The “Carveout Obligations” are (a) the obligation to repay any portion of the indebtedness
evidenced by this Note that arises from any of the “Carveouts” (as defined below), (b) the
obligation to repay the entire indebtedness evidenced by this Note, if the Lender’s
exculpation of the Borrower from personal liability under this Section has become void as
set forfh below, (c) the obligation to indemnify the Lender in respect of its actual
damages suffered in connection with any of the Carveouts, and (d) the obligation to defend
and hold the Lender harmless from and against any claims, judgments, causes of action or
proceedings arising from any of the Carveouts. The “Carveouts” are:

(i) fraud or material written misrepresentation;

	 	(ii)	 	waste of the Property (which shall include damage,
destruction or disrepair of the Real Property caused by a willful act or
grossly negligent omission of the Borrower, but shall exclude ordinary wear
and tear in the absence of gross negligence);

	 	(iii)	 	misappropriation of tenant security deposits (including
proceeds of tenant letters of credit), Insurance Proceeds or Condemnation
Proceeds;

	 	(iv)	 	failure to pay property taxes, assessments or other lienable
Impositions;

	 	(v)	 	failure to pay to the Lender all Rents, income and profits
(including any rent collected more than one month in advance, or any rent for
the last month of the lease term, under any Lease in force at the time of
Default), net of reasonable and customary operating expenses, received in
respect of a period when the Loan is in Default;

	 	(vi)	 	removal &om the Real Property of fixtures or Personal
Property, unless replaced in a commercially reasonable manner;

	 	(vii)	 	the out-of-pocket expenses of enforcing the Loan Documents
following. Default, not including expenses incurred after the Borrower has
agreed in writing to transfer the Real Property to the Lender by the Lender’s
choice of either an uncontested foreclosure or delivery of a deed in lieu of
foreclosure;

	 	(viii)	 	terminating or amending a Lease other than in the ordinary course of
business; and

	 	(ix)	 	any liability of the Borrower under the Environmental
Indemnity Agreement.

The Lender’s exculpation of the Borrower from personal liability for the repayment of the
Indebtedness shall be void without Notice if the Borrower (A) voluntarily transfers or
creates any voluntary lien on the Property in violation of this Deed of Trust, or (B) files
a voluntary petition for reorganization under Title 11 of the United States Code (or under
any other present or future law, domestic or foreign, relating to bankruptcy, insolvency,
reorganization proceedings or otherwise similarly affecting the rights of creditors), and
has not offered, prior to the filing, to enter into the Lender’s choice of either an
agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu
of foreclosure within sixty (60) days of the Lender’s acceptance of the offer. After the
Lender accepts such an offer, default by the Borrower in fulfilling the terms of the
accepted offer shall trigger personal liability for the entire Indebtedness. No such offer
shall be conditioned on any payment by the Lender, on the release of any Obligor from any
Obligation, or on any other concession.

15. SEVERABILITY

If any provision of this Note is held to be invalid, illegal or unenforceable in any
respect, or operates, or would if enforced operate to invalidate this Note, then that
provision shall be deemed null and void. Nevertheless, its nullity shall not affect the
remaining provisions of this Note, which shall in no way be affected, prejudiced or
disturbed.

16. WAIVER

Except to the extent that such rights are expressly provided in this Note, the Borrower
waives demand, presentment for payment, notice of intent to accelerate, notice of
acceleration, protest, notice of protest, dishonor and of nonpayment and any and all lack
of diligence or delays in collection or enforcement of this Note. Without affecting the
liability of the Borrower under this Note, the Lender may release any of the Property,
grant any indulgence, forbearance or extension of time for payment, or release any other
person now or in the future liable for the payment or performance of any obligation under
this Note or any of the Loan Documents.

The Borrower further (a) waives any homestead or similar exemption; (h) waives any statute
of limitation; (c) agrees that the Lender may, without impairing any future right to insist
on strict and timely compliance with the terms of this Note, grant any number of extensions
of time for the scheduled payments of any amounts due, and may make any other accommodation
with respect to the indebtedness evidenced by this Note; (d) waives any right to require a
marshaling of assets; and (e) to the extent not prohibited by applicable law, waives the
benefit of any law or rule of law intended for its advantage or protection as a debtor or
providing for its release or discharge from liability under this Note, excepting only the
defense of full and complete payment of all amounts due under this Note and the Loan
Documents.

17. VARIATION IN PRONOUNS

All the terms and words used in this Note, regardless of the number and gender in which
they are used, shall he deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context or sense of
this Note or any paragraph or clause herein may require, the same as if such word had been
fully and properly written in the correct number and gender.

18. OFFSET RIGHTS

In addition to all liens upon and rights of setoff against the money, securities, or other
property of the Borrower given to the Lender by law, the Lender shall have a lien upon and
a right of setoff against all money, securities, and other property of the Borrower, now or
hereafter in possession of or on deposit with the Lender, whether held in a general or
special account or deposit, or safe-keeping or otherwise, and, following a Default, every
such lien and right of setoff may be exercised without demand upon, or notice to the
Borrower. No lien or right of setoff shall he deemed to have been waived by any act or
conduct on the part of the Lender, or by any neglect to exercise such right of setoff or to
enforce such lien, or by any delay in so doing, and every right of setoff and lien shall
continue in full force and effect until such right of setoff or lien is specifically waived
or released by an instrument in writing executed by the Lender.

19. COMMERCIAL LOAN

The Borrower hereby represents and warrants to the Lender that the Loan was made for
commercial or business purposes, and that the funds evidenced by this Note will be used
solely in connection with such purposes.

20. REPLACEMENT OR BIFURCATION OF NOTE

If this Note is lost or destroyed, the Borrower shall, at the Lender’s request, execute and
return to the Lender a replacement promissory note identical to this Note, provided the
Lender delivers to the Borrower an affidavit to the foregoing effect. Upon delivery of the
executed replacement Note, the Lender shall indemnify the Borrower from and against its
actual damages suffered as a result of the existence of two Notes evidencing the same
obligation. No replacement of this Note under this Section shall result in a novation of
the Borrower’s obligations under this Note. In addition, the Lender may at its sole and
absolute discretion require that the Borrower execute and deliver two separate promissory
notes, which shall replace this Note as evidence of the Borrower’s obligations. The two
replacement notes shall, taken together, evidence the exact obligations set forth in this
Note. The replacement notes shall be independently transferable. If this Note is so
replaced, the Lender shall return this Note to the Borrower marked to evidence its
cancellation.

21. GOVERNING LAW

This Note shall he construed and enforced according to, and governed by, the laws of North
Carolina without reference to conflicts of laws provisions which, but for this provision,
would require the application of the law of any other jurisdiction.

22. TIME OF ESSENCE

In the performance of the Borrower’s obligations under this Note, time is of the essence.

23. NO ORAL AGREEMENTS

THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF THE
BORROWER AND THE LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE LOAN AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE BORROWER AND THE LENDER. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE BORROWER AND THE LENDER THE PROVISIONS OF THIS NOTE AND THE OTHER LOAN
DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE BORROWER
AND THE LENDER.

IN WITNESS’ WHEREOF, the Borrower has caused this Note to be duly executed under seal as of the
date first above written.

BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio
limited Partnership

	 	 	 	By:
Treybum Housing, LLC, an Ohio limited
liability company, its sole General
Partner

	 	 	 	By:
LPS Investments, L.L.C., a Michigan
limited liability company, its sole
Managing Member

By: Phillip I. Levin

Phillip I. Levin, Manager

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