Document:

EX-10.8

(El Dorado)

(99-1069656)

THIS INSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS AND

PROVISIONS LIMITING LENDER’S LIABILITY FOR NEGLIGENCE

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (“Agreement”) is made as of the 1st day of November,
2007 by APARTMENT REIT VILLAS OF EL DORADO, LLC, a Delaware limited liability company (“Borrower”),
and NNN APARTMENT REIT, INC., a Maryland corporation (individually, “Principal”, Borrower and
Principal hereinafter individually and collectively referred to as “Indemnitor”), for the benefit
of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS
OF MORGAN STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-IQ14,
having an address at c/o Capmark Finance Inc., 116 Welsh Road, Horsham, Pennsylvania 19044
(“Indemnitee”) and other Indemnified Parties (as hereinafter defined).

RECITALS

A. Borrower is the current fee owner of that certain real property located in the City of
McKinney, County of Collin and State of Texas, known as Villas of El Dorado and more particularly
described in Exhibit A attached hereto (said real property, together with any real property
hereafter encumbered by the lien of the Security Instrument (as defined in the Note), being herein
collectively referred to as the “Land”, the Land, together with all structures, buildings and
improvements now or hereafter located on the Land, being collectively referred to as the
“Property”).

B. Indemnitee is the current holder of a loan (“Loan”) assumed by Borrower in the original
principal amount of $13,600,000.00, evidenced by a certain promissory note dated November 29, 2006
in the principal amount of $13,600,000.00 made by El Dorado, LLC, a Texas limited liability company
(“Original Borrower”) to the order of Royal Bank of Canada, a Canadian chartered bank (“Note”) and
secured by, among other things, the Security Instrument which will encumber the Property.

C. Pursuant to that certain Agreement of Assumption and Modification of Security Instrument
and Other Loan Documents dated as of the date hereof (the “Assumption Agreement”), Indemnitee
consented to the transfer of the Loan from Original Borrower to Borrower (the “Transfer”)

D. Indemnitee is unwilling to consent to the Transfer unless Indemnitor agrees to provide the
indemnification, representations, warranties, and covenants and other matters described in this
Agreement for the benefit of the Indemnified Parties.

E. Principal will derive substantial benefit from the Loan. Indemnitor enters into this
Agreement to induce Indemnitee to consent to the Transfer.

CERTAIN DEFINED TERMS

As used in this Agreement, the following terms shall have the following meanings:

“Business Day” means a day on which commercial banks are not authorized or required by law to
close in New York, New York.

“Environmental Law” means any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law, relating to protection of human
health or the environment, relating to Hazardous Substances, relating to liability for or costs of
Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs
of other actual or threatened danger to human health or the environment. The term “Environmental
Law” includes, but is not limited to, the following statutes, as amended, any successor thereto,
and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the Comprehensive Environmental
Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act;
the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including
but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water
Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide, and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. The term “Environmental Law” also
includes, but is not limited to, any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law: conditioning transfer of
property upon a negative declaration or other approval of a governmental authority of the
environmental condition of the property; requiring notification or disclosure of Releases of
Hazardous Substances or other environmental condition of the Property to any governmental authority
or other person or entity, whether or not in connection with transfer of title to or interest in
property; imposing conditions or requirements in connection with permits or other authorization for
lawful activity; relating to nuisance, trespass or other causes of action related to the Property;
and relating to wrongful death, personal injury, or property or other damage in connection with any
physical condition or use of the Property.

“Hazardous Substances” includes but is not limited to any and all substances (whether solid,
liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous
substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or
regulatory effect under any present or future Environmental Laws or that may have a negative impact
on human health or the environment, including but not limited to petroleum and petroleum products,
asbestos and asbestos-containing materials, mold, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives.

“Indemnified Parties” includes Indemnitee, any person or entity who is or will have been
involved in the origination of the Loan, any person or entity who is or will have been involved in
the servicing of the Loan, any person or entity in whose name the encumbrance created by the
Security Instrument is or will have been recorded, persons and entities who may hold or acquire or
will have held a full or partial interest in the Loan, including, but not limited to, custodians,
trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties.

“Legal Action” means any claim, suit or proceeding, whether administrative or judicial in
nature.

“Losses” includes any liabilities, obligations, claims, demands, damages, penalties, causes of
action, losses, fines, costs and expenses (including without limitation reasonable attorneys’ fees
and expenses).

“Release” includes but is not limited to any release, deposit, discharge, emission, leaking,
leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.

“Remediation” includes but is not limited to any response, remedial, removal, or corrective
action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any
Hazardous Substance; any actions to prevent, cure or mitigate any, Release of any Hazardous
Substance; any action to comply with any Environmental Laws or with any permits issued pursuant
thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything
referred to herein.

AGREEMENT

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby represents, warrants,
covenants and agrees for the benefit of Indemnified Parties as follows:

1. Environmental Representations and Warranties. To the best of Indemnitor’s
knowledge, (a) there are no Hazardous Substances or underground storage tanks at, in, on or under
the Property, except those that are both (i) in compliance with all Environmental Laws and with
permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing pursuant to the
written report(s) resulting from the environmental assessment(s) of the Property delivered to
Indemnitee (such report(s) are identified in Exhibit B attached hereto and are referred to below
collectively as the “Environmental Report”); (b) there are no past, present or threatened Releases
of Hazardous Substances at, in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to
the Property except as described in the Environmental Report; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property, except as described in the Environmental Report; (e) Indemnitor does not know of and
has not received any written notice or other communication from any person or entity (including but
not limited to a governmental entity) relating to Hazardous Substances or Remediation thereof, of
possible liability of any person or entity pursuant to any Environmental Law, of other
environmental conditions in connection with the Property, or regarding any actual or potential
administrative or judicial proceedings in connection with any of the foregoing; and (f) Indemnitor
has truthfully and fully provided to Indemnitee in writing any and all information relating to
conditions at, in, on, under or from the Property that is known to any Indemnitor and that is
contained in the files and records of any Indemnitor, including, but not limited to, any reports
relating to Hazardous Substances at, in, on, under or from the Property and/or to the environmental
condition of the Property.

2. Environmental Covenants. Indemnitor covenants and agrees that: (a) all uses and
operations on or of the Property by Indemnitor or any other person or entity shall be in compliance
with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no intentional
Releases of Hazardous Substances at, in, on, under or from the Property by Indemnitor or anyone
controlled by, controlling or under common control with Indemnitor; (c) Indemnitor shall keep the
Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental
Law, whether due to any act or omission of Indemnitor or any other person or entity (“Environmental
Liens”); (d) Indemnitor shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with the Property
pursuant to any written request of Indemnitee (provided that such request is made based upon
Indemnitee’s reasonable belief that there are Hazardous Substances at, in, on, under or from the
Property which are not in compliance with Environmental Laws) and share with Indemnitee the reports
and other results thereof, and Indemnitee and the other Indemnified Parties shall be entitled to
rely on such reports and other results thereto (e) Indemnitor shall, at its sole cost and expense,
comply with all reasonable written requests of Indemnitee to (i) reasonably effectuate Remediation
of any condition (including but not limited to a Release of a Hazardous Substance) at, in, on,
under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive
from any governmental authority; and (iv) take any other reasonable action necessary or appropriate
for the protection of human health or the environment; and (f) Indemnitor shall immediately notify
Indemnitee in writing of (i) any presence or Releases or threatened Releases of Hazardous
Substances at, in, on, under, from or migrating towards the Property; (ii) any non-compliance with
any Environmental Laws related in any way to the Property; (iii) any actual or potential
Environmental Lien; (iv) any required or proposed Remediation of environmental conditions relating
to the Property; and (v) any written or oral notice or other communication of which any Indemnitor
becomes aware from any source whatsoever (including but not limited to a governmental entity)
relating in any way to environmental conditions in connection with the Property or any actual or
potential administrative or judicial proceedings in connection with anything referred to in this
Agreement.

3. Indemnified Parties’ Rights/Cooperation and Access. Indemnitor shall cooperate
with and provide access to the Property to Indemnified Parties and any person or entity designated
by Indemnified Parties to assess any and all aspects of the environmental condition of the Property
and its use, including but not limited to conducting any environmental assessment or audit (the
scope of which shall be determined in Indemnitee’s sole and absolute discretion) and taking samples
of soil, groundwater or other water, air or building materials, and conducting other invasive
testing. Except as otherwise provided in Section 5.4 of the Security Instrument, with respect to
any assessment or audit requested by Indemnitee following the occurrence of an Event of Default or
based upon Indemnitee’s reasonable belief that there are Hazardous Substances at, in, on, under or
from the Property which are not in compliance with Environmental Laws, all such investigations
shall be performed at Indemnitor’s sole cost and expense.

4. INDEMNIFICATION. INDEMNITOR COVENANTS AND AGREES, AT ITS SOLE COST AND EXPENSE, TO
PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY AND
ALL LOSSES IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST ANY INDEMNIFIED PARTIES AND DIRECTLY OR
INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO ANY ONE OR MORE OF THE FOLLOWING (EXCEPT TO THE
EXTENT THE SAME RELATE SOLELY TO HAZARDOUS SUBSTANCES FIRST INTRODUCED TO THE PROPERTY BY ANYONE
OTHER THAN INDEMNITOR OR ITS RESPECTIVE AGENTS OR EMPLOYEES FOLLOWING THE FORECLOSURE OF THE
SECURITY INSTRUMENT (OR THE DELIVERY AND ACCEPTANCE OF A DEED IN LIEU OF SUCH FORECLOSURE), THE
EXPIRATION OF ANY APPLICABLE RIGHT OF REDEMPTION AND THE OBTAINING BY THE PURCHASER AT SUCH
FORECLOSURE SALE OR GRANTEE UNDER SUCH DEED OF POSSESSION OF THE PROPERTY): (A) THE PAST, PRESENT
OR FUTURE PRESENCE, RELEASE OR THREATENED RELEASE OF ANY HAZARDOUS SUBSTANCES AT, IN, ON, UNDER OR
FROM THE PROPERTY; (B) ANY PAST, PRESENT OR THREATENED NON-COMPLIANCE OR VIOLATIONS OF ANY
ENVIRONMENTAL LAWS (OR PERMITS ISSUED PURSUANT TO ANY ENVIRONMENTAL LAW) IN CONNECTION WITH THE
PROPERTY OR OPERATIONS THEREON; (C) ANY LEGAL OR ADMINISTRATIVE PROCESSES OR PROCEEDINGS OR
JUDICIAL PROCEEDINGS IN ANY WAY CONNECTED WITH ANY MATTER ADDRESSED IN THIS AGREEMENT; (D) ANY
PERSONAL INJURY, WRONGFUL DEATH, OR PROPERTY OR OTHER DAMAGE ARISING UNDER ANY STATUTORY OR COMMON
LAW OR TORT LAW THEORY CONCERNING HAZARDOUS SUBSTANCES; AND (E) ANY MISREPRESENTATION OR INACCURACY
IN ANY REPRESENTATION OR WARRANTY OR MATERIAL BREACH OR FAILURE TO PERFORM ANY COVENANTS OR OTHER
OBLIGATIONS IN THIS AGREEMENT OR ANY COVENANTS OR OTHER OBLIGATIONS IN THE SECURITY INSTRUMENT
WHICH ARE RELATED TO HAZARDOUS SUBSTANCES OR ENVIRONMENTAL LAW.

5. Duty to Defend and Attorneys and Other Fees and Expenses. Upon written request by
any Indemnified Party, Indemnitor shall defend, and provide legal representation for such
Indemnified Party with respect to any of the matters referenced in Section 4 above (if requested by
any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals
approved by Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in
their sole and absolute discretion, engage their own attorneys and other professionals to defend or
assist them with respect to such matters, and, at the option of Indemnified Parties, their
attorneys shall control the resolution of such matters. Upon demand, Indemnitor shall pay or, in
the sole and absolute discretion of Indemnified Parties, reimburse Indemnified Parties for the
payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants,
laboratories and other professionals in connection therewith.

6. Unimpaired Liability. The liability of Indemnitor under this Agreement shall in no
way be limited or impaired by, and Indemnitor hereby consents to and agrees to be bound by, any
amendment or modification of the provisions of the Note, the Security Instrument or any of the
other Loan Documents (as defined in the Security Instrument).

7. Enforcement. Indemnified Parties may enforce the obligations of Indemnitor without
first resorting to or exhausting any security or collateral and without first having recourse to
the Note, the Security Instrument or any other Loan Documents or any of the Property, through
foreclosure proceedings or otherwise. Nothing herein shall inhibit or prevent Indemnitee from
suing on the Note, foreclosing or exercising any power of sale under the Security Instrument, or
exercising any other rights and remedies thereunder.

8. Survival. The obligations and liabilities of Indemnitor under this Agreement shall
survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment
of foreclosure, exercise of any power of sale or delivery of a deed in lieu of foreclosure of the
Security Instrument.

9. Interest. Any amounts payable to any Indemnified Parties under this Agreement
shall become immediately due and payable on demand and, if not paid within 30 days of such demand,
shall bear interest at a per annum rate equal to the Default Rate (as defined in the Note).

10. Waivers. (a) Indemnitor hereby waives (i) any right or claim, of right to cause a
marshalling of any Indemnitor’s assets or to cause Indemnitee or other Indemnified Parties to
proceed against any of the security for the Loan before proceeding under this Agreement against
Indemnitor; (ii) all rights and remedies accorded by applicable law to Indemnitor except any rights
of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall
neither be contingent upon the existence of any such rights of subrogation nor subject to any
claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claim that such
subrogation rights were abrogated by any acts of Indemnitee or other Indemnified Parties; (iii) any
right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or
proceeding brought against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance
hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand
of payment, protest or notice of nonpayment or failure to perform or observe, or other proof,
notice or demand; and (vi) all homestead exemption rights against the obligations hereunder (to the
extent applicable) and the benefits Of any statutes of limitations or repose. Notwithstanding
anything to the contrary contained herein, Indemnitor hereby agrees to postpone the exercise of any
rights of subrogation with respect to any collateral securing the Loan until the Loan shall have
been paid in full.

(b) INDEMNITOR HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW THE RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN, THE NOTE, THE SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS GOVERNING THE LOAN OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION
THEREWITH.

11. Subrogation. Indemnitor shall take any and all reasonable actions, including
institution of legal action against third parties, necessary or appropriate to obtain
reimbursement, payment or compensation from such persons responsible for the presence of any
Hazardous Substances at, in, on, under or from the Property or otherwise obligated by law to bear
the cost. Indemnified Parties shall be and hereby are subrogated to all of Indemnitor’s rights now
or hereafter in such claims.

12. Transfer of Loan. Indemnitee may, at any time, sell, transfer or assign the Loan,
the Note, the Security Instrument, this Agreement and the other Loan Documents, and any or all
servicing rights with respect thereto, or grant participations therein or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the “Securities”). Indemnitee may forward to each
purchaser, transferee, assignee, servicer, participant or investor in such Securities or any credit
rating agency rating such Securities (the foregoing entities hereinafter collectively referred to
as the “Investor”) and each prospective Investor all documents and information (including but not
limited to financial information) which Indemnitee now has or may hereafter acquire relating to
Indemnitor and the Property, whether furnished by Indemnitor or otherwise, as Indemnitee determines
necessary or desirable. In connection with any such sale, transfer or assignment of the Loan,
Indemnitor further agrees that upon request by Indemnitee, Indemnitor shall, within 15 days after
request by Lender, enter into such amendments or modifications to this Agreement or any of the
other Loan Documents, as applicable, as may be reasonably required by Indemnitee in order to
facilitate any such sale, transfer or assignment without impairing Indemnitor’s rights or
increasing Indemnitor’s obligations hereunder or under any of the other Loan Documents.

13. Notices. All notices or other written communications hereunder shall be deemed to
have been properly given and shall be effective for all purposes (i) upon delivery, if delivered in
person, (ii) one Business Day after having been deposited for overnight delivery with any reputable
overnight courier service, (iii) three Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, or (iv) if by telecopy, upon transmittal
to the recipient’s telecopy number. All such communications shall be mailed, sent or delivered,
addressed to the party for whom it is intended at its address set forth in the Assumption
Agreement.

14. Submission to Jurisdiction. With respect to any claim or action arising
hereunder, Indemnitor (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the
State in which the Property is located and the United States District Court located in the county
in which the Property is located and appellate courts from any thereof, (b) irrevocably waives any
objection which it may have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement brought in any such court and (c) irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.

15. No Third-Party Beneficiary. The terms of this Agreement are for the sole and
exclusive protection and use of Indemnified Parties. No party shall be a third-party beneficiary
hereunder, and no provision hereof shall operate or inure to the use and benefit of any such third
party. It is agreed that those persons and entities included in the definition of Indemnified
Parties are not such excluded third party beneficiaries.

16. Counterparts. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument arid all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this Agreement or any
counterpart hereof shall not relieve the other signatories from, their obligations hereunder.

17. No Oral Change. This Agreement and any provisions hereof may not be modified,
amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act
on the part of any Indemnitor or any Indemnified Party, but only by an agreement in writing signed
by the party against whom enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.

18. Headings. The headings and captions of the various sections of this Agreement are
for convenience of reference only and are not to be construed as defining or limiting, in any way,
the scope or intent of the provisions hereof.

19. Number and Gender/Successors and Assigns. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of
the person or persons referred to may require. Without limiting the effect of specific references
in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and
every person or entity comprising an Indemnitor from time to time, as the sense of a particular
provision may require, and to include the heirs, executors, administrators, legal representatives,
successors and assigns of Indemnitor, all of whom shall be bound by the provisions of this
Agreement, provided that no obligation of arty Indemnitor may be assigned except with the written
consent of Indemnitee. Each reference herein to the term “Indemnitee” shall be deemed to include
its successors and assigns. This Agreement shall inure to the benefit of Indemnified Parties and
their respective successors and assigns.

20. Joint and Several Liability. If Indemnitor consists of more than one person or
entity, the obligations and liabilities of each such person hereunder are joint and several.

21. Release of Liability. Any one or more parties liable under or pursuant to this
Agreement may be released without affecting the liability of any party not so released.

22. Rights Cumulative. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies which Indemnitee has under the Note, the Security Instrument or
the other Loan Documents or would otherwise have at law or in equity.

23. Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be illegal, invalid or unenforceable in any respect, such
provision shall be fully severable and shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

24. Governing Law. This Agreement shall be deemed to be governed, construed, applied
and enforced in accordance with the laws of the state in which the Property is located and the
applicable laws of the United States of America.

25. Attorneys’ Fees. For purposes of this Agreement, the term “attorneys’ fees” shall
include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements,
including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Indemnitee in protecting its interest in the Property, the Leases (as such term
is defined in the Security Instrument) and the Rents (as such term is defined in the Security
Instrument) and enforcing its rights hereunder.

26. Miscellaneous. Whenever pursuant to this Agreement (i) Indemnitee exercises any
right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to
Indemnitee, or (iii) any other decision or determination is to be made by Indemnitee, the decision
of Indemnitee to approve or disapprove, all decisions that arrangements or terms are satisfactory
or not satisfactory and all other decisions and determinations made by. Indemnitee, shall be in
the sole and absolute discretion of Indemnitee and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.

Signature Page Follows

1

IN WITNESS WHEREOF, this Agreement has been executed and delivered by Indemnitor and is
effective as of the day and year first above written.

	 	 	INDEMNITOR: BORROWER:

APARTMENT REIT VILLAS OF EL DORADO, LLC, a Delaware
limited liability company

	 	 	 	By:
NNN Apartment REIT Holdings, L.P., a Virginia
limited partnership, its sole member

	 	 	 	By:
NNN Apartment REIT, Inc., a Maryland
corporation, its general partner

By: /s/ S. Jay Olander

Name: S. Jay Olander

Title: Chief Executive Officer

PRINCIPAL:

NNN APARTMENT REIT, INC., a Maryland corporation

By: /s/ S. Jay Olander

Name: S. Jay Olander

Title: Chief Executive Officer

2EX-10.9

LOAN AGREEMENT

THIS LOAN AGREEMENT (the “Agreement”) is made as of the 1st day of November, 2007
by and between NNN APARTMENT REIT, INC., a Maryland corporation (the “Company”), and WACHOVIA BANK,
NATIONAL ASSOCIATION a national banking association (the “Lender”).

STATEMENT OF PURPOSE

The Company has requested the Lender to extend to the Company a loan to fund the acquisition
of Properties and the Lender has agreed to do so on the terms and subject to the conditions set
forth herein. All capitalized terms not otherwise defined herein are defined in Paragraph 10
hereof.

Now, therefore, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1. Loan Terms.

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 prompt 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 be
reborrowed by the Company, provided that the aggregate principal amount outstanding
at any time shall not exceed the Aggregate Availability. 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 at the Applicable LIBOR Rate,
except as otherwise provided herein.

1(c) Payment of Interest. The Company shall pay to the Lender interest on each
Advance from the date of funding of such Advance to but not including the date of payment
thereof in accordance with Paragraph 2(c). As provided in Paragraph 2(m) below, interest
payable while the Loan is a Prime Rate Loan shall be payable monthly, in arrears, and
interest payable while the Loan is a LIBOR Loan shall be payable at the end of the
applicable Interest Period.

1(d) Request for Loan. If the Company desires to have the Lender make an
Advance, the Chief Financial Officer, Chief Information Officer, President or any Executive
Vice President of the Company (each, a “Responsible Officer”) shall make a Loan
Request to the Lender no later than 12:00 p.m. on the proposed funding date. Such Loan
Request shall specify the amount of such Advance, which shall be in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof. The Lender shall,
subject to the provisions of Paragraph 1(a), make available the amount of the proposed
Advance to the Company on the same date (such date, the “Advance Date”).

1(e) Payment of Origination Fee. The Company shall pay to the Lender a
origination fee in the amount of Fifty Thousand Dollars ($50,000.00) (the “Origination
Fee”) on the Closing Date, which fee shall be fully earned by the Lender as of such date
and shall be non-refundable.

2. Miscellaneous Lending Provisions.

2(a) Use of Proceeds. The proceeds of the Loan shall be used by the Company
solely to fund the acquisition of Properties; more specifically, the intent is that proceeds
shall finance those required acquisition costs of a Property which are in excess of the
costs funded through a Property Loan on such Property in the approximate principal amount of
sixty-five percent (65%) of such Property’s appraised value; provided that the sum
of such Property Loan proceeds and any proceeds disbursed hereunder in connection with such
acquisition shall not exceed ninety percent (90%) of such Property’s appraised value.

2(b) Note. The obligations of the Company to repay the Loan shall be evidenced
by a note payable to the order of the Lender in the form attached hereto as Exhibit
A (as amended, restated or supplemented, the “Note”).

2(c) Repayment of Principal; Extension of Maturity Date.

(i) All outstanding principal amounts together with all accrued and unpaid interest
outstanding on the Maturity Date shall be paid in full on the Maturity Date.

(ii) Subject to the conditions set forth below, the Company may, no less than sixty
(60) days prior to the then-current Maturity Date, request through written notice to the
Lender that the Lender extend the then current Maturity Date for one additional twelve (12)
month period to November 1, 2009. The Lender, in its sole and absolute discretion, may
elect to extend the then-current Maturity Date in accordance with such request;
provided, that in no event shall the Lender extend the then-current Maturity Date
unless:

(A) as of the then current Maturity Date, the aggregate outstanding principal amount of
the Property Loans does not exceed sixty-five percent (65%) of the aggregate Appraised Value
of the Properties as of such date;

(B) the Lender shall have received an appraisal of any or all of the Properties, if so
requested by the Lender; and

(C) as of the then-current Maturity Date, the Company shall have delivered to the
Lender a compliance certificate demonstrating that (1) the Property Debt Service Coverage
Ratio as of such date, and after giving effect to any Advance requested on such date, is not
less than 1.50 to 1.00 and (2) the Total Debt Service Coverage Ratio as of such date, and
after giving effect to any Advance requested on such date, is not less than 1.10 to 1.00.

2(d) Inability to Determine Rate. If the Lender determines (which
determination shall be conclusive and binding upon the Company, provided such determination
is made on a reasonable basis) that by reason of circumstances affecting the London
interbank eurodollar market adequate and reasonable means do not exist for ascertaining the
LIBOR Rate for any Interest Period, then the Lender shall forthwith give facsimile notice of
such determination, confirmed in writing, to the Company. If such notice is given, the Loan
shall be converted on the last day of the then current Interest Period to a Prime Rate Loan.
Until such notice has been withdrawn by the Lender, the Company shall not have the right to
request LIBOR Loans or to continue a LIBOR Loan as such. The Lender shall withdraw such
notice in the event that the circumstances giving rise thereto no longer obtain and that
adequate and reasonable means exist for ascertaining the LIBOR Rate, and following
withdrawal of such notice by the Lender, the Company shall have the right to request LIBOR
Loans (to the extent otherwise available hereunder) and any portion of the Loan then
outstanding shall be maintained as a LIBOR Loan, in each case, in accordance with the terms
and conditions of this Agreement.

2(e) Illegality. Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful for the Lender to make or maintain the Loan as a
LIBOR Loan as contemplated by this Agreement, the Lender shall forthwith give facsimile
notice to the Company of such illegality, and upon giving such notice, the Company may not
request LIBOR Loans, if a Loan is then outstanding as a LIBOR Loan, then it shall be
converted automatically to a Prime Rate Loan at the end of the respective Interest Period or
within such earlier period as required by law. If subsequently Lender determines that the
cause of such illegality has ceased to exist, Lender will notify the Company by facsimile
notice, and the Company may request LIBOR Loans (to the extent otherwise available
hereunder) and the portion of the Loan then outstanding shall thereafter be maintained as a
LIBOR Loan, in each case, in accordance with the terms and conditions of this Agreement.

2(f) Requirements of Law; Increased Costs. In the event that any change
subsequent to the date hereof in any applicable law, order, regulation, treaty or directive
issued by any central bank or other Governmental Authority, or in the governmental or
judicial interpretation or application thereof, or compliance by the Lender with any request
or directive (whether or not having the force of law) by any central bank or other
Governmental Authority:

(1) subjects Lender to any tax of any kind whatsoever with respect to this
Agreement or the Loan made hereunder, or change the basis of taxation of payments to
Lender of principal, fee, interest or any other amount payable hereunder (except for
change in the rate of tax on the overall net income of Lender);

(2) imposes, modifies or holds applicable any reserve, capital requirement,
special deposit, compulsory loan or similar requirements against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of Lender
which are not otherwise included in the determination of the LIBOR Rate or the Prime
Rate; or

(3) imposes on Lender any other condition;

and the result of any of the foregoing is to increase the cost to Lender of making, renewing
or maintaining the Loan or to reduce any amount receivable in respect thereof or to reduce
the rate of return on the capital of Lender or any Person controlling Lender, then, in any
such case, the Company shall, subject to the provisions hereof pay to the Lender within 15
days (the “15 day period”) of written demand made by the Lender, any additional amounts
necessary to compensate Lender for such additional cost or reduced amounts receivable or
rate of return as determined by Lender with respect to this Agreement or the Loan made
hereunder. If Lender becomes entitled to claim any additional amounts pursuant to this
Paragraph 2(f), it shall promptly notify the Company of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence containing the calculation thereof in reasonable detail submitted by
Lender to the Company shall be conclusive in the absence of manifest error. The provisions
hereof shall survive the termination of this Agreement and payment of the outstanding Loan
and all other amounts payable hereunder.

2(g) Funding. The Lender shall be entitled to fund all or any portion of the
Loan in any manner it may determine in its sole discretion. All calculations and
transactions hereunder shall be conducted as though the Lender actually funds each Advance
as a LIBOR Loan through the purchase in London of offshore dollar deposits in the amount of
such Advance in maturities corresponding to the applicable Interest Period.

	 	 	 
	2(h)

	 	Intentionally Omitted.
	
 
	 	 
	2(i)

	 	Intentionally Omitted.
	
 
	 	 

2(j) Computations. All computations of interest and fees payable hereunder
shall be based upon a year of 360 days for the actual number of days elapsed.

2(k) Prepayments; Application of Prepayments and Repayments.

(1) The Company may voluntarily prepay the Loan in whole or in part at any
time.

(2) The Company shall make mandatory prepayments of principal in an amount
equal to one hundred percent (100%) of all Equity Proceeds. Such prepayment shall
be due and payable to Lender no later than three (3) Business Days after the
Company’s receipt of any such Equity Proceeds.

(3) If at any time the outstanding principal amount of the Loan exceeds the
Aggregate Availability, the Company shall repay the Loan immediately upon notice
thereof from the Lender in an amount equal to such excess.

(4) Upon the occurrence of any event triggering a prepayment requirement under
clauses (1) through and including (3) above, the Company shall promptly deliver to
the Lender a Notice of Prepayment/Repayment substantially in the form attached
hereto as Exhibit B.

(5) The Company shall pay all interest accrued but unpaid concurrently with the
prepayment of any principal.

(6) Each prepayment or repayment of principal shall be applied 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 shall then be
applied to the Advance then outstanding which was made on the earliest date as among
all remaining outstanding Advances; and continuing on in like manner until all
outstanding Advances have been paid in full.

2(l) Intentionally Omitted.

2(m) Interest and Fee Billing and Payment. The Lender shall (1) while the Loan
is a Prime Rate Loan, on or before the fifth Business Day of each month, and (2) while the
Loan is a LIBOR Loan, on the last day of the applicable Interest Period, deliver to the
Company an interest and fee billing for the immediately preceding month or Interest Period,
as the case may be, which billing shall set forth interest accrued and payable on the Loan
and fees payable hereunder for such period and which billing shall be payable, in the case
of a billing delivered pursuant to subparagraph (1) above, no later than the second Business
Day following receipt thereof by the Company and, in the case of a billing delivered
pursuant to subparagraph (2) above, on the last day of the applicable Interest Period. In
the alternative, the Company may, within one (1) Business Day following receipt of such
billing by the Company, authorize the Lender by telephone (which authorization shall be
promptly followed by a written confirmation thereof) to debit the Company’s accounts
maintained with the Lender for the amount of such accrued interest and fees payable.

2(n) Nature and Place of Payments. All payments made on account of the
Obligations shall be made without set-off or counterclaim in lawful money of the United
States of America in immediately available same day funds, free and clear of and without
deduction for any taxes, fees or other charges of any nature whatsoever imposed by any
taxing authority upon the Lender and if received by the Lender by 2:00 p.m. (Charlotte,
North Carolina time) such payment will be credited on the Business Day received. If a
payment is received after 2:00 p.m. (Charlotte, North Carolina time) by the Lender, such
payment will be credited on the next succeeding Business Day and interest thereon shall be
payable at the then applicable rate until credited. If any payment required to be made by
the Company hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and interest thereon
shall be payable at the then applicable rate during such extension.

2(o) Post-Maturity Interest. Any Obligations not paid when due (whether at
stated maturity, upon acceleration or otherwise) shall bear interest from the date due until
paid in full at a per annum rate equal to four percent (4%) above the then applicable
interest rate, or, if such Obligations do not otherwise bear interest, four percent (4%)
above the Applicable Prime Rate.

3. Security Instruments.

3(a) Security Instruments. Repayment of the Loan shall be secured pursuant to
the Pledge Agreement by a first priority security interest in the Pledged Assets. To effect
such lien, the Company shall execute and deliver, or shall cause to be executed and
delivered, to the Lender all certificates, transfer forms, filings and recordations, as
applicable, that are necessary to perfect the security interest in the Pledged Assets, in
each case, in form and substance reasonably acceptable to the Lender in its sole discretion.

3(b) Further Documents. The Company agrees to execute and deliver, and to
cause to be executed and delivered, to the Lender from time to time such confirmation and
supplementary security agreements, financing statements and other documents, instruments and
agreements as the Lender may reasonably require, which are in the Lender’s judgment
necessary or desirable to obtain for the Lender the benefit of the Loan Documents. The
Company also hereby authorizes the Lender to execute and file, on behalf of the Credit
Parties, all financing statements which are in the Lender’s judgment necessary to obtain for
the Lender the benefit of the Loan Documents.

4. Conditions to Making of the Loan.

4(a) As conditions precedent to the Lender’s election to make the initial Loan
hereunder:

(1) The Company shall have delivered, and shall have caused the Pledgor to deliver, to
the Lender, in form and substance satisfactory to the Lender and its counsel each of the
following:

	 	 	 
	(A)

	 	A duly executed original of this Agreement;
	(B)

	 	A duly executed original of the Note;
	(C)

	 	A duly executed original of the Pledge Agreement;

(D) Such credit applications, financial statements, authorizations and such
information concerning the Credit Parties and their respective businesses,
operations and conditions (financial and otherwise) as the Lender may reasonably
request;

(E) A certificate of the Secretary or an Assistant Secretary of each Credit
Party certifying the names and true signatures of the officers of such Credit Party
authorized to execute and deliver the Loan Documents;

(F) A copy of the Articles of Incorporation or Certificate of Limited
Partnership, as applicable, of each Credit Party certified by the Secretary or an
Assistant Secretary of such Credit Party as of the date of this Agreement as being
accurate and complete;

(G) A copy of the Bylaws or Limited Partnership Agreement of each Credit Party
certified by the Secretary or an Assistant Secretary of such Credit Party as of the
date of this Agreement as being accurate and complete;

(H) Resolutions of each Credit Party adopted by the requisite parties
authorizing such Credit Party to enter into the transactions contemplated by the
Loan Documents and to execute and deliver the Loan Documents to which such Credit
Party is as party;

(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;

(J) 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;

(K) Original limited partnership certificates with respect to Apartment REIT
Hidden Lakes, L.P. evidencing the Ownership Interests therein pledged to the Lender
pursuant to the Pledge Agreement, together with an undated transfer form for each
such certificate duly executed in blank by the registered owner thereof;

(L) A duly executed consent from the sole general partner of each limited
partnership the Ownership Interests of which are pledged by the Pledgor to the
Lender pursuant to the Pledge Agreement; and

(M) An opinion of counsel for the Credit Parties in form and substance
satisfactory to the Lender and its counsel.

(2) All acts and conditions (including, without limitation, the obtaining of any
necessary regulatory approvals and the making of any required filings, recordings or
registrations) required to be done and performed and to have happened precedent to the
execution, delivery and performance of the Loan Documents and to constitute the same legal,
valid and binding obligations, enforceable in accordance with their respective terms, shall
have been done and performed and shall have happened in due and strict compliance with all
applicable laws.

(3) All documentation, including, without limitation, documentation for corporate and
legal proceedings in connection with the transactions contemplated by the Loan Documents
shall be satisfactory in form and substance to the Lender and its counsel, and all legal and
financial due diligence on the Company and the Pledgor and their respective operations and
conditions shall be completed and shall be satisfactory to Lender and its counsel.

(4) The Company shall have paid the Origination Fee to the Lender.

4(b) As conditions precedent to the Lender’s election to make any Advance hereunder (including
without limitation the initial Loan):

(1) The Company shall have delivered each of the following to the Lender:

(a) a Loan Request for such Advance;

(b) a written description in form and substance satisfactory to the Lender of
the Property to be acquired in connection with such Advance (or such other
information with respect to such Property as the Lender may reasonably request); and

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

(2) The representations and warranties of the Credit Parties contained in the Loan
Documents shall be accurate and complete in all material respects as if made on and as of
the date of such Advance.

(3) There shall not have occurred an Event of Default which is continuing.

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

By making a Loan Request to the Lender hereunder, the Credit Parties shall be deemed to have
represented and warranted the accuracy and completeness of the statements set forth in
subparagraphs 4(b)(2) through 4(b)(4) above.

5. Representations and Warranties of the Company.

The Company represents and warrants to the Lender, on behalf of itself and as sole general
partner of the Pledgor, that:

5(a) Corporate Existence; Compliance with Law. The Company: (1) is duly
organized, validly existing and in good standing as a corporation under the laws of Maryland
and is qualified to do business in each other jurisdiction where its ownership of property
or conduct of business requires such qualification and where failure to qualify could have a
material adverse effect on the Company or its property or business or on the ability of the
Company to pay or perform the Obligations, (2) has the corporate power and authority and the
legal right to own and operate its property and to conduct business in the manner in which
it does and proposes so to do, and (3) is in compliance with all Requirements of Law and
Contractual Obligations, the failure to comply with which could have a material adverse
effect on the business, operations, assets or financial or other condition of the Company.
The Pledgor: (1) is duly organized, validly existing and in good standing as a limited
partnership under the laws of Virginia and is qualified to do business in each other
jurisdiction where its ownership of property or conduct of business requires such
qualification and where failure to qualify could have a material adverse effect on the
Pledgor or its property or business or on the ability of the Pledgor to perform its
obligations under the Pledge Agreement, (2) has the corporate power and authority and the
legal right to own and operate its property and to conduct business in the manner in which
it does and proposes so to do, and (3) is in compliance with all Requirements of Law and
Contractual Obligations, the failure to comply with which could have a material adverse
effect on the business, operations, assets or financial or other condition of the Pledgor.

5(b) Corporate Power; Authorization; Enforceable Obligations The Company has
the corporate power and authority and the legal right to execute, deliver and perform the
Loan Documents to which the Company is a party and has taken all necessary corporate action
to authorize the execution, delivery and performance of the Loan Documents to which the
Company is a party. The Loan Documents to which the Company is a party have been duly
executed and delivered on behalf of the Company and constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with their
respective terms, subject to the effect of applicable bankruptcy and other similar laws
affecting the rights of creditors generally and the effect of equitable principles whether
applied in an action at law or a suit in equity. The Pledgor has the limited partnership
power and authority and the legal right to execute, deliver and perform the Loan Documents
to which the Pledgor is a party and has taken all necessary limited partnership action to
authorize the execution, delivery and performance of the Loan Documents to which the Pledgor
is a party. The Loan Documents to which the Pledgor is a party have been duly executed and
delivered on behalf of the Pledgor and constitute legal, valid and binding obligations of
the Pledgor enforceable against the Pledgor in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting the rights
of creditors generally and the effect of equitable principles whether applied in an action
at law or a suit in equity.

5(c) Financial Condition. The financial statements which have been furnished
to the Lender, are complete and correct and have been prepared to present fairly, in
accordance with GAAP, the financial condition of the Company and its Subsidiaries at such
dates and the results of its operations and changes in financial position for the fiscal
periods then ended.

5(d) Ownership of Assets. The Company, through the Pledgor and its
Subsidiaries, is and will be the sole lawful owner of those apartment properties listed on
Schedule 5(d) attached hereto (as such Schedule may be updated from time to time in
accordance with Paragraph 6(i)) (collectively, subject to any such updates, the
“Properties”). The Company, through the Pledgor and its Subsidiaries, has full
right and title in and to the Properties, free and clear of any lien, security interest,
pledge, mortgage, adverse claim or right, charge or encumbrance (other than encumbrances in
the nature of zoning restrictions, easements and rights or restrictions of record on the use
of real property, which in the aggregate are not substantial in amount and which do not, in
any case, detract from the value of such property or impair the use thereof in the ordinary
conduct of business) other than as set forth in the Property Loan Documents or as otherwise
noted on Schedule 5(d) as of the date hereof.

5(e) Contrary Agreements. Neither the Company nor the Pledgor has made, nor
will either Credit Party at any time without obtaining the prior written consent of the
Lender make, any agreement which prohibits or restricts the pledging or creation of liens
upon the Ownership Interests of the Property Owners or which creates a lien on the Ownership
Interests of the Property Owners, other than as set forth in or permitted pursuant to the
Property Loan Documents and as created pursuant to the Pledge Agreement.

5(f) No Legal Bar. The execution, delivery and performance of the Loan
Documents, the borrowing hereunder and the use of the proceeds thereof, will not violate any
Requirement of Law or any Contractual Obligation of the Company or of the Pledgor the
violation of which could have a material adverse effect on the business, operations, assets
or financial or other condition of the Company or of the Pledgor.

5(g) Consents, etc. No consent, approval, authorization of, or registration,
declaration or filing with, any Governmental Authority is required on the part of the
Company or of the Pledgor in connection with the execution and delivery of the Loan
Documents or the performance of or compliance with the terms, provisions and conditions
hereof or thereof.

5(h) Investment Company Act. Neither the Company nor the Pledgor is an
“investment company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

5(i) Federal Reserve Board Regulations. Neither the Company nor the Pledgor is
engaged, or will engage, principally or as one of its important activities, in the business
of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of such terms under Regulation U. No part of the proceeds of the
Loan issued hereunder will be used, directly or indirectly, for “purchasing” or “carrying”
“margin stock” as so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of the Board of Governors of the
Federal Reserve System.

5(j) Subsidiaries. The attached Schedule II is a complete listing of any and
all

Subsidiaries of the Company and of the Pledgor.

5(k) Further Documents. Each of the Company and the Pledgor agrees to execute
and deliver and to cause to be executed and delivered to the Lender from time to time such
documents, instruments and agreements as the Lender may reasonably require, which are in the
Lender’s reasonable judgment necessary to obtain for the Lender the benefit of the Loan
Documents.

5(l) REIT Status. The Company is a “real estate investment trust” within the
meaning of Section 856 of the Code, and is being operated in accordance with the rules for
qualification as a “real estate investment trust” under Sections 856 through 860 of the
Code.

6. Affirmative Covenants. The Company hereby covenants and agrees with the Lender, on
behalf of itself and as sole general partner of the Pledgor, that, as long as any Obligations
remain unpaid, each of the Company and the Pledgor shall:

6(a) Payment of Indebtedness. Pay or otherwise satisfy at or before maturity
or before it becomes delinquent or accelerated, as the case may be, all its Indebtedness
(including taxes), except Indebtedness being contested in good faith by appropriate
proceedings and for which provision is made to the satisfaction of the Lender for the
payment thereof in the event the Company or the Pledgor, as applicable, is found to be
obligated to pay such Indebtedness and which Indebtedness is thereupon promptly paid by the
Company or the Pledgor, as applicable.

6(b) Maintenance of Existence and Properties. Maintain its corporate existence
and obtain and maintain all rights, privileges, licenses, approvals, franchises, properties
and assets necessary or desirable in the normal conduct of its business.

6(c) Inspection of Property; Books and Records; Audits; Financial Statements; Equity
Proceeds.

(1) Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and

(2) Permit: (i) representatives of the Lender to (A) visit and inspect any of
its properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired by the Lender, (but,
prior to the occurrence of an Event of Default, only upon not less than two Business
Days’ prior notice), and (B) discuss the business, operations, properties and
financial and other condition of the Company or the Pledgor with officers and
employees of the Company or the Pledgor, and with the independent certified public
accountants of the Company or the Pledgor, (ii) representatives of the Lender to
conduct periodic operational audits of the Company’s or the Pledgor’s business and
operations of the Company or the Pledgor and (iii) representatives of the Lender to
conduct appraisals with respect to any Property upon the Lender’s request.

(3) Prepare and deliver to Lender, upon request, for each of its first three
(3) fiscal quarters in each fiscal year, beginning with the fiscal quarter in which
closing occurs, on or before the fiftieth (50th) day following the end of
such fiscal quarter, a copy of the Company’s 10Q report as filed with the Securities
and Exchange Commission and for each fiscal year, on or before the ninety-fifth
(95th) day following the end of such fiscal year, a copy of the
Company’s 10K report as filed with the Securities and Exchange Commission, in each
case certified to be true and correct by the Chief Financial Officer of the Company.

(4) Prepare and deliver to Lender as soon as practicable and in any event
within thirty (30) days after the end of each month in each fiscal year, a
certificate certified by the Chief Financial Officer of the Company of the amount of
all Equity Proceeds received by the Company during such period.

6(d) Notices. Promptly give written notice to the Lender of:

(1) The occurrence of any Potential Default or Event of Default known to
responsible management personnel of the Company or the Pledgor and the proposed
method of cure thereof;

(2) Any litigation or proceeding affecting the Company, the Pledgor or any
Property Owner which could reasonably be expected to have a material adverse effect
on the business, operations, property, or financial or other condition of the
Company, the Pledgor or any Property Owner;

(3) A material adverse change known to responsible management personnel of the
Company or the Pledgor in the business, operations, property or financial or other
condition of the Company, the Pledgor or any Property Owner;

(4) A default under the terms of any Indebtedness to which the Company, the
Pledgor or any Property Owner is a party (whether or not such default gives rise to
the right of the affected lender to accelerate such Indebtedness); and

(6) Any violation of any Requirements of Law or Contractual Obligations to
which the Company, the Pledgor or any Property Owner may be subject or a party.

6(e) Expenses and Indemnification. (1) Pay all reasonable out-of-pocket costs
and expenses (including fees and disbursements of legal counsel): (A) of the Lender incident
to the preparation, negotiation and administration of the Loan Documents, including with
respect to or in connection with any waiver or amendment thereof or thereto, (B) of the
Lender associated with any periodic audits or appraisals conducted pursuant to Paragraph
6(c)(2)(ii) or (iii) above (provided, that so long as no Event of Default has
occurred and is continuing, the Company shall only be required to reimburse the Lender for
such expenses with respect to an audit, or with respect to an appraisal of any Property, on
up to one (1) occasion per fiscal year per audit or per Property), and (C) of the Lender
incident to the enforcement of payment of the Obligations, whether by judicial proceedings
or otherwise, including, without limitation, in connection with bankruptcy, insolvency,
liquidations, reorganization, moratorium or other similar proceedings involving the Company,
the Pledgor or any Property Owner or a “workout” of the Obligations.

(2) Defend, indemnify and hold harmless the Lender and its parents, Subsidiaries,
Affiliates, employees, agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses, suffered by any
such Person in connection with any claim (including, without limitation, any environmental
claims or civil penalties or fines assessed by OFAC), investigation, litigation or other
proceeding (whether or not the Lender is a party thereto) and the prosecution and defense
thereof, arising out of or in any way connected with this Agreement or any other Loan
Document or any Advances, or any documents, reports or other information provided to the
Lender or contemplated by or referred to herein or therein or the transactions contemplated
hereby or thereby, including without limitation reasonable attorney’s and consultant’s fees,
except to the extent that any of the foregoing directly result from the gross negligence or
willful misconduct of the Lender.

(3) The obligations of the Company and the Pledgor under this Paragraph 6(e) shall
survive payment of all other Obligations.

6(f) Loan Documents. Comply with and observe all terms and conditions of the
Loan Documents applicable to the Company or to the Pledgor.

6(g) Insurance. Obtain and maintain insurance with responsible companies in
such amounts and against such risks as are usually carried by corporations engaged in
similar businesses similarly situated, including, without limitation, errors and omissions
coverage and fidelity coverage in form and substance acceptable to the Lender, and furnish
the Lender on request full information as to all such insurance, and to provide within five
(5) days after receipt, certificates or other documents evidencing the renewal of each such
policy.

6(h) Compliance With Laws and Approvals. Observe and remain in compliance in
all material respects with all applicable laws and maintain in full force and effect all
governmental approvals, in each case applicable to the conduct of its business.

6(i) Grant of Lien and Security Interest. In the event that, prior to the
Maturity Date, in connection with the acquisition of any Property with the proceeds of an
Advance hereunder, an additional Property Owner is formed or acquired by the Company or any
Subsidiary thereof (whether now existing or hereafter organized), the Company shall, or
shall cause such Subsidiary to, (i) pledge a security interest in all of the Ownership
Interests of such newly formed or acquired Property Owner by delivering to the Lender a duly
executed supplement to the Pledge Agreement or such other document as the Lender shall deem
appropriate for such purpose and comply with the terms of the Pledge Agreement, (ii) deliver
to the Lender the Property Loan Documents executed or to be executed in connection with the
acquisition of such Property, which Property Loan Documents shall be on terms and conditions
reasonably satisfactory to the Lender and shall include, without limitation, due on sale and
transfer provisions (including provisions that specifically permit and consent to the pledge
of one hundred percent (100%) of the Ownership Interests of such Property Owner to the
Lender as security for the Obligations) reasonably satisfactory to the Lender in its sole
discretion, (iii) deliver to the Lender the organizational documents of such Property Owner,
which documents shall be on terms and conditions reasonably satisfactory to the Lender
(including, without limitation, terms that permit the transfer of the Ownership Interests in
such Property Owner in connection with the pledge thereof to the Lender), (iv) deliver to
the Lender such documents and certificates referred to in Paragraph 4 as the Lender may
reasonably request, (v) deliver to the Lender such updated Schedules to the Loan Documents
as requested by the Lender with respect to such additional Property Owner and Property and
(vi) deliver to the Lender such other documents as may be reasonably requested by the
Lender, all in form, content and scope reasonably satisfactory to the Lender and all at the
expense of the Company. For the avoidance of doubt, it is hereby agreed and acknowledged by
the parties hereto that the foregoing Paragraph 6(i) shall not apply to the acquisition of
the Villas of El Dorado by Apartment REIT Villas of El Dorado, LLC.

6(j) Rent Rolls. Upon the request of the Lender, promptly (and in all events
within two (2) Business Days after the request therefor) deliver to the Lender updated rent
rolls with respect to each Property.

7. Negative Covenants. The Company hereby agrees with the Lender, on behalf of itself
and as sole general partner of the Pledgor, that, as long as any Obligations remain unpaid, neither
the Company nor the Pledgor shall at any time, directly or indirectly:

7(a) Consolidation and Merger; Change of Business. Liquidate or dissolve or
enter into any consolidation or merger or enter into any partnership, joint venture,
syndicate or other combination or make any change in the nature of its business as presently
conducted.

7(b) Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any
of its assets (other than obsolete or worn out property but including, without limitation,
the Properties), whether now owned or hereafter acquired, without the prior written consent
of Lender.

7(c) Additional Indebtedness. Incur any additional Indebtedness (at the
Company or Pledgor level, or on or secured by (including, without limitation, any lien,
pledge, encumbrance or hypothecation of or on) any real property owned by the Company, the
Pledgor, or any of their Subsidiaries) other than trade payables incurred in the ordinary
course of business.

7(d) Embargoed Person. Permit (1) any of the funds or assets of the Company or
the Pledgor that are used to repay the Loan to constitute property of, or be beneficially
owned directly or, to the Company’s and the Pledgor’s best knowledge, indirectly, by any
person subject to sanctions or trade restrictions under United States law (“Embargoed
Person” or “Embargoed Persons”) that are identified on (A) the “List of
Specially Designated Nationals and Blocked Persons” maintained by the Office of Foreign
Assets Control (OFAC), U.S. Department of the Treasury, and/or to Company’s and the
Pledgor’s best knowledge, as of the date thereof, based upon reasonable inquiry by Company
and the Pledgor, on any other similar list maintained by OFAC pursuant to any authorizing
statute including, but not limited to, the International Emergency Economic Powers Act, 50
U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1
et seq., and any Executive Order or regulation promulgated thereunder, with
the result that the investment in the Company or the Pledgor (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in violation of law,
or (B) Executive Order 13224 (September 23, 2001) issued by the President of the United
States (“Executive Order Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism”), any related enabling legislation or any
other similar Executive Orders, and (2) any Embargoed Person to have any direct interest,
and to the Company’s and the Pledgor’s best knowledge, as of the date hereof, based upon
reasonable inquiry by the Company and the Pledgor, indirect interest, of any nature
whatsoever in the Company or the Pledgor, as applicable, with the result that the investment
in the Company or the Pledgor (whether directly or indirectly), is prohibited by law or the
Loan is in violation of law.

7(e) Anti-Money Laundering. Permit any of the funds of Company or Pledgor, as
applicable, that are used to repay the Loan to be derived from any unlawful activity, with
the result that the investment in the Company or Pledgor (whether directly or indirectly),
is prohibited by law or the Loan is in violation of law.

7(f) Distributions During Default. Upon the occurrence of any Event of
Default, and for so long as any such Event of Default in ongoing, the Company shall make no
dividends or distributions to any equity holder except to the extent required by law.

7(g) No Contrary Agreements. The Company shall not make, and shall not permit
any of its Subsidiaries (including without limitation the Pledgor or any Property Owner) to
make, any agreement which (i) prohibits or restricts the pledging or creation of liens upon
any Property (other than the liens created pursuant to the Property Loan Documents) or (ii)
creates a lien on any Property (other than the liens created pursuant to the Property Loan
Documents).

7(h) Management Fees. The Company shall not pay, and shall not permit any of
its Subsidiaries (including without limitation the Pledgor or any Property Owner) to pay,
management fees in respect of any Property in excess of five percent (5%) of the gross
income with respect to such Property.

7(i) Amendments to Property Loan Documents. The Company shall not, and shall
not permit any of its Subsidiaries (including, without limitation, the Pledgor or any
Property Owner) to (i) amend or modify any of the terms or provisions of any Property Loan
Document in any respect which would adversely affect the rights or interests of the Lender
hereunder or under any other Loan Document, including, without limitation, by increasing the
amount of any Indebtedness evidenced by any Property Loan Documents, or (ii) incur any
additional Indebtedness secured by any Property or by any Ownership Interests in any
Property Owner.

7(j) REIT Status and Compliance. The Company shall not (i) revoke its election
to be a “real estate investment trust” within the meaning of Section 856 of the Code or (ii)
take or fail to take any action that will cause such election to be terminated or to cease
to be valid at any time, in either case which would cause an Event of Default.

8. Events of Default. Upon the occurrence of any of the following events (an “Event
of Default”):

8(a) The Company shall fail to pay principal (including, without limitation, pursuant
to Section 2(k)) or interest on the Loan, or the fee specified in paragraph 1(e), in each
case, (i) within five (5) days after notice of such failure has been given to the Company by
the Lender (provided, that this Paragraph 8(a)(i) shall only apply to the Company’s failure
to pay any such amount on up to two (2) occasions per fiscal year) or (ii) otherwise, when
due; or

8(b) Any representation or warranty made by any Credit Party in any Loan Document or in
connection with any Loan Document shall be false or untrue in any material respect on or as
of the date made; or

8(c) Any provision of this Agreement or any provision of any other Loan Document shall
for any reason cease to be valid and binding on the Company or any other Credit Party party
thereto or any such Person shall so state in writing, or any Loan Document shall for any
reason cease to create a valid and perfected first priority Lien on, or security interest
in, any of the Pledged Assets purported to be covered thereby, in each case, other than in
accordance with the express terms hereof or thereof; or

8(d) Any Credit Party shall fail to observe or perform any other term or provision
contained in the Loan Documents and such failure shall continue for thirty (30) days; or

8(e) Any Credit Party shall default in any payment of principal of or interest on any
Indebtedness in the aggregate principal amount of $100,000 or more (and without regard for
the dollar amount of the defaulted payment), or any other event shall occur, the effect of
which is to permit such Indebtedness to be declared or otherwise to become due prior to its
stated maturity; or

8(f) (1) Any Credit Party shall commence any case, proceeding or other action (i)
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to such Credit Party, or seeking to adjudicate such
Credit Party a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect to such
Credit Party or its debts, or (ii) seeking appointment of a receiver, trustee, custodian or
other similar official for such Credit Party or for all or any substantial part of the
assets of such Credit Party, or such Credit Party shall make a general assignment for the
benefit of its creditors; or (2) there shall be commenced against any Credit Party any case,
proceeding or other action of a nature referred to in clause (1) above which (i) results in
the entry of an order for relief or any such adjudication or appointment, or (ii) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (3) there shall be
commenced against any Credit Party any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
substantially all of the assets of such Credit Party which results in the entry of an order
for any such relief which shall not have been vacated, discharged, stayed, satisfied or
bonded pending appeal within sixty (60) days from the entry thereof; or (4) any Credit Party
shall take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in (other than in connection with a final settlement), any of the acts set
forth in clauses (1), (2) or (3) above; or (5) any Credit Party shall generally not, or
shall be unable to, or shall admit in writing its inability to pay its debts as they become
due; or

8(g) One or more judgments or decrees in an aggregate amount in excess of $100,000
shall be entered against any Credit Party and all such judgments or decrees shall not have
been vacated, discharged, stayed, satisfied or bonded pending appeal within sixty (60) days
from the entry thereof;

THEN:

(1) Automatically upon the occurrence of an Event of Default under Paragraph
8(f) above; and

(2) In all other cases under this Paragraph 8, at the option of the Lender;

the principal balance of outstanding Loan and interest accrued but unpaid thereon shall become
immediately due and payable, without demand upon or presentment to the Company, which are expressly
waived by the Company.

Notwithstanding anything to the contrary contained above, the parties hereto agree that in the
event that the Company fails to make any mandatory payment of principal and interest as set forth
in Paragraph 2(c)(i) above as and when due, the Lender may, at its sole option, (a) elect to obtain
consent from each lender party to any Property Loan Documents to obtain a pledge of up to one
hundred percent (100%) of the Ownership Interests of each Property Owner as security for the
Obligations, and upon receiving any such consent shall require the Pledgor to grant such a pledge
in favor of the Lender as security for the Obligations or (b) require repayment of the Loan with
any net income from any Property or from any other assets of the Company. The Company and the
Pledgor shall use their best efforts to assist the Lender in obtaining such consent and such
pledge. The exercise of any rights of the Lender hereunder shall not constitute a waiver of any
Event of Default which may have occurred.

9. Miscellaneous Provisions.

9(a) Assignment. The Company may not assign its rights or obligations under
this Agreement without the prior written consent of the Lender. Subject to the foregoing,
all provisions contained in this Agreement or any document or agreement referred to herein
or relating hereto shall inure to the benefit of the Lender, and its successors and assigns,
and shall be binding upon the Company, and its successors and assigns.

9(b) Amendment. Neither this Agreement nor any of the other Loan Documents may
be amended or terms or provisions hereof or thereof waived unless such amendment or waiver
is in writing and signed by the Lender and the Company (and by each other Person, if any,
party to such Loan Document).

9(c) Cumulative Rights; No Waiver. The rights, powers and remedies of the
Lender under the Loan Documents are cumulative and in addition to all rights, powers and
remedies provided under any and all agreements among the Credit Parties and the Lender
relating hereto, at law, in equity or otherwise. Any delay or failure by the Lender to
exercise any right, power or remedy shall not constitute a waiver thereof by the Lender, and
no single or partial exercise by the Lender of any right, power or remedy shall preclude
other or further exercise thereof or any exercise of any other rights, powers or remedies.

9(d) Entire Agreement. This Agreement and the documents and agreements
referred to herein embody the entire agreement and understanding between the parties hereto
and supersede all prior agreements and understandings relating to the subject matter hereof
and thereof.

9(e) Survival. All representations, warranties, covenants and agreements on
the part of the Credit Parties contained in the Loan Documents shall survive the termination
of this Agreement and shall be effective until the Obligations are paid and performed in
full or longer as expressly provided herein.

9(f) Notices. All notices given by any party to the others under the Loan
Documents shall be in writing unless otherwise provided for herein, delivered personally or
by depositing the same in the United States mail, registered, with postage prepaid,
addressed to the party at the address set forth on Schedule I attached hereto. Any
party may change the address to which notices are to be sent by notice of such change to
each other party given as provided herein. Such notices shall be effective on the date
received or, if mailed, on the third Business Day following the date mailed.

9(g) Governing Law/Waiver of Jury Trial. This Agreement shall be governed by
and construed in accordance with the laws of the State of North Carolina. TO THE EXTENT
PERMITTED BY LAW, EACH OF LENDER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THE LOAN DOCUMENTS.

9(h) Counterparts. This Agreement and the other Loan Documents may be executed
in any number of counterparts, all of which together shall constitute one agreement.

9(i) Binding Arbitration. Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any dispute, claim or controversy arising
out of, connected with or relating to the Note or any other Loan Document (“Disputes”),
between or among parties to the Note or any other Loan Document shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a party does not
waive the right of that party to demand arbitration hereunder. Disputes may include,
without limitation, tort claims, counterclaim, claims brought as class actions, claims
arising from Loan Documents executed in the future, or claims concerning any aspect of the
past, present or future relationships arising out of or connected with the Loan Documents.
Arbitration shall be conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association and
Title 9 of the U.S. Code. All arbitration hearings shall be conducted in Charlotte, North
Carolina. The expedited procedures set forth in Rule 51, et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable
statutes of limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys. The single arbitrator selected for expedited procedure
shall be a retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted. Notwithstanding the foregoing, this
paragraph shall not apply to any hedging arrangement that is a Loan Document.

10. Definitions. For purposes of this Agreement, the terms set forth below shall have
the following meanings:

“Advance” shall have the meaning set forth in Paragraph 1(a).

“Advance Date” shall have the meaning set forth in Paragraph 1(d).

“Affiliate” shall mean, as to any Person, any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with, such Person. “Control”
as used herein means the power to direct the management and policies of such Person.

“Aggregate Availability” shall mean, as of any date of determination, the lesser of
(a) $10,000,000.00 and (b) the difference of (i) ninety percent (90%) of the aggregate Appraised
Value for all of the Properties as of such date, minus (ii) the aggregate outstanding
principal amount of the Property Loans as of such date.

“Agreement” shall mean this Agreement, as the same may be amended, restated,
supplemented, modified, extended or replaced from time to time.

"Applicable LIBOR Rate” shall mean, with respect to a LIBOR Loan, the rate per annum
(rounded upward, if necessary, to the next higher 1/32 of one percent (.03125%)) calculated in
accordance with the following formula:

Applicable LIBOR Rate =  LR  + LIBOR Spread 1-LRP

	 	 	 	 	 
	where:

	 	

	 	

	
 
	 	LR =

LRP =
	 	LIBOR Rate; and

LIBOR Reserve Percentage.

"Applicable Prime Rate” shall mean the Prime Rate plus the Prime Rate Spread.

“Appraised Value” shall mean, as of any date of determination, for each Property, the
amount that such Property would receive in an arm’s length sale of such Property as determined by
an appraiser mutually acceptable to the Company and the Lender. If an updated appraisal is
requested by the Lender with respect to any Property, the appraiser shall render its decision on
the Appraised Value of the subject Property within thirty (30) days of the Lender’s request for
such appraisal. The costs and expenses of any appraisal made with respect to any Property shall be
paid by the Company.

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which
banks in Charlotte, North Carolina are authorized or obligated to close their regular banking
business.

“Closing Date” shall mean the date of this Agreement or such later Business Day upon
which each condition described in Paragraph 4 shall be satisfied or waived in all respects in a
manner acceptable to the Lender, in its sole discretion.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company” shall have the meanings given such term in the introductory paragraph
hereof.

“Contractual Obligation” as to any Person shall mean any provision of any security
issued by such Person or of any agreement, instrument or undertaking to which such Person is a
party or by which it or any of its property is bound.

“Credit Parties” shall mean, collectively, the Company and the Pledgor, and “Credit
Party” shall mean either such Person individually.

“Equity Proceeds” shall mean any and all sums invested in the Company (including
dividend reinvestment) on or after the date hereof in the nature of equity including, without
limitation, common and preferred stock (whether or nor convertible into common stock), options or
warrants to acquire stock, and subordinated debt (whether or not convertible into stock), net of
any reasonable and customary costs of sale and issuance of such equity.

“Event of Default” shall have the meaning set forth in Paragraph 8 above.

“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 shall be deemed to be $10,000,000.

“GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

“Indebtedness” of any Person shall mean all items of indebtedness which, in accordance
with GAAP and practices thereof, would be included in determining liabilities as shown on the
liability side of a statement of condition of such Person as of the date as of which indebtedness
is to be determined, including: without limitation, all obligations for money borrowed, all amounts
for which such Person may be obligated under gestation or other repurchase facilities, and shall
also include all indebtedness and liabilities of others assumed or guaranteed by such Person or in
respect of which such Person is secondarily or contingently liable (other than by endorsement of
instruments in the course of collection) whether by reason of any agreement to acquire such
indebtedness or to supply or advance sums or otherwise.

“Interest Expense” shall mean, for any period, the gross interest expense (including,
without limitation, interest expense attributable to capital leases and all net payment obligations
pursuant to hedging agreements or interest rate contracts) of the applicable Person determined on a
consolidated basis, without duplication, in accordance with GAAP.

"Interest Period” shall mean with respect to the Loan while it is a LIBOR Loan, the
period commencing on the date of each Advance and ending one month thereafter, and each subsequent
one (1) month period thereafter beginning on the date following the last day of the immediately
preceding Interest Period.

“Lender” shall have the meaning given such term in the introductory paragraph hereof.

"LIBOR Loan” shall mean the Loan at such time as it is bearing interest at the
Applicable LIBOR Rate.

"LIBOR Rate” shall mean, with respect to a LIBOR Loan, for any Interest Period, the
rate obtained on the Reuters Screen LIBOR01 Page as being the rate at which deposits in immediately
available U.S. dollars having a maturity equal to approximately one (1) month are offered to or by
reference banks in the London interbank market, as determined by the Lender at the opening of
business on the Business Day which is two (2) Business Days preceding the last day of the previous
Interest Period.

"LIBOR Reserve Percentage” shall mean for any day, that percentage expressed as a
decimal, which is in effect on such day, as specified by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum aggregate reserve requirement
(including all basis, supplemental, marginal and other reserves) which is imposed on eurocurrency
liabilities.

“LIBOR Spread” shall mean four and fifty one hundredths percent (4.50%).

“Lien” shall mean any security interest, mortgage, pledge, lien, claim on property,
charge or encumbrance (including any conditional sale or other title retention agreement), any
lease in the nature thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code of any jurisdiction.

"Loan” shall have the meaning given such term in Paragraph 1(a) above.

“Loan Documents” shall mean this Agreement, the Note, the Pledge Agreement and each
other document, instrument and agreement executed by the Company or the Pledgor in connection
herewith, as any of the same may be amended, extended or replaced from time to time.

“Loan Request” shall mean a request by the Company to the Lender of an Advance under
this Agreement, which Loan Request shall (i) specify the principal amount of the Advance so
requested and (ii) contain a certification by the Company that the Company is in compliance with
Paragraph 4(b).

“Maturity Date” shall mean November 1, 2008 as such date may be extended by the
Lender, in its sole and absolute discretion, in accordance with Paragraph 2(c).

“Net Operating Income” shall mean, with respect to any Property, as calculated as of
the last day of each fiscal quarter of the Company, the sum of (i) the net income (or loss) before
extraordinary items derived from such Property for the period of four (4) consecutive fiscal
quarters of the Company ending on such date, as determined in accordance with GAAP, plus
(ii) to the extent deducted in the determination of net income (or loss) for such Property for such
period, (A) Interest Expense, (B) federal, state and local income taxes, (C) depreciation and (D)
amortization.

“Note” shall mean have the meaning given such term in Paragraph 2(b) hereof.

“Obligations” shall mean any and all debts, obligations and liabilities of the Credit
Parties to the Lender (whether now existing or hereafter arising, voluntary or involuntary, whether
or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished and later increased,
created or incurred), arising out of or related to the Loan Documents.

“Ownership Interests” means (a) in the case of a corporation, capital stock, (b) in
the case of an association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of capital stock, (c) in the case of a
partnership, partnership interests (whether general or limited), (d) in the case of a limited
liability company, membership interests and (e) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.

“Person” shall mean any corporation, natural person, firm, joint venture,
partnerships, trust, unincorporated organization or Governmental Authority.

“Pledge Agreement” shall mean that certain pledge agreement in the form attached
hereto as Exhibit C of even date herewith executed by the Pledgor in favor of the Lender,
as amended, restated, supplemented or otherwise modified from time to time.

“Pledged Assets” shall mean the “Collateral,” as defined in the Pledge Agreement.

“Pledgor” shall mean NNN Apartment REIT Holdings, L.P., a Virginia limited
partnership, or any successor or permitted assign thereof.

"Potential Default” shall mean an event which but for the lapse of time or the giving
of notice, or both, would constitute an Event of Default.

“Prime Rate” shall mean a rate per annum equal to the rate announced from time to time
by the Lender to be its “Prime Rate” as such “Prime Rate” may change from time to time, said
changes to occur on the first date the “Prime Rate” changes; it being understood that the “Prime
Rate” is the rate announced by the Lender from time to time as its “Prime Rate” and is not
necessarily the lowest interest rate charged by the Lender to its customers.

"Prime Rate Loan” shall mean the Loan at such time as it is bearing interest at the
Applicable Prime Rate.

“Prime Rate Spread” shall mean three and one-half percent (3.50%).

“Properties” shall have the meaning set forth in Paragraph 5(d) above.

“Property Debt Service Coverage Ratio” shall mean, as of any fiscal quarter end, the
ratio of (a) the aggregate Net Operating Income for all of the Properties for the period of the
four (4) consecutive fiscal quarters ending on or immediately prior to such date to (b) Property
Interest Expense for the period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date.

“Property Interest Expense” shall mean, for any period, that portion of Interest
Expense attributable solely to interest due and payable on the Property Loans, in the aggregate.

“Property Loan Document” shall mean any agreement, note, instrument, certificate or
other document executed by any Property Owner in connection with the Property Loan to which such
Property Owner is a party, all as may be amended, restated, supplemented or otherwise modified from
time to time.

“Property Loans” shall mean those certain first priority real estate-secured loans
made or to be made by various financial institutions to the Property Owners, each of which Property
Loans is secured by a first priority lien on the related Property.

“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 and to any other Person which may become the fee
owner of a Property on or after the date hereof.

“Requirements of Law” shall mean, as to any Person, the Articles or Certificate of
Incorporation and Bylaws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation, or a final and binding determination of an arbitrator or a
determination of a court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” shall have the meaning set forth in Paragraph 1(d).

“Subsidiary” shall mean any corporation, partnership, limited liability company or
joint venture more than fifty percent (50%) of the stock or other ownership interest of which
having by the terms thereof ordinary voting power to elect the board of directors, managers or
trustees of such corporation, partnership or joint venture (irrespective of whether or not at the
time stock of any other class or classes of such corporation, partnership or joint venture shall
have or might have voting power by reason of the happening of any contingency) shall, at the time
as of which any determination is being made, be owned, either directly or through Subsidiaries.

“Total Debt Service Coverage Ratio” shall mean, as of any fiscal quarter end, the
ratio of (a) the aggregate Net Operating Income for all of the Properties for the period of the
four (4) consecutive fiscal quarters ending on or immediately prior to such date to (b) the sum of
(i) Property Interest Expense and (ii) Facility Interest Expense, each for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date.

1

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and sealed
as of the day and year first above written.

NNN APARTMENT REIT, INC.,

a Maryland corporation

By: /s/ Stanley J. Olander, Jr.

Name: Stanley J. Olander, Jr.

Title CEO and President

WACHOVIA BANK, NATIONAL ASSOCIATION,

a national banking association

By: /s/ Bradford Chatigny

Name: Bradford Chatigny

Title: Vice President

2

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