VINEBROOK HOMES TRUST, INC. (Form: 10-12G/A, Received: 06/14/2021 12:39:54)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Amendment No. 1

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g) OF

THE SECURITIES EXCHANGE ACT OF 1934

VINEBROOK HOMES TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland		83-1268857
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

2515 McKinney Avenue, Suite 1100, Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (833) 463-6697

Copies to:

Brian Mitts

Chief Financial Officer,

Assistant Secretary and Treasurer

VineBrook Homes Trust, Inc.

2515 McKinney Avenue, Suite 1100

Dallas, Texas 75201

(833) 463-6697

Charlie Haag

Justin Reinus

Winston & Strawn LLP

2121 North Pearl Street, Suite 900

Dallas, Texas 75201

(214) 453-6500

Securities to be registered pursuant to Section 12(b) of the Act:


Title of each class to be so registered		Name of each exchange on which each class is to be registered
None		None

Securities to be registered pursuant to Section 12(g) of the Act:

Class A Common Stock, par value $0.01 per share

(Title of class)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

TABLE OF CONTENTS


Cautionary Note Regarding Forward-Looking Statements			ii
Item 1. Business.			1
Item 1A. Risk Factors.			13
Item 2. Financial Information.			47
Item 3. Properties.			71
Item 4. Security Ownership of Certain Beneficial Owners and Management.			72
Item 5. Directors and Executive Officers.			74
Item 6. Executive Compensation.			84
Item 7. Certain Relationships and Related Transactions, and Director Independence.			88
Item 8. Legal Proceedings.			98
Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.			99
Item 10. Recent Sales of Unregistered Securities.			101
Item 11. Description of Registrant’s Securities to be Registered.			104
Item 12. Indemnification of Directors and Officers.			121
Item 13. Financial Supplements and Supplementary Data.			123
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.			124
Item 15. Financial Statements and Exhibits.			125

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this General Form for Registration of Securities on Form 10 (this “Form 10”) of VineBrook Homes Trust, Inc. (“we”, “us”, “our”, or the “Company”) other than historical facts may be considered forward-looking statements. In particular, statements relating to our business and investment strategies, plans or intentions, our liquidity and capital resources, our performance and results of operations contain forward-looking statements. Furthermore, all statements regarding future financial performance (including market conditions) are forward-looking statements. We caution investors that any forward-looking statements presented in this Form 10 are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result,” the negative version of these words and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements.

Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you against relying on any of these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

•

risks associated with the COVID-19 pandemic and future outbreak of other highly infectious or contagious diseases;

•

risks associated with our limited operating history and the possibility that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of NexPoint Real Estate Advisors V, L.P. (our “Adviser”), members of VineBrook Homes, LLC’s (our “Manager”) management team or their affiliates;

•

our dependence on our Manager, its affiliates and personnel to conduct our day-to-day operations;

•

risks associated with the Manager’s ability to terminate the Management Agreements (as defined below) and risks associated with any potential internalization of our management functions;

•

loss of key personnel of our Adviser and our Manager;

•

risks associated with the fluctuation in the net asset value (“NAV”) per share amounts;

•

unfavorable changes in economic conditions and their effects on the real estate industry generally and our operations and financial condition, including our ability to access funding and generate returns for stockholders;

•

the risk we make significant changes to our strategies in a market downturn, or fail to do so;

•

risks associated with ownership of real estate, including properties in transition, subjectivity of valuation, environmental matters and lack of liquidity in our assets;

•

risks related to increasing property taxes, homeowner’s associations (“HOAs”) fees and insurance costs may negatively affect our financial results;

•

risks associated with acquisitions, including the risk of expanding our scale of operations and acquisitions even if there is a recovery in the rental and housing markets, which could adversely impact anticipated yields;

•

risks associated with leasing real estate, including the risks that rents do not increase sufficiently to keep pace with rising costs of operations and competitive pressures from other types of properties or market conditions that incentivize tenants to purchase their residences;

•

risks related to tenant relief laws, including laws regulating evictions, rent control laws, executive orders, administrative orders and other regulations that may impact our rental income and profitability;

•

risks related to governmental laws, regulations and rules applicable to our properties or that may be passed in the future;

•

risks relating to the timing and costs of the renovation of properties which has the potential to adversely affect our operating results and ability to make distributions;

•

risks related to our ability to change our major policies, operations and targeted investments without stockholder consent;

•

risks related to failure to maintain our status as a real estate investment trust (“REIT”);

•

risks related to failure of our operating partnership to be taxable as a partnership for federal income tax purposes, possibly causing us to fail to qualify for or to maintain REIT status;

•

risks related to compliance with REIT requirements, which may limit our ability to hedge our liabilities effectively and cause us to forgo otherwise attractive opportunities, liquidate certain of our investments or incur tax liabilities;

•

the risk that the Internal Revenue Service (“IRS”) may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain;

iii

•

the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends;

•

risks associated with the stock ownership restrictions of the Internal Revenue Code of 1986, as amended (the “Code”) for REITs and the stock ownership limit imposed by our charter;

•

recent and potential legislative or regulatory tax changes or other actions affecting REITs;

•

failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels;

•

risks associated with purchasing single-family properties through the foreclosure auction process;

•

damage associated with single-family properties sold through short sales or foreclosure sales may require extensive renovation; and

•

any of the other risks included in this Form 10, including those set forth under the heading “Risk Factors.”

ITEM 1. BUSINESS.

We are filing this Amendment No. 1 to Form 10 to register shares of our Class A common stock, par value $0.01 per share (our “common stock”), pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are subject to the registration requirements of Section 12(g) of the Exchange Act because as of December 31, 2020, the aggregate value of our assets exceeded the applicable threshold and our common stock was held of record by 2,000 or more persons. As a result of the registration of our common stock pursuant to the Exchange Act, following the effectiveness of this Form 10 (as amended), we will be subject to the requirements of the Exchange Act and the rules promulgated thereunder. In particular, we will be required to file Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K and otherwise comply with the disclosure obligations of the Exchange Act applicable to issuers filing registration statements to register a class of securities pursuant to Section 12(g) of the Exchange Act.

General

VineBrook Homes Trust, Inc. (“VineBrook,” the “Company,” “we,” “us,” or “our”) was formed on July 16, 2018 as a Maryland corporation, and elected to be taxed as a real estate investment trust (“REIT”) beginning with its taxable year ended December 31, 2018. We are focused on acquiring, developing, renovating, leasing and operating single-family rental (“SFR”) properties primarily located in the midwestern, heartland and southern U.S. markets. Substantially all of our assets are owned by, and our operations are conducted through, our operating partnership, VineBrook Homes Operating Partnership, L.P. (our “Operating Partnership”). This structure is referred to as an Umbrella Partnership REIT or “UPREIT” structure. We own the majority of the issued and outstanding limited partnership interests of our Operating Partnership. As of March 31, 2021, we, through our Operating Partnership, owned and operated a portfolio of over 13,500 SFR assets located in 16 states (our “Portfolio”).

We are externally managed by our adviser, NexPoint Real Estate Advisors V, L.P. (our “Adviser”), through an amended and restated advisory agreement, dated May 4, 2020, between our Adviser and us (as amended from time to time, the “Advisory Agreement”), subject to the authority of our board of directors (our “Board”) over the management of the Company. Our Adviser’s responsibilities include, among other duties, recommending distributions to our Board, preparing our quarterly and annual consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”), managing our annual audit, developing and maintaining appropriate internal accounting controls, maintaining our REIT status, recommending to the pricing committee of our board of directors our net asset value (“NAV”), processing purchases and redemptions of shares of our common stock, preparing public filings, preparing our tax filings, raising capital for us and procuring debt financing. See Item 5. “Directors and Executive Officers—Our Adviser—Advisory Agreement” for additional information regarding the terms of the Advisory Agreement. Additionally, certain employees of our Adviser serve as some of our directors and executive officers. For additional information regarding our Adviser’s key employees, see Item 5. “Directors and Executive Officers—Our Adviser—Key Employees of Our Adviser.”

Our Portfolio is managed by VineBrook Homes, LLC (our “Manager”), pursuant to the terms of a management agreement, dated November 1, 2018 (as amended from time to time, the “Original Management Agreement”), among our Manager and various wholly owned subsidiaries of our Operating Partnership that own the SFR properties and the amended and restated side letter, dated July 31, 2020, among our Manager, our Operating Partnership and other parties thereto (as amended from time to time, the “Side Letter”). Our Manager entered into two additional management agreements (as amended from time to time, the

“TrueLane Management Agreements”) with other wholly owned subsidiaries of our Operating Partnership in connection with our acquisition of a bulk portfolio of SFR properties on September 30, 2019 (See “—Subsequent Material Acquisitions—TrueLane Acquisition” below for additional information). The TrueLane Management Agreements are on the same terms as the Original Management Agreement and are also subject to the terms of the Side Letter. Our Manager entered into an additional management agreement (as amended from time to time, the “Conrex Management Agreement”) with other wholly owned subsidiaries of our Operating Partnership in connection with our acquisitions of a bulk portfolio of SFR properties on January 22, 2021 and March 1, 2021 (See “—Subsequent Material Acquisitions—Conrex Acquisitions” below for additional information). The Conrex Management Agreement is on the same terms as the Original Management Agreement and is also subject to the terms of the Side Letter. From time to time, our Manager may enter into one or more additional management agreements with other wholly owned subsidiaries of our Operating Partnership in connection with future acquisitions of SFR properties on the same terms as the Original Management Agreement. The Original Management Agreement, the TrueLane Management Agreements, the Conrex Management Agreement and any future management agreements are collectively referred to herein as the “Management Agreements.” See Item 7. “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons—Management Agreements and Side Letter” for additional information regarding the terms of the Management Agreements.

Our Manager is responsible for the day-to-day management of the properties, renovating the homes, leasing the properties, managing tenant situations, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, and other responsibilities customary for the management of SFR properties. In addition, subject to the limitations set forth in our Operating Partnership’s Amended and Restated Agreement of Limited Partnership (as amended from time to time, the “OP LPA”) and oversight from our Operating Partnership’s investment committee (the “Investment Committee”), our Manager is primarily responsible for the identification of potential SFR properties and the acquisition and disposition of SFR properties.

Our principal executive offices are located at 2515 McKinney Avenue, Suite 1100, Dallas, Texas 75201. Our telephone number is (833) 463-6697.

The Formation Transaction

On July 18, 2018, our Operating Partnership and its subsidiaries executed definitive agreements (the “Purchase Agreements”) to acquire the Initial Portfolio (defined below) through a series of restructurings and acquisitions of SFR properties from numerous partnerships and limited liability companies (such partnerships and limited liability companies are collectively referred to herein as the “VineBrook Companies,” and such acquisitions and related transactions are referred to herein as the “Formation Transaction”). The Formation Transaction closed on November 1, 2018, at which time we, through our Operating Partnership, acquired the equity interest in six special purpose entities (“SPEs”), which collectively owned approximately 4,129 SFR assets located in Ohio, Kentucky and Indiana (the “Initial Portfolio”) for a total purchase price of $330.2 million, including closing and financing costs of approximately $6.0 million. In connection with the Formation Transaction, NexPoint Real Estate Opportunities, LLC (“NREO”), an affiliate of NexPoint Advisors, L.P. (“NexPoint”), contributed an SPE which owned a portfolio of SFR properties located in Cincinnati included in the Initial Portfolio and cash in exchange for approximately $70.7 million in Class A units of our Operating Partnership (“OP Units”).

Because we acquired substantially all of the VineBrook Companies’ assets and liabilities by purchasing (via a combination of cash and the issuance OP Units) all general partnership interests, limited partnership interests and equity interests of the VineBrook Companies in connection with the Formation Transaction, we consider the VineBrook Companies on a consolidated basis to be our predecessor.

Subsequent Material Acquisitions

TrueLane Acquisition

On September 30, 2019, we, through our Operating Partnership, acquired a portfolio of 954 SFR properties from an unaffiliated third-party for $73 million (the “TrueLane Acquisition”). The TrueLane Acquisition expanded our footprint to four additional active markets, including Pittsburgh, Pennsylvania, Jackson, Mississippi, Omaha, Nebraska and Little Rock, Arkansas. In connection with the TrueLane Acquisition, our Manager entered into the TrueLane Management Agreements with other wholly owned subsidiaries of our Operating Partnership. The TrueLane Management Agreements are on the same terms as the Original Management Agreement and are also subject to the terms of the Side Letter (See “—General” above and Item 7. “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons—Management Agreements and Side Letter” for additional information regarding the terms of the Management Agreements).

Conrex Acquisitions

On January 22, 2021, we, through our Operating Partnership, acquired a portfolio of 1,725 SFR properties from an unaffiliated third-party for $228.0 million (the “Conrex I Acquisition”). In addition to the $228.0 million purchase price, in connection with the Conrex I Acquisition, we paid an approximately $2.5 million acquisition fee to the Manager which was capitalized as a transaction cost. The Conrex I Acquisition expanded our footprint to seven additional markets in Alabama, Georgia, North Carolina and South Carolina. In connection with the Conrex I Acquisition, our Manager entered into the Conrex Management Agreement with wholly owned subsidiaries of our Operating Partnership. The Conrex Management Agreement is on the same terms as the Original Management Agreement and is also subject to the terms of the Side Letter (See “—General” above and Item 7. “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons—Management Agreements and Side Letter” for additional information regarding the terms of the Management Agreements).

On March 1, 2021, we, through our Operating Partnership, acquired a portfolio of 2,170 SFR properties from an unaffiliated third-party for $282.9 million (the “Conrex II Acquisition”). In addition to the $282.9 million purchase price, in connection with the Conrex II Acquisition, we paid an approximately $3.0 million acquisition fee to the Manager which was capitalized as a transaction cost. The Conrex II Acquisition further expanded our presence in the midwest, heartland and southeast U.S. markets. In connection with the Conrex II Acquisition, our Manager entered into an amendment to the Conrex Management Agreement with wholly owned subsidiaries of our Operating Partnership. The Conrex Management Agreement is on the same terms as the Original Management Agreement and is also subject to the terms of the Side Letter (See “—General” above and Item 7. “Certain Relationships and Related Transactions, and Director Independence—Transactions with Related Persons—Management Agreements and Side Letter” for additional information regarding the terms of the Management Agreements).

We entered into a 120-day agreement with an affiliate of Brookfield Asset Management for the management of a subset of homes purchased in the Conrex I Acquisition and Conrex II Acquisition on a transitional basis, which was mutually terminated early on April 27, 2021.

The portfolio acquired in the Conrex I Acquisition had an occupancy rate of 96.5% and weighted average monthly effective rent per occupied home of $1,167 as of January 22, 2021. The portfolio acquired in the Conrex II Acquisition had an occupancy rate of 89.2% and weighted average monthly effective rent per occupied home of $1,158 as of March 1, 2021. At the time of the acquisition, 93% of the homes we acquired in the Conrex I Acquisition and the Conrex II Acquisition had in place leases and 99.6% of homes were generally in good condition with 99.6% being recently renovated and had minimal deferred maintenance. We intend to renovate less than 0.4% of the homes acquired and to sell less than 0.1% of the homes acquired.

The following table provides a summary of the number of homes, occupancy rate and average rent on a market basis of the 1,725 homes we acquired in the Conrex I Acquisition as of January 22, 2021:


	# of Homes		Occupancy			Avg Rent
Birmingham		309		91.6	%		1,104
Columbia		379		97.6	%		1,211
Indianapolis		276		98.2	%		1,196
Augusta		182		96.2	%		994
Cincinnati		117		98.3	%		1,270
Dayton		64		98.4	%		1,221
Greenville		138		99.3	%		1,228
Kansas City		130		94.6	%		1,164
Triad		52		98.1	%		1,159
Columbus		65		96.9	%		1,214
Huntsville		13		100.0	%		1,024

Total		1,725		96.5	%		1,167

The following table provides a summary of the number of homes, occupancy rate and average rent on a market basis of the 2,170 homes we acquired in the Conrex II Acquisition as of March 1, 2021:


	# of Homes		Occupancy			Avg Rent
Birmingham		438		86.3	%		1,104
Columbia		305		88.5	%		1,191
Indianapolis		217		90.3	%		1,151
Augusta		186		91.4	%		990
Cincinnati		252		96.4	%		1,271
Dayton		125		95.2	%		1,244
Greenville		46		87.0	%		1,228
Kansas City		164		82.9	%		1,201
Triad		35		80.0	%		1,191
Columbus		81		91.4	%		1,196
Huntsville		121		95.0	%		1,074
St. Louis		31		80.6	%		1,188
Montgomery		61		85.2	%		1,061
Jackson		108		82.4	%		1,220

Total		2,170		89.2	%		1,158

We included contractual provisions in both the acquisition agreements under which the sellers are obligated to provide us the books and records of the entities purchased, which would have allowed us to comply with Rule 3-14 by completing and auditing the required financial statements. We have, to date, exhausted all practical avenues by which to obtain the information necessary to provide Rule 3-14 financial statements. Consequently, we believe the essential information for the delivery of Rule 3-14 financial statements cannot be reasonably obtained. There is no affiliation between us and the sellers.

Our Adviser

Our Adviser is an affiliate of NexPoint Real Estate Advisors, L.P. (“NREA”), which is wholly owned by NexPoint. NREA was formed to manage real estate investments for NexPoint managed companies, funds and accounts. The NREA real estate team is led by Matt McGraner and Brian Mitts. Pursuant to the Advisory Agreement, our Adviser manages our business operations, subject to the authority of our Board. Additionally, certain employees of our Adviser serve on our Board, as our officers and on the Investment Committee. The Investment Committee was established pursuant to the terms of the OP LPA and is responsible for making decisions and approvals with respect to asset acquisitions and asset dispositions that exceed a pre-determined amount. The Investment Committee is comprised of three individuals, one appointed by our Adviser and two appointed by our Manager (so long as any Management Agreement remains in place). Currently, Matt McGraner, Dana Sprong and Ryan McGarry are members of the Investment Committee. In accordance with the OP LPA, the Investment Committee has delegated authority to the Manager to acquire or dispose of a limited number of homes. Acquisitions must satisfy the approved guidelines set forth in the Management Agreements, which may be updated from time to time.

For additional information regarding the Adviser’s key employees, see Item 5. “Directors and Executive Officers—Our Adviser—Key Employees of Our Adviser.”

Our Manager

As part of the acquisition of the Initial Portfolio, the entity that managed the SFR properties owned by our predecessor since its inception in 2007 (the “Historical VineBrook Manager”) was not acquired. Instead, the beneficial owners of the Historical VineBrook Manager, which include Dana Sprong, Ryan McGarry, Dan Bathon and Tom Silvia (collectively, the “VineBrook Executives”) formed our Manager for the purpose of managing our Portfolio as an external manager.

Our Manager is led by Dana Sprong, Ryan McGarry, and Graham Strong and has a team of more than 350 professionals with experience in real estate investment, property management operations, construction management and comprehensive financial and metric-focused reporting. The VineBrook Executives have operated in the workforce SFR market since the inception of the VineBrook Companies in 2007, participating in several large acquisitions and financing transactions, demonstrating the ability to identify consolidation and growth opportunities and to subsequently integrate new properties into an existing portfolio. Pursuant to the Management Agreements, our Manager is generally the sole and exclusive manager for our properties (subject to the terms of the Management Agreements), responsible for managing, coordinating and supervising the ordinary and usual business and affairs pertaining to the renovation, operation, maintenance, leasing, and management of properties in an efficient manner satisfactory to us and in compliance with the Management Agreements. In addition, our Manager is primarily responsible for the identification of potential SFR properties and the acquisition and disposition of SFR properties, subject to oversight from the Investment Committee and the terms of the OP LPA. Additionally, certain employees of the Manager serve on our Board, as our officers and on the Investment Committee. From time to time, we may use an unaffiliated third party manager for limited periods to, for example, provide management while our Manager sets up an operations team in a market or to manage homes we acquired as part of a larger portfolio acquisition but plan to sell.

For additional information regarding our Manager’s key employees, see Item 5. “Directors and Executive Officers—Our Manager—Key Employees of Our Manager.”

Under the terms of the Side Letter, at any time, we and our Operating Partnership have the right and option (but not the obligation) to purchase all of the equity interests of our Manager, at a price calculated by a formula specified in the Side Letter (the “Call Right”). The purpose of the Call Right is to provide us, our Operating Partnership, and our and its respective permitted successors and assigns with the ability to perform the responsibilities and obligations of our Manager under the Management Agreements. It is not expected that the Call Right would be exercised, except in the event of our initial public offering or sale at our discretion. In addition, the equity interests of our Manager may not be transferred (directly or indirectly), or additional equity interests issued, without the consent of us and our Operating Partnership, which may be withheld in our discretion.

Our Ownership and Operation Structure

The following chart shows our current ownership structure and our relationship with our Adviser and our Manager.

LOGO

Our Portfolio

As of March 31, 2021, our homes average approximately 1,318 square feet with three bedrooms and one and a half bathrooms. Our homes benefit from high occupancy and low turnover rates due to our extensive renovation process and institutional management, generating stable, durable cash flows. Similarly, as of March 31, 2021, 93% of our Portfolio is comprised of standalone units, with only 7% of properties stemming from duplexes, triplexes, quad-plexes, villas, townhouses, courtyards and condominiums. As of March 31, 2021, 1,779 homes in our Portfolio (13% of our Portfolio) were unoccupied, including 1,331 recently purchased homes (10% of our Portfolio) in rehabilitation and 442 homes (3% of our Portfolio) in turnover between tenants (make-ready turnover). As of March 31, 2021, the average length of leases in our Portfolio was 12 months and the average remaining length of leases in our Portfolio was seven months. We believe our turnover rate is low because of our institutional level of management, affordable pricing and available amenities not found in other SFR rental properties, including a large number of employees and 24/7 support. As of March 31, 2021, the average age of the homes in our Portfolio is 59 years.

The table below provides summary information regarding our Portfolio as of March 31, 2021:


Market	# of Homes		Portfolio Occupancy			Average Effective Rent		# of Stabilized Homes		Stabilized Occupany			Stabilized Average Monthly Rent
Cincinnati		2,738		92.9	%	$	1,076		1,828		97.6	%	$	1,066
Dayton		2,432		93.3	%		961		2,097		98.2	%		940
Columbus		1,368		92.5	%		1,070		1,048		98.2	%		1,071
St. Louis		1,226		76.0	%		946		372		94.1	%		928
Indianapolis		1,059		89.6	%		1,070		403		96.8	%		976
Birmingham		759		87.1	%		1,126		—		n/a			n/a
Columbia		685		93.4	%		1,213		—		n/a			n/a
Kansas City		673		76.4	%		1,066		123		94.3	%		925
Jackson		494		58.9	%		1,040		46		93.5	%		1,079
Memphis		474		91.1	%		852		278		95.0	%		870
Augusta		374		86.6	%		998		—		n/a			n/a
Milwaukee		370		82.7	%		1,033		108		98.1	%		1,147
Pittsburgh		306		66.3	%		894		46		97.8	%		979
Greenville		190		90.5	%		1,242		—		n/a			n/a
Little Rock		137		54.7	%		822		33		100.0	%		885
Huntsville		134		95.5	%		1,144		—		n/a			n/a
Omaha		112		64.3	%		1,100		12		100.0	%		1,089
Triad		95		87.4	%		1,162		—		n/a			n/a
Montgomery		61		86.9	%		1,061		—		n/a			n/a

Sub-Total/Average		13,687		87.0	%	$	1,039		6,394		97.5	%	$	1,001

Held for Sale		6		n/a			n/a		n/a		n/a			n/a

Total/Average		13,693		87.0	%	$	1,039		6,394		97.5	%	$	1,001

Occupancy is calculated as the number of homes occupied as of the respective period end, divided by the total number of homes, expressed as a percentage. We use the definition of stabilized homes as established by the National Rental Home Council (the “NRHC”), a non-profit SFR home trade association. A stabilized home means a home that has had a rehabilitation completed and is either leased or 30 days have expired since the rehabilitation has been completed. In accordance with the NRHC definition of stabilized which allows management certain discretion in the inclusion of acquired homes, we currently do not include homes purchased with a tenant in place as stabilized until (1) we have owned them for an adequate period of time to allow for complete on-boarding to our operating platform and (2) the property has experienced tenant turnover at least once under our ownership, providing the opportunity for rehabilitation to meet our property standards. Since stabilized homes are expected to be held for at least one year, stabilized homes also excludes any assets held for sale. As of March 31, 2021, a total of 53.3% of our Portfolio was excluded from being a stabilized home, with 9.7% of our Portfolio being excluded because the homes were in rehabilitation and 43.6% of our Portfolio being excluded because the homes were purchased with tenants in place. As of March 31, 2021, on average, homes are in rehabilitation for 163 days and the average length of time from acquisition to stabilization for acquired homes is 222 days.

Investment Objectives and Strategy

Our primary investment objectives are to maximize the cash flow and value of properties owned, acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders through targeted management and a renovation program on

the homes purchased. We predominately target markets that exhibit lower institutional competition, household formation growth, and superior revenue growth relative to national averages that still allow us to efficiently operate through market-level density. Our target markets include the following metropolitan statistical areas or MSAs: Cincinnati, Dayton (OH), Columbus (OH), St. Louis, Indianapolis, Birmingham (AL), Kansas City, Memphis, Montgomery (AL), Pittsburgh, Greenville (SC), Columbia (SC), Huntsville (AL), Milwaukee, Omaha, Little Rock, Jackson (MS), Augusta (GA) and the Triad (NC). We believe we can achieve this objective through active portfolio management to take advantage of market opportunities to achieve superior risk adjusted returns. Our Adviser and Manager regularly monitor and stress-test each market and the Portfolio as a whole under various scenarios, enabling us to make informed and proactive investment decisions.

Our Financing Strategy

We intend to use leverage to provide additional funds to support our investment activities, with the expectation that this will enhance returns. Leverage allows us to make more investments than would otherwise be possible, resulting in a broader and more diverse portfolio with potentially higher returns but also with more risk.

We leverage our Portfolio by assuming or incurring secured or unsecured property-level or entity-level debt. An example of property-level debt is a mortgage loan secured by an individual property or portfolio of properties incurred or assumed in connection with the acquisition of such property or portfolio of properties. An example of entity-level debt is a line of credit obtained by us or our Operating Partnership or subsidiaries.

Our actual leverage level will be affected by a number of factors, some of which are outside our control. Significant inflows of proceeds from our ongoing private offering generally will cause our leverage as a percentage of net assets, or our leverage ratio, to decrease, at least temporarily. Our leverage ratio will also increase or decrease with decreases or increases, respectively, in the value of our Portfolio.

Our target leverage is 60-65% loan-to-value (“LTV”), with value being calculated as the value of our assets used to determine our NAV (see Item 2. “Financial Information—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview”) and capital priced at one-month London InterBank Offered Rate (“LIBOR”) plus 150-325 bps, depending on whether the loan is secured or unsecured, the duration of the loan and specific provisions and covenants contained in the loan. We may additionally enter into interest rate swap contracts whereby we synthetically fix floating interest rates on loans.

The following table presents a summary of our current outstanding indebtedness as of March 31, 2021:


	Type		Outstanding Principal as of March 31, 2021
Initial Mortgage		Floating	$	241,400
Warehouse Facility		Floating		100,000
JPM Facility		Floating		320,000
MetLife Note		Fixed		125,000
TrueLane Mortgage		Fixed		10,526
Colony Note		Fixed		9,318
CoreVest Note		Fixed		2,364

			$	808,608
Debt premium, net				563
Deferred financing costs, net of accumulated amortization of $1,794				(9,942	)

			$	799,229

Competition

We face competition from different sources in each of our two primary activities: developing/acquiring properties and renting our properties. We believe our primary competitors in acquiring our target properties through individual acquisitions are individual investors, small private investment partnerships looking for one-off acquisitions of investment properties that can either be rented or restored and sold, and larger investors, including private equity funds and other REITs, that are seeking to capitalize on the same market opportunity that we have identified as well as individuals looking to become homeowners. Our primary competitors in acquiring portfolios of properties or land assets include large and small private equity investors, public and private REITs, other sizeable private institutional investors and other homebuilders. These same competitors may also compete with us for tenants. Competition may increase the prices for properties and land that we would like to purchase, reduce the amount of rent we may charge at our properties, reduce the occupancy of our Portfolio and adversely impact our ability to achieve attractive yields. However, we believe that our acquisition platform, our extensive in-house property management infrastructure and market knowledge in markets that meet our selection criteria provide us with competitive advantages.

Private Offering

On August 28, 2018, we commenced a non-registered continuous private placement of up to 40,000,000 shares of our common stock (the “Private Offering”) pursuant to the safe harbor of Rule 506(b) of Regulation D under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Private Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) November 1, 2023, subject to two one-year extensions at the sole discretion of the Board or (iii) a decision by the Company to terminate the Private Offering. As of March 31, 2021, we have issued 11,533,512 shares of common stock through the Private Offering and under our DRIP resulting in gross offering proceeds of approximately $370.2 million, including 411,577 shares issued under our dividend reinvestment plan (“DRIP”). After fees, commissions and other offering expenses, we received net offering proceeds of approximately $352.4 million. We contributed a majority of the net proceeds from the Private Offering to our Operating Partnership in exchange for OP Units. Our Operating Partnership has used the net proceeds from the Private Offering primarily to acquire and renovate additional SFR properties in new and existing markets and maintain existing SFR properties in our Portfolio.

Human Capital

We have one accounting employee. We are externally managed by our Adviser pursuant to the Advisory Agreement. In addition, our Manager is responsible for the day-to-day management of our Portfolio pursuant to the Management Agreements and Side Letter. We will not have any employees other than accounting and tax employees while the Advisory Agreement is in effect.

Regulation

General

Our properties are subject to various rules, laws and ordinances, and certain of our properties are also subject to the rules of the various HOAs where such properties are located. We believe that we are in material compliance with such covenants, laws, ordinances and rules, and we also require that our tenants agree to comply with such covenants, laws, ordinances and rules in their leases with us.

Fair Housing Act

The Fair Housing Act (“FHA”) and its state law counterparts, and the regulations promulgated by the U.S. Department of Housing and Urban Development and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under the age of 18), handicap or, in some states, financial capability. We believe that our properties are in substantial compliance with the FHA and other regulations.

Environmental Matters

As a current or prior owner of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances, and we could be liable to third parties as a result of environmental contamination or noncompliance at our properties, even if we no longer own such properties. See Item 1A. “Risk Factors—Risks Related to Our Business—Contingent or unknown liabilities could adversely affect our financial condition.” and Item 1A. “Risk Factors—Risks Related to the Real Estate Industry—Environmental hazards outside of our control and the cost of complying with governmental laws and regulations regarding these hazards may adversely affect our operations and performance.”

REIT Qualification

We have elected to be treated as a REIT under the Code, commencing with our taxable year ended on December 31, 2018. We believe that we have been organized and operate in such a manner as to continue to qualify for taxation as a REIT.

Qualification and taxation as a REIT depend on our ability to meet on a continuing basis, through actual operating results, distribution levels, and diversity of stock and asset ownership, various

qualification requirements imposed upon REITs by the Code. Our ability to qualify as a REIT also requires that we satisfy certain asset tests, some of which depend upon the fair market values of assets that we own directly or indirectly. Such values may not be susceptible to a precise determination. Accordingly, no assurance can be given that the actual results of our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT.

If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we failed to qualify as a REIT. Even if we qualify for taxation as a REIT, we may be subject to some U.S. federal, state and local taxes on our income or property or REIT “prohibited transactions” taxes with respect to certain of our activities. Any distributions paid by us generally will not be eligible for taxation at the preferred U.S. federal income tax rates that apply to certain distributions received by individuals from taxable corporations. For additional information see Item 1A. “Risk Factors—Risks Related to Tax.”

Investment Company Act of 1940

We intend to conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act of 1940.

Implications of Being an Emerging Growth Company and Smaller Reporting Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”) and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.

We could remain an “emerging growth company” until the earliest of (1) the end of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (2) the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion, (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (4) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

We are also a “smaller reporting company” as defined in the Exchange Act, and may elect to take advantage of certain of the scaled disclosures available to smaller reporting companies. We may be a smaller reporting company even after we are no longer an “emerging growth company.”

ITEM 1A. RISK FACTORS.

The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements. You should consider carefully the risks described below and the other information in this Form 10, including our consolidated financial statements and the related notes included in this Form 10 when evaluating our business. The risks and uncertainties described below are not the only ones we face but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.

Summary Risk Factors

The following is a summary of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations:

•

risks associated with the COVID-19 pandemic and future outbreak of other highly infectious or contagious diseases;

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risks associated with our limited operating history and the possibility that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Adviser, members of our Manager’s management team or their affiliates;

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our dependence on our Manager, its affiliates and personnel to conduct our day-to-day operations;

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risks associated with the Manager’s ability to terminate the Management Agreements;

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loss of key personnel of our Adviser and our Manager;

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risks associated with the fluctuation in the NAV per share amounts;

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the risk we make significant changes to our strategies in a market downturn, or fail to do so;

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risks associated with ownership of real estate, including properties in transition, subjectivity of valuation, environmental matters and lack of liquidity in our assets;

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risk related to increasing property taxes, HOA fees and insurance costs may negatively affect our financial results;

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risks related to governmental laws, regulations and rules applicable to our properties or that may be passed in the future;

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risks relating to the timing and costs of the renovation of properties which has the potential to adversely affect our operating results and ability to make distributions;

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risks related to our ability to change our major policies, operations and targeted investments without stockholder consent;

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risks related to failure to maintain our status as a REIT;

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risks related to failure of our operating partnership to be taxable as a partnership for federal income tax purposes, possibly causing us to fail to qualify for or to maintain REIT status;

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the risk that the IRS may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain;

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the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends;

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risks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter;

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recent and potential legislative or regulatory tax changes or other actions affecting REITs;

•

failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels;

•

risks associated with purchasing single-family properties through the foreclosure auction process; and

•

damage associated with single-family properties sold through short sales or foreclosure sales may require extensive renovation.

You should read this summary together with the more detailed description of each risk factor contained below:

Risks Related to Our Common Stock and Our Organizational Structure

As a recently organized company, limited operating history and information exists.

As a recently established entity, we have limited operating history from which potential investors may evaluate likely performance. Neither the past performance of previous investments of our Adviser and its affiliates, nor the past financial performance of us or the VineBrook Companies can be relied upon as an indicator of our future performance or success due to a variety of factors, including changes in personnel, different national and local economic circumstances, different supply and demand characteristics, and varying circumstances relating to the real estate markets. Since our performance depends on future events, it is inherently uncertain.

We are employing a business model with a limited consolidated institutional track record, which may make our business difficult to evaluate.

Until recently, the SFR business consisted primarily of private and individual investors in local markets and was managed individually or by small, non-institutional owners and property managers. Our business strategy involves purchasing, renovating, maintaining and managing a large number of residential properties and leasing them to qualified residents. Entry into this market by large, well-capitalized investors is a relatively recent trend, so few peer companies exist and none have yet established long-term track records that might assist us in predicting whether our business model and investment strategy can be implemented and sustained over an extended period of time. It may be difficult to evaluate our potential future performance without the benefit of established long-term track records from companies implementing a similar business model. We may encounter unanticipated problems as we continue to refine our business model, which may adversely affect our results of operations and ability to make distributions to our stockholders and cause our NAV and stock price to decline significantly.

We are dependent upon the retention of key personnel and the ability to attract qualified personnel.

Our Adviser has the sole authority to direct our operations, subject to oversight by our Board. Our Manager has discretionary authority (subject to consent rights of us set forth in the OP LPA and the Investment Committee) through the Management Agreements, to identify, structure, allocate, acquire and dispose of investments and, in doing so, has no responsibility to consult with any investor. Accordingly, investors will have no authority to direct our investments or operations and must depend entirely on the investment skills and abilities of our Adviser, our Manager and their respective employees. The ability of our Adviser and Manager to manage our affairs currently depends on key personnel. Our Adviser and Manager will be relying extensively on the diligence, skill, judgment, reputation and business contacts of such key personnel.

In addition, our future success will depend upon our Adviser and Manager’s ability to retain the services of key personnel and recruit additional qualified personnel. Our Adviser and Manager’s respective personnel have no obligation to remain employed by either entity or their respective affiliates. The departure for any reason of any of their most senior professionals, or a significant number of other investment professionals, could have a material adverse effect on our ability to achieve our investment objectives. In

addition, our Adviser and Manager anticipate that it will be necessary to add professionals to both grow their teams and replace those who depart. However, the market for qualified real estate professionals and individuals with experience operating a REIT is extremely competitive, and they may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors.

Stockholders will have limited participation and communication in regard to our management or control.

Stockholders will have no right or power to participate directly in the management or control of our business and thus must depend solely on our Adviser and Manager’s ability to make and dispose of investments and operate our business. In addition, aside from our Portfolio, investors will not have an opportunity to evaluate the future investments, or the terms of any such investment, made by us.

There are restrictions on the transferability and withdrawal of our common stock, and therefore, our stockholders’ ability to dispose of common stock will likely be limited to repurchases by us.

Our common stock has not been registered under the Securities Act or any state securities laws and may not be transferred unless (a) an exemption from registration under applicable federal and state securities laws is available and (b) either the transfer is a “Permitted Transfer” as defined in our charter or our Board has consented to such transfer (which consent may be withheld if, in the reasonable judgment of our Board, such transfer would result in violations under applicable federal or state securities laws), except as otherwise set forth in our charter. There is no public market for our common stock and one is not guaranteed to develop. As a result, stockholders may be required to hold their common stock indefinitely. Consequently, the purchase of our common stock should be considered only as a long-term and illiquid investment and shares should only be acquired by investors who are able to commit their funds for an indefinite period of time. Each investor will be required to represent that it is an accredited investor under applicable securities laws and that it is acquiring its common stock for investment purposes and not with a view to resale or distribution and that it will only sell and transfer its common stock to an accredited investor under applicable securities laws or in a manner permitted by our charter and consistent with such laws. In addition, the investors may not sell, assign, transfer or pledge any interest in us without the prior written consent of our Board (which consent may be withheld if, in the reasonable judgment of our Board, such transfer would result in violations under applicable federal or state securities laws), except if such transfer is considered a Permitted Transfer or as otherwise set forth in our charter. See Item 11. “Description of Registrant’s Securities to be Registered—Restrictions on Ownership and Transfer.”.

Due to these transfer restrictions, the repurchase of common stock by us will likely be the only way for stockholders to dispose of their common stock. We will repurchase our common stock at a price equal to the offering price of our common stock in the Private Offering on the date of repurchase (which will generally be equal to the most recent NAV per share in effect), and not based on the price at which stockholders initially purchased their common stock.

The ability of stockholders to have common stock repurchased through the Share Repurchase Plan is limited. We may choose to repurchase fewer shares of common stock than have been requested to be repurchased, in our Board’s sole discretion, and the amount of common stock we may repurchase is subject to caps. Further, our Board may modify, suspend or terminate the Share Repurchase Plan if it deems such action to be in our best interest and the best interest of our stockholders.

We may choose to repurchase fewer shares of common stock than have been requested in any particular quarter to be repurchased under the Share Repurchase Plan, or none at all, in our Board’s sole discretion. We may repurchase fewer shares of common stock than have been requested to be repurchased due to lack of readily available funds because of adverse market conditions beyond our control, the need to maintain liquidity for our operations or because we determined that investing in real property or other illiquid investments is a better use of our capital than repurchasing shares of common stock. In addition, the total amount of common stock that we will repurchase will be limited, in any calendar quarter, to common stock whose aggregate value (based on the repurchase price per share on the date of the repurchase) is no more than 5% of our aggregate NAV as of the last day of the previous calendar quarter. Further, our Board may modify, suspend or terminate the Share Repurchase Plan if it deems such action to be in our best interest and the best interest of our stockholders, including but not limited to decreasing or modifying the price at which shares of common stock are repurchased through the Share Repurchase Plan or changing the frequency at which repurchases occur. If the full amount of all shares of common stock requested to be repurchased in any given quarter are not repurchased, funds will be allocated pro rata based on the total number of shares of common stock being repurchased. All unsatisfied repurchase requests must be resubmitted after the start of the next quarter, or upon the recommencement of the Share Repurchase Plan, as applicable.

The vast majority of our assets will consist of properties that cannot generally be readily liquidated without impacting our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to immediately satisfy repurchase requests. Should repurchase requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on us as a whole, or should we otherwise determine that investing our liquid assets in our Operating Partnership rather than repurchasing common stock is in our best interest as a whole, then we may choose to repurchase fewer shares of common stock than have been requested to be repurchased, or none at all. Because we are not required to authorize the recommencement of the Share Repurchase Plan within any specified period of time, we may effectively terminate the plan by suspending it indefinitely. As a result, stockholders’ ability to have common stock repurchased by us may be limited, and at times, stockholders may not be able to liquidate their investment. See Item 11. “Description of Registrant’s Securities to be Registered—Distribution Reinvestment Plans.” and Item 11. “Description of Registrant’s Securities to be Registered—Share Repurchase Plan.”

The Board may amend or suspend the DRIP at any time in its discretion, including by decreasing the discount at which shares of common stock may be purchased through the DRIP.

Our Board has adopted the DRIP whereby investors who purchase shares of our common stock in the Private Offering may elect at the time of subscription or upon subsequent enrollment to have their dividends reinvested through purchase of additional shares (each electing investor, a “participant”). Any cash dividends attributable to shares of our common stock owned by a participant in the DRIP will be used to purchase additional shares of our common stock on the payment date for the dividend. The purchase price per share for shares of our common stock purchased pursuant to the DRIP will be equal to 97.0% of most recent NAV in effect on the purchase date, equivalent to a 3.0% discount. Purchases made through the DRIP have no minimum investment amount and no fees, commissions or offering and organization expenses will be paid in respect of or attributable to such purchases. The Board in its discretion may amend or suspend the DRIP at any time, including but not limited to decreasing the discount at which shares of common stock are purchased through the DRIP.

Purchases, repurchases, reinvestments of distributions and repurchases of shares of our common stock will not be made based on the current NAV per share.

Generally, the price at which we repurchase the shares of our common stock will equal the most recent NAV per share in effect based on a previous calculation period. The NAV per share as of the date on which stockholders make their repurchase request may be significantly different than the price such stockholder originally paid or the repurchase price to be received. In addition, we may offer and repurchase shares of our common stock at a price that we believe reflects the NAV per share more appropriately than the most recent NAV per share in effect, including by updating a previously disclosed NAV, in cases where we believe there has been a material change (positive or negative) to the most recent NAV per share in effect. In such cases, the repurchase price will not equal our NAV per share as of any time.

The sale price of the shares of our common stock sold in the Private Offering and the purchase price at which the shares of our common stock may be repurchased under the Share Repurchase Plan are based on NAV as calculated in accordance with the Valuation Methodology, which is subject to certain risks and uncertainties and may be changed at any time in the sole discretion of our Board.

The sale price of the shares of our common stock sold in the Private Offering is equal to the most recent NAV in effect plus applicable fees and commissions, and the purchase price at which shares of our common stock may be repurchased in accordance with the terms of the Share Repurchase Plan is generally based on the most recent NAV in effect at the time of repurchase. NAV is calculated in accordance with the valuation methodology (the “Valuation Methodology”) approved by our Board. The Valuation Methodology involves significant judgment and estimation of the fair value of our properties and is subject to certain risks and uncertainties, including that valuations of our properties may not incorporate all material information concerning their value. In addition, the Valuation Methodology may be amended at any time at the sole discretion of our Board.

For additional information, see “—Valuations of our properties are estimates of fair value and may not necessarily correspond to realizable value. In addition, the Valuation Methodology may be changed at any time at the sole discretion of our Board,” “—Our NAV per share amounts may change materially if the values of our properties materially change from prior values or the actual operating results differ from what we originally budgeted for that quarter,” and “—It may be difficult to reflect, fully and accurately, material events that may impact our NAV” below.

Valuations of our properties are estimates of fair value and may not necessarily correspond to realizable value. In addition, our Valuation Methodology and related policies may be changed at any time at the sole discretion of our Board.

Valuations of properties will be determined by our Adviser based in part on valuations of each of our properties by independent, third-party firms (the “Valuation Providers”) conducted on a quarterly or monthly basis, at the sole discretion of the Board. Our NAV is calculated by our Adviser in accordance with the Valuation Methodology and recommended to the pricing committee of our Board. Based on this recommendation, the pricing committee of our Board then determines NAV.

Within the parameters of our Valuation Methodology, the techniques used to value the properties will involve subjective judgments and projections and may not be accurate. The Valuation Methodology will also involve assumptions and opinions about future events, which may or may not turn out to be correct. Valuations and appraisals of our properties are only estimates of fair value. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond our control or the control of our Adviser and the Valuation Providers. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, the carrying value of an asset may not reflect the price at which the asset could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the valuation. There will be no retroactive adjustment in the valuation of such assets, the price we paid to repurchase shares of our common stock or NAV-based fees paid to our Adviser to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the price at which such shares of common stock may be repurchased by us pursuant to the Share Repurchase Plan are generally based on the most recent NAV per share in effect which may be based on a previous calculation period, stockholders may pay more than realizable value or receive less than realizable value for their investment.

Our Valuation Methodology and related policies may be changed at any time at the sole discretion of our Board.

On May 24, 2021, our Board approved a form of an amendment and restatement of the Valuation Methodology and authorized the officers of the Company to implement the new methodology (the “Green Street Valuation Methodology”). Once implemented, the Company expects Green Street Advisors, LLC (“Green Street”) to calculate the NAV by valuing the Portfolio in accordance with the Green Street Valuation Methodology. Green Street will then recommend the NAV to the pricing committee of our Board. Based on this recommendation, the pricing committee of our Board will then determine NAV. The Green Street Valuation Methodology includes an initial valuation (“Initial Valuation”) conducted by Green Street which the Company expects to be completed by Green Street on or about July 31, 2021, the expected effective date of the Green Street Valuation Methodology, followed by monthly or quarterly ongoing valuations (“Ongoing Valuations”) as determined by the Board, which are also conducted by Green Street. Assessments are expected to vary based on whether a property is stabilized (as such term is defined in the Green Street Valuation Methodology) but to also take into consideration whether the property is occupied, was recently acquired, recently had a renovation completed, has remaining renovation costs exceeding a certain threshold, or recently transitioned to being stabilized. The Initial Valuation for stabilized properties is expected to rely on cap rates as determined by Green Street using proprietary and third-party data, third-party estimates and other relevant information as inputs for a discounted cash flow estimate of valuation, subject to certain adjustments and validation as determined by Green Street. With regard to Ongoing Valuations, stabilized properties are expected to rely on Green Street’s proprietary appreciation index (the “Index”), newly stabilized properties are expected to rely on a capitalized income methodology and then rely on the Index for future valuations, newly acquired properties are expected to be assessed for stabilization and valued accordingly in an Initial Valuation, and other properties are expected to continue to be valued according to discounted cash flow estimates, in each of the foregoing cases subject to certain adjustments and validation. The NAV calculation is expected to include the values of our other assets and of our liabilities. The NAV per share is expected to be calculated on a fully diluted basis, assuming all restricted stock unit grants and profit interest grants are fully vested and all units of the operating partnership are converted to common stock. The risks set forth in this Form 10 will also apply to the Green Street Valuation Methodology once implemented.

Our NAV per share amounts may change materially if the appraised values of our properties materially change from prior appraisals or the actual operating results for a particular month differ from what we originally budgeted for that quarter.

We anticipate that the monthly appraisals of our properties will be conducted on a rolling basis, such that properties may be appraised at different times but each property would be appraised at least once per quarter. When these appraisals are reflected in our NAV calculations, there may be a material change in the NAV per share amounts from those previously reported. In addition, actual operating results for a given month may differ from what we originally budgeted for that month, which may cause a material increase or decrease in the NAV per share amounts. We will not retroactively adjust the NAV per share reported for the previous month. Therefore, because a new monthly appraisal may differ materially from the prior appraisal or the actual results from operations may be better or worse than what we previously budgeted for a particular month, the adjustment to reflect the new appraisal or actual operating results may cause the NAV per share to increase or decrease, and such increase or decrease will occur on the day the adjustment is made.

It may be difficult to reflect, fully and accurately, material events that may impact our monthly NAV.

Our Adviser’s recommendation to the pricing committee of our Board of the monthly NAV per share will be based on appraisals of each of our properties provided on a monthly basis by the Valuation Providers. The Adviser will take an average of each valuation per property to determine the valuation for each specific property. However, in cases

where the Adviser receives data from three or more Valuation Providers that (1) reflects a change in value that is 20% higher (or more) than the last value received for the most recent NAV, the Adviser will use a value that is 15% greater than the last value used to calculate the most recent NAV, or (2) reflects a change in value that is 5% lower (or more) than the last value used to calculate the most recent NAV, the Adviser will use a value that is 95% of the previous value. The Board has determined that such adjustments are reasonable and necessary to remove valuation outliers from the data used by the Adviser to calculate NAV. As a result, the most recent NAV per share in effect may not fully reflect any or all changes in value that may have occurred since the most recent appraisal. Our Adviser will review appraisal reports and monitor the properties, and is responsible for notifying the Valuation Providers of the occurrence of any property-specific or market-driven event it believes may cause a material valuation change in the real estate valuation, but it may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of the properties or liabilities between valuations, or to obtain quickly complete information regarding any such events. For example, an unexpected termination or renewal of a material lease, a material increase or decrease in vacancies or an unanticipated structural or environmental event at a property may cause the value of a property to change materially, yet obtaining sufficient relevant information after the occurrence has come to light and/or analyzing fully the financial impact of such an event may be difficult to do and may require some time. In addition, the adjustments and validation to valuation information may slow the reflection of any such events. As a result, the most recent NAV per share in effect may not reflect a material event until such time as sufficient information is available and analyzed, and the financial impact is fully evaluated, such that our NAV may be appropriately adjusted in accordance with the Valuation Methodology.

The form, timing and/or amount of dividend distributions on our common stock in future periods may vary and be impacted by economic and other considerations.

The form, timing and/or amount of dividend distributions on our common stock, will be declared at the discretion of our Board and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as our Board may consider relevant. Our Board may modify our dividend policy from time to time.

We may change the frequency at which our NAV per share is calculated and may infrequently calculate our NAV per share. In addition, because our NAV per share is calculated periodically, our NAV per share may suddenly change on the day the newly calculated NAV per share is effective.

As of May 2021, we calculate NAV per share on an approximately monthly basis. However, our Board has approved the Green Street Methodology which, when implemented, will provide for calculations of NAV per share on an approximately monthly or quarterly basis as determined by the Board. In addition, the Board in its discretion may in the future approve a Valuation Methodology with less or more frequent calculations of NAV per share. To the extent we infrequently calculate our NAV per share, our stockholders may not be able to determine the NAV per share on an ongoing basis except when our estimated NAV per share is calculated. In addition, our Portfolio and other applicable assets and liabilities are valued periodically in accordance with the Valuation Methodology in effect. As such, when these new valuations are reflected in our NAV per share calculation, our NAV per share may suddenly and materially change on the day the newly calculated NAV per share becomes effective.

NAV calculations are not governed by governmental or independent securities, financial or accounting rules or standards.

The Valuation Methodology and components thereof are not prescribed by rules of the SEC or any other regulatory agency. Furthermore, there are no accounting rules or standards that prescribe which components should be used in calculating NAV, and our NAV is not audited by our independent registered public accounting firm. We calculate NAV solely for purposes of establishing the price at which we sell and repurchase shares of our common stock, and our stockholders should not view our NAV as a measure of our historical or future financial condition or performance. The components and methodology used in calculating our NAV may differ from those used by other companies now or in the future. In addition, calculations of our NAV, to the extent that they incorporate valuations of our assets and liabilities, are not necessarily prepared in accordance with GAAP. These valuations may differ from actual values that could be realized in the event that we were forced to sell assets. Additionally, errors may occur in calculating our NAV, which could impact the price at which we sell and repurchase shares of our common stock and fees we pay to our Adviser.

We may be unable to make distributions on our common stock at expected levels, which could result in a decrease in the value of our common stock.

If sufficient cash is not available for distribution from our operations, we may have to fund distributions on our common stock, from working capital, borrow to provide funds for such distributions, reduce the amount of such distributions, or issue stock dividends. To the extent we have to borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. If we make stock dividends in lieu of cash distributions, it may have a dilutive effect on the holdings of our stockholders.

All distributions on our common stock will be made at the discretion of our Board and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, other expense obligations, debt covenants, contractual prohibitions or other limitations, and applicable law and such other matters as our Board may deem relevant from time to time. We may not be able to make distributions in the future, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the value of our common stock.

We may pay distributions from sources other than our cash flow from operations, including, without limitation, the sale of assets, borrowings or offering proceeds, and we have no limits on the amounts we may pay from such sources.

We may not generate sufficient cash flow from operations to fully fund distributions to stockholders. Therefore, we may fund distributions to our stockholders from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings, return of capital or offering proceeds, including from sales from our common stock, our 6.50% Series A Cumulative Redeemable Preferred Stock (our “Series A Preferred Stock”) or OP Units. The extent to which we pay distributions from sources other than cash flow from operations will depend on various factors, including the level at which holders of shares of our common stock participate in our DRIP, how quickly we invest the proceeds from our Private Offering and any future offerings and the performance of our investments. Funding distributions from the sales of assets, borrowings, return of capital or offering proceeds will result in us having less funds available to acquire SFR properties or other real estate-related investments. As a result, the return you realize on your investment may be reduced. Doing so may also negatively impact our ability to generate cash flows. Likewise, funding distributions from the sale of additional securities will dilute your interest in us on a percentage basis and may impact the value of your investment, especially if we sell these securities at prices less than the price you paid for your capital stock. We may be required to continue to fund our regular distributions from a combination of some of these sources if our investments fail to perform, if expenses are greater than our revenues or due to numerous other factors. We have not established a limit on the amount of our distributions that may be paid from any of these sources.

To the extent we borrow funds to pay distributions, we would incur borrowing costs and these borrowings would require a future repayment. The use of these sources for distributions and the ultimate repayment of any liabilities incurred could adversely impact our ability to pay distributions in future periods, decrease our NAV, decrease the amount of cash we have available for operations and new investments and adversely impact the value of your investment.

Disruptions in the financial markets and deteriorating economic conditions may adversely affect our operations and may limit our ability to execute our business strategy.

The capital and credit markets are prone to volatility and disruption from time to time. Such turmoil in the capital markets can constrain equity and debt capital available for investment in the real estate market, resulting in fewer buyers seeking to acquire properties, increases in cap rates and lower property values. Furthermore, deteriorating economic conditions can negatively impact real estate fundamentals, which can increase risks of defaults on loans and foreclosures on mortgages. We cannot foresee such fluctuations and disruptions.

Should such disruptions in the financial markets occur, deteriorating economic conditions could also impact the market for our investments and the volatility of our investments. The returns available to us with respect to our targeted investments are determined, in part, by: (1) the supply and demand for such investments and (2) the existence of a market for such investments, which includes the ability to sell or finance such investments. During periods of volatility, the number of investors participating in the market may change at an accelerated pace. As liquidity or “demand” increases, our returns will increase. Conversely, a lack of liquidity will cause our returns to decrease.

Our Adviser is using and may continue to use leverage with respect to our Portfolio. Should the credit markets become uncertain, we may not be able to obtain debt financing on attractive terms. In addition, because we use leverage to acquire or refinance investments, and if as a result the value of our Portfolio declines, we could be forced to dispose of investments at inopportune times to repay debt or use operating income to repay debt.

Economic events affecting the U.S. economy, such as the general negative performance of the real estate sector or other events, including the COVID-19 pandemic, could also cause stockholders to seek to sell their shares to us pursuant to the Share Repurchase Plan at a time when such events are adversely affecting the performance of our assets. Even if we decide to satisfy all resulting repurchase requests, our cash flow could be materially adversely affected. In addition, if we determine to sell assets to satisfy repurchase requests, we may not be able to realize the return on such assets that we may have been able to achieve had such assets been sold at a more favorable time, and our results of operations and financial condition, including, without limitation, breadth of our Portfolio by property type and location, could be materially adversely affected.

Furthermore, all of the factors described above, including disruptions in the financial markets and deteriorating economic conditions related to the COVID-19 pandemic (see “—Risks Related to the Real Estate Industry—Local market conditions may adversely affect our performance” and “—The current COVID-19 pandemic, and the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance”), could adversely impact our ability to implement our business strategy and make distributions to investors and could decrease the value of an investment in us.

Stockholders have no assurance of investment returns.

No assurance can be given that we will be able to meet our objectives or that we will be able to generate returns for our stockholders, or that the returns, if any, will be commensurate with the risks of investing in the type of investments made by us. Our investments are subject to a wide range of significant risks that could cause such investments to lose value. Our investments are speculative in nature and the possibility of partial or total loss of capital will exist. Accordingly, an investment in us should only be considered by persons able to withstand a total loss of their investment. Furthermore, our investment return objectives are targets only and there can be no assurance that we will achieve these objectives.

We may be required to pay for state tax obligations.

We own single family homes in 16 states. We may be subject to state and/or local tax obligations in some of those states as a result of the income generated from the SFR properties in those states. We may be required to withhold amounts from distributions otherwise payable to stockholders to satisfy these tax obligations.

Provisions providing for indemnification and limitation of liability in our charter and bylaws may limit investors’ rights of action.

Certain provisions providing for indemnification and limitation of liability contained in our charter and bylaws limit the rights of action otherwise available to the investors and other parties against our Board and/or certain of its officers and employees. See Item 12. “Indemnification of Directors and Officers.”

Our exemption from holding plan assets may have negative consequences.

We will be structured and operated in a manner intended to avoid holding the “plan assets” of “Benefit Plan Investors” (as defined under Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) with us being required to use reasonable commercial efforts to comply with one or more exceptions provided under Section 3(42) of ERISA and the Plan Asset Regulations. We will attempt to qualify for an exception provided for entities in which Benefit Plan Investors will hold less than 25% of the total value of each class of our equity interests. To qualify for this exception, we may limit the investment in us by Benefit Plan Investors, which in certain circumstances could have the result that (1) transfers of shares would be limited or (2) the shares of some stockholders would be subject to mandatory redemption. Alternatively, we will have the right to take whatever action we deem necessary (after consulting with counsel) to avoid our assets being treated as plan assets under any other exception under the Plan Asset Regulations, such as the venture capital operating company exception or the real estate operating company exception. To qualify for those exceptions, we may be required to decline to make certain investments that we would otherwise prefer to make, or we may be required to sell certain investments before we would otherwise prefer to do so. There can be no assurance that we will avoid holding plan assets under the foregoing exceptions. If our underlying assets were to be considered plan assets of a Benefit Plan Investor, we would be an ERISA fiduciary and would be subject to certain fiduciary requirements of ERISA with which it would be difficult for us to comply.

Our Board may change significant corporate policies without stockholder approval.

Our investment, financing, borrowing and distribution policies and our policies with respect to all other activities, including growth, debt, capitalization, operations and property valuation, are determined by our Board. These policies may be amended or revised at any time and from time to time at the discretion of our Board without a vote of our stockholders. In addition, our Board may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements. A change in these policies could have an adverse effect on our financial condition, our results of operations, our cash flow, the price of our common stock and our ability to satisfy our debt service obligations and to pay distributions to our stockholders.

Future issuances of debt securities and equity securities may negatively affect the value of our common stock and, in the case of equity securities, may be dilutive to owners of our common stock and could reduce the overall value of an investment in our common stock.

In the future, we may issue debt or equity securities or incur other financial obligations, including stock dividends and shares that may be issued in exchange for our common stock. Upon liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of our available assets before holders of our common stock. We are not required to offer any such additional debt or equity securities to stockholders on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities (including common stock and convertible preferred stock), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the value of shares of our common stock. Any convertible preferred stock would have, and our Series A Preferred Stock has and any series or class of our preferred stock would likely have, a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to holders of our common stock.

Holders of shares of our common stock do not have preemptive rights to any shares we issue in the future. Our charter authorizes the issuance of 500,000,000 shares of capital stock, consisting of 300,000,000 of Class A Common Stock, 100,000,000 shares of Class I Common Stock, and 100,000,000 shares of preferred stock, par value $0.01 per share, 16,000,000 shares of which have been classified as the Series A Preferred Stock. Our Board may increase the number of authorized shares of capital stock without stockholder approval. In the future, our Board may elect to (1) sell additional shares in future public offerings; (2) issue equity interests in private offerings, including the Private Offering; (3) issue shares of our common stock under a long-term incentive plan to our non-employee directors or to employees of our Manager, Adviser or either of their affiliates; (4) issue shares to our Manager, Adviser, or either of their successors or assigns, in payment of an outstanding fee obligation (if permitted pursuant to the Advisory Agreement, the applicable Management Agreement or as otherwise may be agreed) or as consideration in a related-party transaction; or (5) issue shares of our common stock in connection with a redemption of OP Units. To the extent we issue additional equity interests in the future, the percentage ownership interest held by holders of shares of our common stock will be diluted. Further, depending upon the terms of such transactions, most notably the offering price per share, holders of shares of our common stock may also experience a dilution in the book value of their investment in us.

Common stock eligible for future sale may have adverse effects on our share price.

There is no public market for our common stock and one is not guaranteed to develop. However, should one develop or should we determine to publicly list our common stock, we cannot predict the effect, if any, of future sales of our common stock, or the availability of shares for future sales, on the market price, if any, of our common stock. Sales of substantial amounts of common stock or the perception that such sales could occur may adversely affect the prevailing market price, if any, for our common stock.

We may issue additional shares in future public offerings or private placements to make new investments or for other purposes. We are not required to offer any such shares to stockholders on a preemptive basis. Therefore, it may not be possible for stockholders to participate in such future share issuances, which may dilute such stockholders’ interests in us.

Risks Related to our Series A Preferred Stock

Our charter permits our Board to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could otherwise result in a premium price to our stockholders.

Our Board may classify or reclassify any unissued shares of common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption of any such stock. Thus, our Board could authorize the issuance of preferred stock with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

On October 7, 2020, the Company issued 2,440,000 shares of our Series A Preferred Stock. On December 30, 2020 the Company issued 1,100,000 shares of Series A Preferred Stock and on January 8, 2020 the Company issued 1,460,000 shares of Series A Preferred Stock. As of March 31, 2021, we have issued 5,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock rank, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to our common stock; (2) on parity with all equity securities issued by us with terms specifically providing that those equity securities rank on parity with the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (3) junior to all our existing and future indebtedness and to the indebtedness and other liabilities of our existing subsidiaries and any future subsidiaries. Additionally, unless the mandatory redemption date is extended, if we fail to effect a mandatory redemption of the Series A Preferred Stock by October 7, 2027, and such non-compliance remains uncured by us on the nine-month anniversary following such date, the number of directors shall be automatically increased to such number as is necessary so that a majority of the outstanding shares of Series A Preferred Stock shall have the right at any time after such date to elect a majority of the members of our Board. See Item 11. “Description of Registrant’s Securities to be Registered—Description of Series A Preferred Stock” for additional information regarding our Series A Preferred Stock.

Risks Related to Our Business and the Single-Family Rental Housing Market

A significant portion of our costs and expenses are fixed and we may not be able to adapt our cost structure to offset declines in our revenue.

Many of the expenses associated with our business, such as real estate taxes, HOA fees, personal and property taxes, insurance, utilities, acquisition, renovation and maintenance costs, and other general corporate expenses are relatively inflexible and will not necessarily decrease with a reduction in revenue from our business. Some components of our fixed assets depreciate more rapidly and require ongoing capital expenditures. Our expenses and ongoing capital expenditures are also affected by inflationary increases and certain of our cost increases may exceed the rate of inflation in any given period or market. By contrast, our rental income is affected by many factors beyond our control, such as the availability of alternative rental housing and economic conditions in our markets. In addition, state and local regulations may require us to maintain properties that we own, even if the cost of maintenance is greater than the value of the property or any potential benefit from renting the property, or pass regulations that limit our ability to increase rental rates. As a result, we may not be able to fully offset rising costs and capital spending by increasing rental rates, which could have a material adverse effect on our results of operations and cash available for distribution.

Increasing property taxes, HOA fees and insurance costs may negatively affect our financial results.

As a result of our substantial real estate holdings, the cost of property taxes and insuring our properties is a significant component of our expenses. Our properties are subject to real and personal property taxes that may increase as tax rates change and as the real properties are assessed or reassessed by taxing authorities. As the owner of our properties, we are ultimately responsible for payment of the taxes to the applicable government authorities. If real property taxes increase, our expenses will increase. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale. In addition, a significant portion of our properties are located within HOAs and we are subject to HOA rules and regulations. HOAs have the power to increase monthly charges and make assessments for capital improvements and common area repairs and maintenance. Property taxes, HOA fees, and insurance premiums are subject to significant increases, which can be outside of our control. If the costs associated with property taxes, HOA fees and assessments or insurance rise significantly and we are unable to increase rental rates due to rent control laws or other regulations to offset such increases, our results of operations would be negatively affected.

Our Portfolio will be concentrated in the single-family asset class; our Portfolio will also be geographically concentrated, which could adversely affect operations if either the targeted markets or asset class suffers from a negative event.

Our investments in real estate assets and debt secured by real estate assets are and will continue to be concentrated in our markets and in the single-family properties sector of the real estate industry. A downturn or slowdown in the rental demand for single-family housing caused by adverse economic, regulatory or environmental conditions, or other events, in our markets may have a greater impact on the value of our properties or our operating results than if we had more fully diversified our investments. We believe that there are seasonal fluctuations in rental demand with demand higher in the spring and summer than in the late fall and winter. Such seasonal fluctuations may impact our operating results. In addition to

general, regional, national and international economic conditions, our operating performance will be impacted by the economic conditions in our markets. We base a substantial part of our business plan on our belief that property values and operating fundamentals for single-family properties in our markets will continue to improve over the near to intermediate term. We can provide no assurance as to the extent property values and operating fundamentals in these markets will improve, if at all. If the recent economic downturn in these markets returns or if we fail to accurately predict the timing of economic improvement in these markets, the value of our properties could decline and our ability to execute our business plan may be adversely affected to a greater extent than if we owned a real estate portfolio that was more geographically diversified, which could adversely affect our financial condition, operating results and ability to make distributions to our stockholders and cause the value of our capital stock to decline.

If rents in our markets do not increase sufficiently to keep pace with rising costs of operations, the cash available for distribution will be adversely impacted.

The success of our business model will substantially depend on conditions in the SFR market in our geographic markets. Our asset acquisitions are premised on assumptions about, among other things, occupancy and rent levels, and if those assumptions prove to be inaccurate, our cash flows will be lower than expected.

Eventually, the rebound of the U.S. economy and job growth, coupled with government programs designed to keep homeowners in their homes and/or other factors, may contribute to trends that favor homeownership rather than renting. A softening of the rental market in our markets would reduce our rental revenue, which could adversely impact the cash available for distribution.

Competitive pressures from rental homes, multifamily units, and current high levels of home affordability in our target markets may have a material impact on our performance.

All of our houses are located in developed areas that include other single-family houses. The number of competitive houses in a particular area could have a material effect on our ability to lease our houses and on the rents charged. The pool of potential renters is reduced by those who choose to purchase, rather than rent, houses. In addition, multi-family properties, particularly apartment buildings, provide housing alternatives to potential renters of single-family houses. The continuing development of apartment buildings in many markets increases the supply of housing and may exacerbate the competition for renters.

We intend to continue expanding our scale of operations and make acquisitions even if there is a recovery in the rental and housing markets, which could adversely impact anticipated yields.

Our long-term growth depends on the availability of acquisition opportunities in our target markets at attractive pricing levels. We believe various factors and market conditions have made homes available for purchase at prices that are below replacement costs. We expect that, in the future, housing prices will stabilize and return to more normalized levels, and therefore future acquisitions may be more expensive. There are many factors that may cause a recovery in the housing market in our target markets that would result in future acquisitions becoming more expensive and possibly less attractive than recent past and present opportunities, including:

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improvements in the overall economy and job market in our target markets;

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increased of consumer lending activity and greater availability of consumer credit;

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improvements in the pricing and terms of mortgage-backed securities;

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the emergence of increased competition for single-family assets from private investors and entities with similar investment objectives as us; and

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tax or other government incentives that encourage homeownership.

We have not adopted and do not expect to adopt a policy of making future acquisitions only if they are accretive to existing yields and distributable cash. We plan to continue acquiring properties as long as we believe such properties offer an attractive total return opportunity. Accordingly, future acquisitions may have lower yield characteristics than recent past and present opportunities and if such future acquisitions are funded through equity issuances, the yield and distributable cash will be reduced, and the value of our common stock may decline.

Acquiring properties during periods when the single-family home sector is experiencing substantial inflows of capital and intense competition may result in inflated purchase prices and increase the likelihood that our properties will not appreciate in value and may, instead, decrease in value.

The allocation of substantial amounts of capital for investment in the single-family home sector and significant competition for income producing real estate may inflate the purchase prices for such assets. To the extent we purchased, or in the future purchase, real estate in such an environment, it is possible that the value of such properties may not appreciate and may, instead, decrease in value, perhaps significantly, below the amount paid for such properties. In addition to macroeconomic and local economic factors, technical factors, such as a decrease in the amount of capital allocated to the single-family home sector and the number of investors participating in the sector, could cause the value of our properties to decline.

Purchasing single-family properties through the foreclosure auction process subjects us to significant risks that could adversely affect our operating results, cash flows and ability to make distributions.

Our business plan involves acquiring single-family properties through the foreclosure auction process simultaneously in a number of markets, which involves monthly foreclosure auctions on the same day of the month in certain markets. In these instances, we are only able to visually inspect properties from the street and must purchase these properties without a contingency period and in “as is” condition with the risk that unknown defects in the property may exist. We also may encounter unexpected legal challenges and expenses in the foreclosure process. Upon acquiring a new property, we may have to evict residents who are in unlawful possession before we can secure possession and control of the property. The holdover occupants may be the former owners or tenants of a property, or they may be squatters or others who are illegally in possession. Securing control and possession from these occupants can be both costly and time-consuming.

Further, when acquiring properties on an “as is” basis, title commitments are often not available prior to purchase, and title reports or title information may not reflect all senior liens, which may increase

the possibility of acquiring houses outside predetermined acquisition and price parameters, purchasing residences with title defects and deed restrictions, HOA restrictions on leasing or underwriting or purchasing the wrong residence. The policies, procedures and practices we implement to assess the state of title and leasing restrictions prior to purchase may not be effective, which could lead to a material if not complete loss on our investment in such properties. For properties we acquire through the foreclosure auction process, we do not obtain title commitments prior to purchase, and we are not able to perform the type of title review that is customary in acquisitions of real property. As a result, our knowledge of potential title issues will be limited, and no title insurance protection will be in place. This lack of title knowledge and insurance protection may result in third parties having claims against our title to such properties that may materially and adversely affect the values of the properties or call into question the validity of our title to such properties. Without title insurance, we are fully exposed to, and would have to defend ourselves against, such claims. Further, if any such claims are superior to our title to the property acquired, we risk loss of the property purchased. Any of these risks could adversely affect our operating results, cash flows and ability to make distributions to investors.

The failure to manage acquisitions or to integrate them with our existing business could negatively affect our financial condition and results of operations.

We have completed a number of strategic acquisitions in the past and intend to continue actively acquiring single family properties for rental operations as market conditions, including access to the debt and equity markets, dictate. Our ability to successfully grow through these types of strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions and to obtain any necessary financing, and is subject to numerous risks, including problems integrating the acquired properties, unanticipated costs associated with the acquisitions and increased legal and accounting compliance costs.

We may engage in expedited transactions that increase the risk of loss.

Our underwriting guidelines require a thorough analysis of many factors, including, among others, the underlying property’s financial performance and condition, geographic market assessment and future prospects of the property within the market. Investment analyses and decisions by us may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In such cases, the information available to us at the time of making an investment decision may be limited, and we may not have access to detailed information regarding the investment property, such as physical characteristics, environmental matters, zoning regulations or other local conditions affecting an investment property. If we make the decision to purchase a property prior to the full completion of one or more of these analyses, we may fail to identify certain risks that we would otherwise have identified and we may suffer significant losses as a result. Therefore, no assurance can be given that we will have knowledge of all circumstances that may adversely affect an investment.

Properties acquired as part of portfolios or in bulk may subject us to a variety of risks.

All of our properties have been, and we expect that a substantial portion of any future property acquisitions will be, purchased as portfolios in bulk from owners of portfolios of single-family homes. To the extent the management and leasing of such properties have not been consistent with our property management and leasing standards, we may be subject to a variety of risks, including risks relating to the

condition of the properties, the credit quality and employment stability of the tenants and compliance with applicable laws, among others. In addition, financial and other information provided to us regarding such portfolios during due diligence may not be accurate, and we may not discover such inaccuracies until it is too late to seek remedies against such sellers. To the extent we timely pursue such remedies, we may not be able to successfully prevail against the seller in an action seeking damages for such inaccuracies.

We may not be able to effectively control the timing and costs relating to the renovation of properties, which may adversely affect our operating results and our ability to make distributions.

Nearly all of our properties require some level of renovation immediately upon their acquisition or in the future following expiration of a lease or otherwise. We may acquire properties that we plan to renovate extensively. We also may acquire properties that we expect to be in good condition only to discover unforeseen defects and problems that require extensive renovation and capital expenditures. To the extent properties are leased to existing tenants, renovations may be postponed until the tenant vacates the premises, and we will pay the costs of renovating. In addition, from time to time, in order to reposition properties in the rental market, we will be required to make ongoing capital improvements and replacements and perform significant renovations and repairs that tenant deposits and insurance may not cover.

Our properties have infrastructure and appliances of varying ages and conditions. Consequently, we routinely retain independent contractors and trade professionals to perform physical repair work and are exposed to all of the risks inherent in property renovation and maintenance, including potential cost overruns, increases in labor and materials costs, delays by contractors in completing work, delays in the timing of receiving necessary work permits, certificates of occupancy and poor workmanship. If our assumptions regarding the costs or timing of renovation and maintenance across properties prove to be materially inaccurate, our operating results and ability to make distributions to investors may be adversely affected.

Single-family properties that are being sold through short sales or foreclosure sales are subject to risks of theft, mold, infestation, vandalism, illegal activity on the premises, deterioration or other damage that could require extensive renovation prior to renting and adversely impact our operating results.

When a single-family property is put into foreclosure due to a default by the homeowner on its mortgage obligations or the value of the property is substantially below the outstanding principal balance on the mortgage and the homeowner decides to seek a short sale, the homeowner may abandon the property or cease to maintain the property as rigorously as the homeowner normally would. Neglected and vacant properties are subject to increased risks of theft, mold, infestation, vandalism, illegal activity on the premises, general deterioration and other maintenance problems that may persist without appropriate attention and remediation. If we begin to purchase a large volume of properties in bulk portfolio acquisitions and are not able to inspect them immediately before closing on the purchase, we may purchase properties that may be subject to these problems, which may result in maintenance and renovation costs and time frames that far exceed our estimates. These circumstances could substantially impair our ability to quickly renovate and lease such properties in a cost-efficient manner or at all, which would adversely impact our operating results.

As a result of current housing market conditions, potential renters may choose to purchase their residences, which could adversely impact the number and quality of our tenants.

Government sponsored programs, low interest rates, the large supply of foreclosed homes on the market, and depressed home values all pose threats to the SFR market. As a result of these low home prices and increased home affordability, potential renters may be encouraged to purchase homes rather than lease them. This may have a negative impact on the number and quality of our tenants.

Our real estate investments are illiquid, which limits our operational flexibility and may negatively affect our performance.

Real estate investments generally cannot be sold quickly. This inability to sell properties could adversely affect our ability to maximize sales proceeds.

Our business objectives could be impeded by not being able to obtain additional capital.

Our ability to acquire, develop, or redevelop properties depends upon our ability to obtain capital. The real estate industry has historically experienced periods of volatile debt and equity capital markets and/or periods of extreme illiquidity. A prolonged period in which we cannot effectively access the debt or equity markets may result in heavier reliance on alternative financing sources to undertake new investments. An inability to obtain debt or equity capital on acceptable terms could delay or prevent us from acquiring, financing, and completing desirable investments and could otherwise adversely affect our business. Also, the issuance of additional shares of capital stock or interests in subsidiaries to fund future operations could dilute the ownership of our then-existing stockholders. Even as liquidity returns to the market, debt and equity capital may be more expensive than in prior years.

In addition, we may not be able to sell our properties quickly to raise capital. Investments in real estate are relatively illiquid compared to other investments. Accordingly, we may not be able to sell our properties when we desire or at prices acceptable to us in response to changes in economic or other conditions. In addition, the Code may limit our ability to sell properties held for less than two years. These limitations on our ability to sell our properties may adversely affect our cash flows, our ability to repay debt, and our ability to make distributions to our stockholders.

A number of our properties are part of HOAs, and we and our tenants are subject to the rules and regulations of such HOAs, which may be arbitrary or restrictive. Violations of such rules may subject us to additional fees, penalties and litigation with such HOAs which would be costly.

As of March 31, 2021, approximately 7.6% of our properties are located within HOAs, which are private entities that regulate the activities of owners and occupants of, and levy assessments on, properties in a residential subdivision. We pay all HOA fees and assessments directly. The majority of the HOA fees due on our properties are billed annually. The fees are paid when due by our Manager and are included in our property and operating expenses. HOAs in which we own properties may have or may enact onerous or arbitrary rules that restrict our ability to restore, market or lease our properties or require us to restore or maintain such properties at standards or costs that are in excess of our planned budgets. Such rules may include requirements for landscaping, limitations on signage promoting a property for lease or sale or the requirement that specific construction materials be used in restorations. Some HOAs also impose limits on the number of property owners who may rent their homes, which, if met or exceeded, would cause us to incur additional costs to sell the property and opportunity costs of lost rental revenue. Furthermore, many HOAs impose restrictions on the conduct of occupants of homes and the use of common areas, and we may

have tenants who violate HOA rules and for which we may be liable as the property owner. Additionally, the boards of directors of the HOAs in which we own property may not make important disclosures about the properties or may block our access to HOA records, initiate litigation, restrict our ability to sell our properties, impose assessments or arbitrarily change the HOA rules. We may be unaware of or unable to review or comply with HOA rules before purchasing a property, and any such excessively restrictive or arbitrary regulations may cause us to sell such property at a loss, prevent us from renting such property or otherwise reduce our cash flow from such property, which would have an adverse effect on our returns on these properties.

The inability to effectively integrate operating platforms and personnel may result in inefficiencies that could adversely affect our cash available for distribution.

To grow successfully, we must be able to apply our experience in managing real estate to a larger number of properties in our current markets and as we expand into new markets. In addition, we must be able to integrate new management and operations personnel as our organization grows in size and complexity. Failures in either area will result in inefficiencies that could adversely affect our cash available for distribution to investors.

We rely on information supplied by prospective residents in managing our business.

We make leasing decisions based on our review of rental applications completed by the prospective resident. While we may seek to confirm or build on information provided in such rental applications through our own due diligence, including by conducting background checks, we rely on the information supplied to us by prospective residents to make leasing decisions, and we cannot be certain that this information is accurate. These applications are submitted to us at the time we evaluate a prospective resident and we do not require residents to provide us with updated information during the terms of their leases, notwithstanding the fact that this information can, and frequently does, change over time. For example, increases in unemployment levels or adverse economic conditions in certain of our markets may adversely affect the creditworthiness of our residents in such markets. Even though this information is not updated, we will use it to evaluate the characteristics of our Portfolio over time. If resident-supplied information is inaccurate or our residents’ creditworthiness declines over time, we may make poor or imperfect leasing decisions and our Portfolio may contain more risk than we believe.

Our leases are relatively short-term, exposing us to the risk that we may have to re-lease our properties frequently, which we may be unable to do on attractive terms, on a timely basis or at all.

Substantially all of our new leases have a duration of one year. As such leases permit the residents to leave at the end of the lease term, we anticipate our rental revenues may be affected by declines in market rental rates more quickly than if our leases were for longer terms. Short-term leases may result in high turnover, which involves costs such as restoring the properties, marketing costs and lower occupancy levels. Our resident turnover rate and related cost estimates may be less accurate than if we had more operating data upon which to base such estimates. If the rental rates for our properties decrease or our residents do not renew their leases, our operating results and ability to make distributions to our stockholders could be adversely affected. In addition, most of our potential residents are represented by leasing agents and we may need to pay all or a portion of any related agent commissions, which will reduce the revenue from a particular rental home. Alternatively, to the extent that a lease term exceeds one year, we may miss out on the ability to raise rents in an appreciating market and be locked into a lower rent until such lease expires.

Many factors impact the SFR market, and if rents in our markets do not increase sufficiently to keep pace with rising costs of operations, our income and distributable cash could decline.

The success of our business model depends, in part, on conditions in the SFR market in our markets. Our investment strategy is premised on assumptions about occupancy levels, rental rates, interest rates and other factors, and if those assumptions prove to be inaccurate, our cash flows and profitability will be reduced. Government programs designed to keep homeowners in their homes and/or other factors may contribute to an increase in homeownership rather than renting. In addition, we expect that as investors like us increasingly seek to capitalize on opportunities to purchase housing assets at below replacement costs and convert them to productive uses, the supply of SFR properties will decrease, which may increase competition for residents, limit our strategic opportunities and increase the cost to acquire those properties. A softening of the rental market in our core areas would reduce our rental revenue and profitability.

We are highly dependent on information systems and systems failures could significantly disrupt our business.

Our operations are dependent upon our information systems that support our business processes, including marketing, leasing, vendor communications, finance, intracompany communications, resident portal and property management platforms, which include certain automated processes that require access to telecommunications or the Internet, each of which is subject to system security risks. Certain critical components of our platform are dependent upon third party service providers, and a significant portion of our business operations are conducted over the Internet. As a result, we could be severely impacted by a catastrophic occurrence, such as a natural disaster or a terrorist attack, or a circumstance that disrupted access to telecommunications, the Internet or operations at our third-party service providers, including viruses or experienced computer programmers that could penetrate network security defenses and cause system failures and disruptions of operations. Even though we believe we utilize appropriate duplication and back-up procedures, a significant outage in telecommunications, the Internet or at our third-party service providers could negatively impact our operations.

The SFR portfolios tend to be larger than portfolios in other property sectors and is a relatively new sector lacking publicly traded institutional owners, which could limit the quality and availability of data and financial information available on large SFR portfolios we acquire.

Unlike other property sectors, SFR portfolios tend to be extremely large. For example, as of March 31, 2021, we own over 13,500 individual assets across 16 states, whereas a large portfolio in a publicly traded multifamily REIT has on average 178 properties. Because each unit in an SFR portfolio is generally also an individual property, and financial records must be maintained on each individual property, the volume of data and information to be kept is larger in the SFR sector as compared to other sectors.

Also, there are a limited number of publicly traded companies that currently have exposure to SFR properties. Because the vast majority of the SFR portfolios with over 1,000 homes (or “institutional” portfolios) are held by private companies, many of the portfolios we seek to acquire do not have audited financial statements at the portfolio or company level, which creates a varied range in the quality of financial

documentation and financial information available. Further, many SFR operators outsource property management to third party managers who produce and maintain the property level accounting. When we purchase a large portfolio of SRF assets or an entity that owns a large portfolio of SFR assets, we are largely dependent on the information provided by the property manager, which in many cases is an unrelated third party that is not contractually bound by the sales agreements. Since the SFR sector is relatively new, the third-party property managers may lack the quality, sophistication and institutionalization of third-party managers in other sectors. The inability to access quality data and financial information associated with large SFR portfolios that we acquire could significantly disrupt our business.

Risks Related to the Real Estate Industry

Our business has inherent general real estate risks.

Our Portfolio will be subject to the risks incident to the ownership and operation of real estate, including risks associated with the general economic climate, local real estate conditions (including the availability of excess supply of properties relative to demand), changes in the availability of debt financing, credit risk arising from the financial condition of tenants, buyers, and sellers of properties, geographic or market concentration, competition from other space, our ability to manage our Portfolio, government regulations (such as changes in regulations governing land usage, improvements, zoning, and environmental issues), liability arising out of the presence of certain construction materials, uninsurable losses, and fluctuations in interest rates. We will incur the burdens of ownership of real property, which include paying expenses and taxes, maintaining the investments, and ultimately disposing of our Portfolio. The possibility of partial or total loss of capital will exist, and prospective investors should not purchase our common stock unless they can readily bear the consequences of such loss.

Real estate historically has experienced fluctuations and cycles in value, and local market conditions may result in reductions in the value of real property. The marketability and value of real property will depend on many factors beyond our control, including changes in general or local economic conditions in various markets, changes in supply of, or demand for, competing properties in an area, changes in interest rates, the promulgation and enforcement of governmental regulations relating to land-use and zoning restrictions, issues relating to environmental protection and occupational safety, condemnation or other taking of property by the government, unavailability of mortgage funds, which may render the sale of an investment difficult, the financial condition of tenants, buyers, and sellers of investments, changes in real estate tax rates and operating expenses, the imposition of rent controls, energy and supply shortages, the availability and cost of property insurance, including insurance covering earthquake and acts of terrorism, and various uninsured or uninsurable risks and acts of God, natural disasters and other uninsurable losses. In addition, general economic conditions, as well as conditions of domestic and international financial markets, may adversely affect our operations. Furthermore, should the value of our investments decline, we may need to consider disposing of investments at inopportune times or using operating income to repay indebtedness in order to maintain compliance with debt covenants. There can be no assurance that there will be a ready market for the resale of investments, because investments generally will not be liquid. Illiquidity may result from the absence of an established market for the investments, as well as legal or contractual restrictions on their resale by us. Additionally, partial or complete sales, transfers, or other dispositions of investments which may result in a return of capital or the realization of gains, if any, are generally not expected to occur for a number of years after an investment is made. Accordingly, an investment in us requires a long-term commitment, with no certainty of return.

Local market conditions may adversely affect our performance.

We intend to focus our investment activity in target markets based on our belief in our investment strategy, which relies, in part, upon providing need-based housing to individuals with working-class jobs. Our strategy further relies, in part, upon market recoveries in our target markets. However, no assurance can be given that the real estate assets can be acquired at favorable prices or that the market for such assets will recover or continue to improve, as the case may be, since this will depend, in part, upon events and factors outside of our control, including, without limitation, local market and economic conditions in our target markets and the surrounding regions which may significantly affect rents and vacancy rates in our target markets. For example, a downturn in the local economy could lead to a decrease in rents and an increase in vacancy rates, which would significantly adversely affect our profitability and ability to satisfy our financial obligations. Accordingly, our performance and our ability to make distributions to investors could be materially and adversely affected by market and economic conditions in these geographic areas. The risks that may further affect conditions in these geographic areas include the following:

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The local economic climate (which may be adversely affected by industry slowdowns, decreases in government spending, and other factors);

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A downturn in the economy;

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The local real estate conditions (such as an oversupply of properties);

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A decline in business growth that adversely affects occupancy or rental rates;

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The inability or unwillingness of tenants to pay rent increases;

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An adverse change in local governmental procedures; and

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The local rental market may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates.

Any of these risks could adversely affect our ability to achieve our desired yields on our investments and to make expected distributions to investors.

The COVID-19 pandemic has led to an economic slowdown in the U.S. and other countries. During periods of economic slowdown or recession, rising interest rates or declining demand for real estate could result in a general decline in rents or an increased incidence of defaults under existing leases. Such adverse impacts from COVID-19 to the economy generally or to our real estate in particular could negatively impact, among other things, our rental income, the value of our real estate, and our ability to raise capital. If we cannot operate our Portfolio to meet our financial expectations or if we cannot raise adequate capital, because of these or other risks, we may be prevented from being profitable or growing the values of our real estate properties, and our business, financial condition, results of operations or cash flow may be significantly negatively impacted.

We may experience heightened risks of vacancies.

A property may incur vacancy either by the continued default of the tenant under the lease, the expiration of a lease or the termination by the tenant of a lease. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash available to distribute to investors. Some of the leases for the properties in our Portfolio are scheduled to expire at the same time and as a result the cash flow from our Portfolio may be significantly diminished for a period of time. In addition, because properties’ market values depend principally upon the value of the properties’ leases, the resale value of properties with high or prolonged vacancies or with tenants suffering economically (for example, because of the current U.S. and global economic slowdown as a result of the COVID-19 pandemic) could suffer, which could further reduce or eliminate any return on an investor’s investment.

The current COVID-19 pandemic, and the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.

The COVID-19 pandemic has had, and other pandemics in the future could have, repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has evolved rapidly and, as cases of COVID-19 were identified in additional countries, many countries, including the U.S., reacted by instituting quarantines, mandating business and school closures and restricting travel.

The COVID-19 pandemic has negatively impacted, and will likely continue to negatively impact, almost every industry directly or indirectly, which may adversely impact the ability of our tenants, many of whom may be restricted in their ability to work or to pay their rent as and when due. In addition, our property manager may be limited in its ability to properly maintain our properties.

The COVID-19 pandemic, and other future pandemics, could also materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance due to, among other factors:

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reduced economic activity may cause certain of our tenants to be unable to meet their rent obligations to us in full, or at all, or to otherwise seek modifications of such obligations;

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difficulty accessing debt and equity capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis, or at all;

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weaker economic conditions due to the COVID-19 pandemic could require us to recognize future impairment losses;

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the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants in our debt obligations and result in a default and potentially an acceleration of indebtedness;

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a general decline in business activity and demand for real estate transactions could adversely affect our ability to sell or purchase properties;

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a change in housing trends, including tenants seeking properties with yards or larger outdoor spaces;

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the potential negative impact on the health of the employees of our Adviser and our Manager, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption; and

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the timing of the development and distribution of an effective vaccine or treatments for COVID-19.

The extent to which COVID-19 continues to impact our business will depend on future developments, which are highly uncertain and cannot be predicted, including additional actions taken to contain COVID-19 or treat its impact, among others. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic. The COVID-19 pandemic could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance. Moreover, many risk factors set forth in this Form 10 should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic.

Inability to renew leases as leases expire may impact our financial performance.

When renters decide to leave our houses, whether they decide not to renew their leases or they leave before their lease expiration date, we may not be able to relet their houses. In addition, we may suffer unexpected losses from renters who leave prior to the expiration of the lease term without notice or payment of penalty to us as our ability to collect rent due under the lease will be limited in these circumstances. Even if the renters do renew or we can relet the houses, the terms of renewal or reletting may be less favorable than current lease terms. If we are unable to promptly renew the leases or relet the houses, or if the rental rates upon renewal or reletting are significantly lower than expected rates, our results of operations and financial condition will be adversely affected. Furthermore, there are seasonal fluctuations in rental activity with activity higher in the spring and summer than in the fall and winter. If renters do not experience increases in their income, we may be unable to increase rent and/or delinquencies may increase. Occupancy levels and market rents may be adversely affected by national and local economic and market conditions, including new construction of single-family houses and apartment buildings and excess inventory of single and multi-family housing, rental housing subsidized by the government, government programs that favor owner occupied housing over rental housing, slow or negative employment growth and household formation, the availability of low interest mortgages for single-family home buyers, changes in social preferences and the potential for geopolitical instability, all of which are beyond our control. In addition, various state and local municipalities are considering and may continue to consider rent control legislation

which could limit our ability to raise rents. Finally, the large quantity of foreclosed houses, along with the low residential mortgage interest rates currently available and government sponsored programs to promote home ownership, have resulted in a record high level on the National Association of Realtor’s Housing Affordability Index, an index used to measure whether or not a typical family could qualify for a mortgage loan on a typical house. The foregoing factors may encourage potential renters to purchase residences rather than lease them, thereby causing a decline in the number and quality of potential tenants available to us and our ability to renew leases and/or raise rents. Consequently, our cash flow and ability to make distributions to investors could be reduced. In addition, we may be unable to quickly dispossess tenants in default under the applicable laws in certain jurisdictions resulting in delays in re-leasing properties.

We may experience deferred maintenance costs.

Before renting a home, we will typically perform a detailed assessment with an on-site review of each property to identify the scope of work to be completed. Beyond customary repairs, our Manager will usually focus on improvements that optimize overall property appeal and complete such improvements when appropriate and cost-effective as a means of maximizing the value of the property. To the extent properties are leased to existing tenants, renovations may be postponed until the tenant vacates the premises and we will pay the cost of renovating.

We may not be able to obtain adequate insurance on all of our investments, resulting in the potential risk of excessively expensive premiums for insurance and/or uninsured losses.

We will attempt to obtain adequate insurance on all of our investments to cover casualty losses. However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, tornadoes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorist acts could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that property owners purchase coverage against terrorism as a condition of providing mortgage loans. Such insurance policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our investments. In such instances we could be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any of our investments incur a casualty loss that is not fully insured, the value of our investments will be reduced by such uninsured loss. In addition, other than any working capital reserve or other reserves we may have, we have no source of funding to repair or reconstruct any uninsured damaged property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to investors.

Due diligence may not reveal all conditions.

We perform due diligence on each investment prior to its acquisition. Regardless of the thoroughness of the due diligence process, not all circumstances affecting the value of an investment can be ascertained through the due diligence process. If the materials provided to us are inaccurate, if we do not sufficiently investigate or follow up on matters brought to our attention as part of the due diligence process, or if the due diligence process fails to detect material facts that impact the value determination, we may acquire an investment that results in significant losses to us or may overpay for an investment, which would cause our performance to suffer.

Each of our real estate investments is subject to the effect of property taxes and assessments.

Each of our investments will be subject to real and personal property taxes and assessments. The real and personal property taxes on each investment may increase or decrease as property tax rates change and as such investments are assessed or reassessed by taxing authorities. If property taxes on the investments increase, our cash available for distribution to investors may be materially and adversely affected.

Compliance with governmental laws, regulations and covenants that are applicable to our properties or that may be passed in the future, including permit, license and zoning requirements, may adversely affect our ability to make future acquisitions or renovations, result in significant costs or delays, and adversely affect our growth strategy.

Rental homes are subject to various covenants and local laws, executive orders, administrative orders and regulatory requirements, including permitting, licensing and zoning requirements. Local regulations, including municipal or local ordinances, restrictions and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring any of our properties or when undertaking renovations of any of our existing properties. Among other things, these restrictions may relate to fire and safety, seismic, asbestos cleanup or hazardous material abatement requirements. Additionally, such local regulations may cause us to incur additional costs to renovate or maintain our properties in accordance with the particular rules and regulations. We cannot assure you that existing regulatory policies will not adversely affect us or the timing or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that would increase such delays or result in additional costs. Our business and growth strategies may be materially and adversely affected by our ability to obtain permits, licenses and approvals. Our failure to obtain such permits, licenses and approvals could have a material adverse effect on us and cause the value of our capital stock to decline.

Tenant relief laws, including laws regulating evictions, rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability.

As the landlord of numerous properties, we are involved from time to time in evicting residents who are not paying their rent or who are otherwise in material violation of the terms of their lease. Eviction activities impose legal and managerial expenses that raise our costs and expose us to potential negative publicity. The eviction process is typically subject to legal barriers, mandatory “cure” policies, our internal policies and procedures and other sources of expense and delay, each of which may delay our ability to gain possession and stabilize the property. Additionally, state and local landlord-tenant laws may impose legal duties to assist residents in relocating to new housing or restrict the landlord’s ability to remove the resident on a timely basis or to recover certain costs or charge residents for damage residents cause to the landlord’s premises. Because such laws vary by state and locality, we must be familiar with and take all appropriate steps to comply with all applicable landlord-tenant laws and need to incur supervisory and legal expenses to ensure such compliance. To the extent that we do not comply with state or local laws, we may be subjected to civil litigation filed by individuals, in class actions or actions by state or local law

enforcement and our reputation and financial results may suffer. We may be required to pay our adversaries’ litigation fees and expenses if judgment is entered against us in such litigation or if we settle such litigation. Furthermore, state and local governmental agencies may introduce rent control laws or other regulations that limit our ability to increase rental rates, which may affect our rental income. Especially in times of recession and economic slowdown, rent control initiatives can acquire significant political support. If rent controls unexpectedly became applicable to certain of our properties, our revenue from and the value of such properties could be adversely affected.

We may become a target of legal demands, litigation (including class actions) and negative publicity by tenant and consumer rights organizations, which could directly limit and constrain our operations and may result in significant litigation expenses and reputational harm.

Numerous tenant rights and consumer rights organizations exist throughout the country and operate in our markets, and we may attract attention from some of these organizations and become a target of legal demands, litigation and negative publicity. Many such consumer organizations have become more active and better funded in connection with mortgage foreclosure-related issues, and with the increased market for homes arising from displaced homeownership, some of these organizations may shift their litigation, lobbying, fundraising and grass roots organizing activities to focus on landlord-resident issues. While we intend to conduct our business lawfully and in compliance with applicable landlord-tenant and consumer laws, such organizations might work in conjunction with trial and pro bono lawyers in one or multiple states to attempt to bring claims against us on a class action basis for damages or injunctive relief and to seek to publicize our activities in a negative light. We cannot anticipate what form such legal actions might take, or what remedies they may seek. Additionally, such organizations may lobby local county and municipal attorneys or state attorneys’ general to pursue enforcement or litigation against us, may lobby state and local legislatures to pass new laws and regulations to constrain or limit our business operations, adversely impact our business or may generate negative publicity for our business and harm our reputation. If they are successful in any such endeavors, they could directly limit and constrain our operations and may impose on us significant litigation expenses, including settlements to avoid continued litigation or judgments for damages or injunctions.

Environmental hazards outside of our control and the cost of complying with governmental laws and regulations regarding these hazards may adversely affect our operations and performance.

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to, among other things, environmental protection and human health and safety and access by persons with disabilities. We could be subject to liability in the form of fines or damages for noncompliance with these laws and regulations (or our borrowers could suffer such liability), even if we did not cause the event(s) resulting in liability.

Environmental Laws Generally. Environmental laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid hazardous materials, the remediation of contaminated property associated with the disposal of solid and hazardous materials and other health and safety-related concerns. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the acts causing the contamination were legal, whether the

contamination was present prior to a purchaser’s acquisition of a property, and whether an owner knew of such contamination. The conditions of investments at the time we acquire them, operations in the vicinity of our investments, such as the presence of underground tanks, or activities of unrelated third parties may affect the value or performance of our Portfolio.

Hazardous Substances. The presence of hazardous substances (on owned real estate), or the failure to properly remediate these substances, may hinder our ability to sell, rent or pledge investments as collateral for future borrowings. Any material expenditures, fines, or damages that we must pay will reduce our ability to make distributions to investors and may reduce the value of an investment in us. Additionally, compliance with new laws, ordinances or regulations may impose material environmental liability.

Asbestos Containing Materials. Certain U.S. federal, state, and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials (“ACMs”) when such materials are in poor condition or in the event of construction, remodeling, renovation, or demolition of a building. Such laws may impose liability for release of ACMs and may provide for third parties to seek recovery from owners or operators of real property for personal injury associated with ACMs. In connection with our ownership and operation of real estate, we may incur costs associated with the removal of ACMs or liability to third parties.

Other Regulations. We will be required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. We may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could adversely affect our performance and our ability to make distributions to investors.

Eminent domain could lead to material losses on our investments in our properties.

Governmental authorities may exercise eminent domain to acquire the land on which our properties are built in order to build roads and other infrastructure. Any such exercise of eminent domain would allow us to recover only the fair value of the affected properties. In addition, “fair value” could be substantially less than the real market value of the property for a number of years, and we could effectively have no profit potential from properties acquired by the government through eminent domain.

Contingent or unknown liabilities could adversely affect our financial condition.

Our acquisition activities are subject to many risks. We may acquire properties that are subject to unknown or contingent liabilities, including liabilities for or with respect to liens attached to properties, unpaid real estate taxes, utilities or HOA charges for which a prior owner remains liable, clean-up or remediation of environmental conditions or code violations, claims of vendors or other persons dealing with the acquired properties and tax liabilities, among other things. In each case, our acquisitions may be without any, or with only limited, recourse with respect to unknown or contingent liabilities or conditions. As a result, if any such liability were to arise relating to our properties, or if any adverse condition exists with respect to our properties that is in excess of its insurance coverage, we might have to pay substantial sums to settle or cure it, which could adversely affect our business. The properties we acquire may also be subject to covenants, conditions or restrictions that restrict the use or ownership of such properties, including prohibitions on leasing or requirements to obtain the approval of HOAs prior to leasing. We may not discover such restrictions during the acquisition process and such restrictions may adversely affect our ability to operate such properties as we intend.

In addition, purchases of single-family homes acquired as part of a portfolio or in bulk purchases typically involve few or no representations or warranties with respect to the properties and may allow us limited or no recourse against the sellers of such properties. Such properties also often have unpaid tax, utility and HOA liabilities for which we may be obligated but fail to anticipate.

Our dependence upon third parties for key services may have an adverse effect on our operating results or reputation if the third parties fail to perform.

We use local and national third-party vendors and service providers to provide certain services for our properties. For example, we typically engage third-party home improvement professionals with respect to certain maintenance and specialty services, such as heating, ventilation and air conditioning systems, roofing, painting and floor installations. Selecting, managing and supervising these third-party service providers requires significant resources and expertise, and because our Portfolio consists of geographically dispersed properties, our ability to adequately select, manage and supervise such third parties may be more limited or subject to greater inefficiencies than if our properties were more geographically concentrated. We have entered into a three-year contract with a third-party vendor to provide certain services for our properties. Because of the large volume of services under this contract, only a limited number of companies are capable of servicing our needs on this scale. Accordingly, the inability or unwillingness of this vendor, to continue to provide these services on acceptable terms or at all could have a material adverse effect on our business.

We may obtain only limited warranties when we purchase a property and would have only limited recourse in the event due diligence did not identify any issues that lower the value of the property.

The seller of a property often sells such property in its “as is” condition on a “where is” basis and “with all faults” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase and sale agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental revenue from that property.

The costs of complying with new and existing laws and regulations may adversely affect the values of our properties or affect our ability to attract and retain tenants.

Federal, state, and local governments and governmental agencies may adopt, create or amend laws, regulations, or ordinances related to property acquisitions, tenants, or landlords that could negatively affect our operations and our ability to effectively manage our properties.

Our properties may be or become subject to condemnation or eminent domain proceedings.

A governmental authority could bring an eminent domain or inverse condemnation action against one or more of our properties. Such an action could have a material adverse effect on the financial viability and marketability of that property, and, as a result, our results of operations and our ability to make distributions to investors.

Risks Associated with Debt Financing

General debt financing risks related to the use of leverage in connection with executing our business strategy may result in increased risk for investors.

We employ leverage and may continue to utilize leverage or enter into hedging agreements related to our debt in connection with our respective investments. Use of leverage subjects the investments to risks normally associated with debt financing, including the risk that cash flows will be insufficient to meet required payments of principal and interest, the risk that the value of collateral may decrease, forcing us to dispose of investments at inopportune times to reduce leverage and maintain compliance, the risk that indebtedness on the investments will not be able to be refinanced, or that the terms of such refinancing will not be as favorable as the terms of the existing indebtedness.

Significant borrowings increase the risks of an investment in us. If there is a shortfall between the cash flow from investments and the cash flow needed to service our indebtedness, then the amount available for distributions to stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the investment securing the loan that is in default, thus reducing the value of an investment in us.

Currently, financing for investments in single-family homes is generally available, but there can be no guarantee that sufficient financing will be available to us in the future.

Under current lending conditions, financing for investment single-family houses is generally available. However, there can be no assurance that we will be able to obtain financing on favorable terms, if at all.

Interest rate risk on our debt may adversely affect our performance and our ability to make distributions to stockholders.

As of March 31, 2021, $661.4 million of our total debt outstanding bears interest at floating interest rates, and we may also borrow additional funds at floating interest rates in the future, including $180.0 million and $150.0 million available for borrowing under the JPM Facility and Warehouse Facility, respectively, as of March 31, 2021. As of March 31, 2021, five interest rate swap agreements, with a combined notional amount of $320 million and terms expiring in 2024 and 2025, effectively fix the interest rate on $320 million, or 48%, of our $661.4 million of floating rate debt outstanding. As of March 31, 2021, the interest rate cap agreement we have entered into effectively caps LIBOR on $241.4 million of our floating rate mortgage debt outstanding at 6.60% for the term of the agreement, which expires on November 1, 2021. Except to the extent we have arrangements in place that hedge against the risk of rising interests rates, an increase in interest rates could increase required debt service payments on floating rate debt and could reduce funds available for operations, future business opportunities, and distributions to stockholders. If we need to repay debt during times of rising interest rates, we could be forced to dispose of properties on unfavorable terms, which may not permit realization of the maximum return on such investments.

Interest-only indebtedness may increase our risk of default.

As of March 31, 2021, $661.4 million of our debt outstanding was interest-only. Additionally, we may also finance any future property acquisitions using interest-only mortgage indebtedness or make other borrowings that are interest-only. For all of this indebtedness other than the Initial Mortgage, interest is payable monthly during the loan term, and a “balloon” payment of the entire principal amount is payable at maturity. For our Initial Mortgage, interest is payable monthly during the loan term and principal payments based on a 30 year amortization schedule are required during the last 36 months of the loan and the remainder of the principal, or a balloon payment, is payable at maturity. These required balloon payments may increase our risk of default under the related loan because we may not have the required funds to repay the principal as required under the agreements. These required principal or balloon payments may increase our risk of default under the related loan if we do not have funds available or are unable to refinance the obligation. Additionally, if we default on the payment of principal under one of our agreements, it may cause cross defaults under our other credit agreements. In order to make the required principal or balloon payments, we may be forced to sell one or more of our properties or investments in real estate at times that may not permit us to realize the return on the investments we would have otherwise realized. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT.

We have a substantial amount of indebtedness, which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.

As of March 31, 2021, there was $808.6 million of debt outstanding related to our Portfolio.

Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties, fully implement our capital expenditure, acquisition and development activities, or pay the dividends necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

•

require us to dedicate a substantial portion of cash flow from operations to the payment of principal, and interest on, indebtedness, thereby reducing the funds available for other purposes;

•

make it more difficult for us to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs;

•

force us to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants which we may be subject to;

•

subject us to increased sensitivity to interest rate increases;

•

make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;

•

limit our ability to withstand competitive pressures;

•

limit our ability to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

•

reduce our flexibility in planning for or responding to changing business, industry and economic conditions; and/or

•

place us at a competitive disadvantage to competitors that have relatively less debt than we have.

If any one of these consequences were to materialize, our financial condition, results of operations, cash flow and price of our common stock could be adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

Changes to, or the elimination of, LIBOR may adversely affect interest expense related to our loans and investments.

In a speech on July 27, 2017, Andrew Bailey, the Chief Executive of the Financial Conduct Authority of the U.K., or the FCA, announced the FCA’s intention to cease sustaining LIBOR after 2021. The FCA has statutory powers to require panel banks to contribute to LIBOR when necessary. The FCA has decided not to ask, or to require, that panel banks continue to submit contributions to LIBOR beyond the end of 2021. The FCA has indicated that it expects that the current panel banks will voluntarily sustain LIBOR until the end of 2021. The FCA’s intention is that after 2021, it will no longer be necessary for the FCA to ask, or to require, banks to submit contributions to LIBOR. The FCA does not intend to sustain LIBOR through its influence or legal powers beyond that date. It is possible that the ICE Benchmark Administration Limited (formerly NYSE Euronext Rate Administration Limited) and the panel banks could continue to produce LIBOR on the current basis after 2021, if they are willing and able to do so, but we cannot make assurances that LIBOR will survive in its current form, or at all. The ICE Benchmark Administration Limited also recently announced that it will consult on its intention to extend the publication of LIBOR to June 30, 2023. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities. Although there have been a few issuances utilizing SOFR or the Sterling Over Night Index Average, an alternative reference rate that is based on transactions, it is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

Approximately 82% of our debt outstanding as of March 31, 2021 pays interest at a variable rate that is tied to LIBOR. If LIBOR is no longer available, our loan documents generally allow the lender, in some cases in coordination with us, to choose a new index based upon comparable information. If LIBOR is no longer available, we may need to renegotiate some of our agreements to determine a replacement index or rate of interest. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate, although SOFR has emerged as a leading candidate and is expressly used in some of our facilities. As such, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined and any changes to benchmark interest rates could increase our financing costs, which could impact our results of operations, cash flows and the market value of our investments. In addition, the elimination of LIBOR and/or changes to another index could result in mismatches with the interest rate of investments that we are financing.

Secured indebtedness exposes us to the possibility of foreclosure on our ownership interests in our rental homes.

Incurring mortgage and other secured indebtedness increases our risk of loss of our ownership interests in our rental homes because defaults thereunder, and/or the inability to refinance such indebtedness, may result in foreclosure action initiated by lenders. For tax purposes, a foreclosure of any of our rental homes would be treated as a sale of the home for a purchase price equal to the outstanding balance of the indebtedness secured by such rental home. If the outstanding balance of the indebtedness secured by such rental home exceeds our tax basis in the rental home, we would recognize taxable income on foreclosure without receiving any cash proceeds.

Covenants in our debt agreements may restrict our operating activities and adversely affect our financial condition.

Our existing debt agreements contain, and future debt agreements may contain, financial and/or operating covenants including, among other things, certain coverage ratios, as well as limitations on the ability to incur additional secured and unsecured debt and otherwise affect our distribution and operating policies. These covenants may limit our operational flexibility and acquisition and disposition activities. Moreover, if any of the covenants in these debt agreements are breached and not cured within the applicable cure period, we could be required to repay the debt immediately, even in the absence of a payment default. A default under one of our debt agreements could result in a cross-default under other debt agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require and enforce their respective interests against existing collateral. As a result, a default under applicable debt covenants could have an adverse effect on our financial condition or results of operations. Additionally, borrowing base requirements associated with our financing arrangements may prevent us from drawing upon our total maximum capacity under these financing arrangements if sufficient collateral, in accordance with our facility agreements, is not available.

For example, some of our debt agreements require, among other things, that a cash management account controlled by the lender collect all rents and cash generated by the properties securing our Portfolio. Upon the occurrence of an event of default or failure to satisfy the required financial covenants, the lender may apply any excess cash as the lender elects, including prepayment of principal and amounts due under the loans. These covenants may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our stockholders. Further, such restrictions could make it difficult for us to satisfy the requirements necessary to maintain our qualification as a REIT for U.S. federal income tax purposes.

Other Risks

We may be subject to requirements under the USA PATRIOT Act of 2001 and the regulations of the Treasury Department’s Office of Foreign Assets Control.

We may be subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), which amends the Bank Secrecy Act and was designed to detect and deter money laundering and terrorist financing activity. The USA PATRIOT Act requires subject businesses to establish anti-money laundering compliance programs that must include policies and procedures to verify investor identity at account opening and to detect and report suspicious transactions to the government. Institutions subject to the USA PATRIOT Act must also implement specialized employee training programs, designate an anti-money laundering compliance officer and submit to independent audits of the effectiveness of the compliance program. Compliance with the USA PATRIOT Act may result in additional financial expenses for us and may subject us to additional liability. Our failure to comply with regulations of the Treasury Department’s Office of Foreign Assets Control applicable to it could have similar or additional negative consequences to those under the USA PATRIOT Act.

Risks Related to Tax

Failure to qualify as a REIT for U.S. federal income tax purposes would have a material adverse effect on us.

We elected to be taxed as a REIT under the Code. Our qualification as a REIT will require us to satisfy numerous requirements, some on an annual and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and which involve the determination of various factual matters and circumstances not entirely within our control. We expect that our current organization and proposed method of operation will enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future. In addition, U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. If we fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax on our REIT taxable income at the corporate tax rate and would not be allowed to deduct dividends paid to our stockholders in computing our taxable income. Also, unless the IRS granted us relief under certain statutory provisions, we could not re-elect REIT status until the fifth calendar year after the year in which we first failed to qualify as a REIT. The additional tax liability from the failure to qualify as a REIT would reduce or eliminate the amount of cash available for investment or distribution to our stockholders. This would materially and adversely affect us. In addition, we would no longer be required to make distributions to our stockholders.

As a REIT, we may be subject to tax liabilities that reduce our cash flow.

Even if we continue to qualify as a REIT, for U.S. federal income tax purposes, we may be subject to certain U.S. federal, state and local taxes on our income or property, including the following:

•

To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gains) to our stockholders. If we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income (determined without regard to the dividends paid deduction and including net capital gains), we will be subject to tax on the undistributed income at the corporate income tax rate.

•

We will be subject to a 4% nondeductible excise tax on the amount, if any, by which the distributions that we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income, and 100% of our undistributed income from prior years.

•

If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the corporate income tax rate.

•

If we sell a property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our net gain will be subject to the 100% “prohibited transaction” tax.

•

We may be subject to state and local taxes on our income or property, either directly or indirectly because of the taxation of entities through which we indirectly own our assets.

•

Our subsidiaries that are “taxable REIT subsidiaries” (“TRSs”) would generally be required to pay U.S. federal (and applicable state and local) corporate income tax on their earnings. We currently do not have a TRS.

To qualify as a REIT, we must meet annual distribution requirements, which could result in material harm to the Company if they are not met.

To obtain the favorable tax treatment accorded to REITs, among other requirements, we normally will be required each year to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and by excluding net capital gains. We will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gains. In addition, if we fail to distribute to our stockholders during each calendar year at least the sum of (a) 85% of our ordinary income for such year; (b) 95% of our capital gain net income for such year; and (c) any undistributed REIT taxable income from prior periods, we will be subject to a 4% excise tax on the excess of the required distribution over the sum of (1) the amounts actually distributed by us and (2) retained amounts on which we pay U.S. federal income tax at the corporate level. We intend to make distributions to our stockholders to comply with the requirements of the Code for REITs and to minimize or eliminate our U.S. federal income tax obligation. However, differences between the recognition of REIT taxable income and the actual receipt of cash could require us to sell assets or raise capital on a short-term or long-term basis to meet the distribution requirements of the Code. Certain types of assets generate substantial mismatches between REIT taxable income and available cash. Such assets include rental real estate that has been financed through financing structures which require some or all of available cash flows to be used to service borrowings. As a result, the requirement to distribute a substantial portion of our REIT taxable income could cause us to: (1) sell assets in adverse market conditions; (2) raise capital on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, expansions or developments, capital expenditures or repayment of debt, in order to comply with REIT requirements. Further, amounts distributed will not be available to fund our operations. Under certain circumstances, covenants and provisions in our existing and future debt instruments may prevent us from making distributions that we deem necessary to comply with REIT requirements. Our inability to make required distributions as a result of such covenants could threaten our status as a REIT and could result in material adverse tax consequences for us and our stockholders.

Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our shares. We may be required to make distributions to our stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may, for instance, hinder our ability to make certain otherwise attractive investments or undertake other activities that might otherwise be beneficial to us and our stockholders, or may require us to raise capital or liquidate investments in unfavorable market conditions and, therefore, may hinder our performance.

As a REIT, at the end of each quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other than cash, cash items, government securities, securities issued by a TRS and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than cash, cash items, government securities, securities issued by a TRS and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any quarter, we must correct the failure within 30 days after the end of the quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering material adverse tax consequences. The need to comply with the 75% asset test and 20% TRS securities test on an ongoing basis potentially could require us in the future to limit the future acquisition of, or to dispose of, nonqualifying assets, limit the future expansion of any TRS’s assets and operations or dispose of or curtail TRS assets and operations, which could adversely affect our business and could have the effect of reducing our income and amounts available for distribution to our stockholders.

If our Operating Partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT.

We believe that our Operating Partnership will be treated as a partnership for U.S. federal income tax purposes. As a partnership, our Operating Partnership generally will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our Operating Partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our Operating Partnership or any other subsidiary partnership in which we own an interest as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating Partnership or any other such subsidiary partnership as an entity taxable as a corporation for U.S. federal income tax purposes (including by reason of being classified as a publicly traded partnership or “taxable mortgage pool” for U.S. federal income tax purposes), we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of our Operating Partnership or any subsidiary partnerships to qualify as a partnership could cause it to become subject to U.S. federal and state corporate income tax, which would significantly reduce the amount of cash available for debt service and for distribution to its partners, including us.

The prohibited transactions tax may limit our ability to engage in sale transactions.

A REIT’s income from “prohibited transactions” is subject to a 100% tax. In general, “prohibited transactions” are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transactions tax equal to 100% of net gain upon a disposition of real property or debt instruments that we hold. Although a safe harbor is available, for which certain sales of property by a REIT are not subject to the 100% prohibited transaction tax, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our properties or we may conduct such sales

through our TRSs, which would be subject to U.S. federal and state income taxation at corporate rates. In addition, we may have to sell numerous properties to a single or a few purchasers, which could cause us to be less profitable than would be the case if we sold properties on a property-by-property basis. For example, if we decide to acquire properties opportunistically to renovate in anticipation of immediate resale, we will need to conduct that activity through our TRSs to avoid the 100% prohibited transactions tax.

The 100% tax described above may limit our ability to enter into transactions that would otherwise be beneficial to us. For example, if circumstances make it not profitable or otherwise uneconomical for us to remain in certain states or geographical markets, the 100% tax could delay our ability to exit those states or markets by selling our assets in those states or markets other than through a TRS, which could harm our operating profits.

You may be restricted from acquiring or transferring certain amounts of our stock.

The restrictions on ownership and transfer in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities.

In order to qualify as a REIT for each taxable year, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year for each taxable year. To help ensure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary to preserve our qualification as a REIT. Unless exempted by our Board, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is more restrictive, of outstanding shares of our common stock or more than 9.8% in value of the aggregate of the outstanding shares of any class or series of our capital stock. Our Board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of such ownership limits would, among other things, result in our failing to qualify as a REIT. This as well as other restrictions on transferability and ownership will not apply, however, if our Board determines that it is no longer in our best interest to continue to qualify as a REIT. See Item 11. “Description of Registrant’s Securities to be Registered—Restrictions on Ownership and Transfer.”

We may be subject to adverse legislative or regulatory tax changes.

The U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S. federal income tax treatment of an investment in us. The U.S. federal income tax rules dealing with REITs are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which could result in statutory changes as well as frequent revisions to regulations and interpretations. We cannot predict the long-term effect of any future law changes on REITs and their stockholders. Prospective investors are urged to consult with their tax advisors regarding the effect of potential changes to the U.S. federal tax laws on an investment in our stock.

We and our subsidiaries and stockholders may be subject to state, local or foreign taxation in various jurisdictions including those in which we or they transact business, own property or reside.

We may own real property assets located in numerous jurisdictions, and may be required to file tax returns in some or all of those jurisdictions. Our state, local or foreign tax treatment and that of our stockholders may not conform to the U.S. federal income tax treatment discussed above. Prospective investors should consult their tax advisors regarding the application and effect of state and local income and other tax laws on an investment in our stock.

Dividends payable by REITs generally are taxed at the higher ordinary income rate, which could reduce the net cash received by stockholders and may be detrimental to our ability to raise additional funds through any future sale of our stock.

Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates is generally subject to tax at reduced rates. However, dividends payable by REITs to their stockholders generally are not eligible for the reduced rates for qualified dividends and are taxed at ordinary income rates (but U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of ordinary dividends from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026). To qualify for this deduction, the U.S. stockholder receiving such dividends must hold the dividend-paying REIT stock for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the stock becomes ex-dividend and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property. Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, to the extent that the reduced rates continue to apply to regular corporate qualified dividends, investors that are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our stock, and could be detrimental to our ability to raise additional funds through the future sale of our stock.

Risks Related to Conflicts of Interest

Certain of our officers will have conflicts of interest.

Certain of our officers will have conflicts of interest in allocating their time between us and their other business activities, including that of our Adviser or our Manager, and none of our officers will devote all of such officer’s business time and attention to our activities.

Conflicts may arise in connection with allocation of services and costs.

Affiliates of our Adviser own, and may continue to own in the future, other properties outside our Portfolio, which may result in a conflict of allocation of services and costs.

ITEM 2. FINANCIAL INFORMATION.

Summary Historical and Pro Forma Financial Data

Summary Historical Financial Data

The following tables set forth, for the periods and dates indicated, our summary historical consolidated financial data. We have derived the statement of operations data for the years ended December 31, 2020 and 2019 and the balance sheet data as of December 31, 2020 and 2019 from our audited consolidated financial statements appearing elsewhere in this Form 10. We have derived the statement of operations data for the three months ended March 31, 2021 and 2020 and the balance sheet data as of March 31, 2021 from our unaudited consolidated financial statements appearing elsewhere in this Form 10. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and unaudited interim consolidated financial statements and the related notes to those financial statements included elsewhere in this Form 10.


(in thousands, except per share data)	For the Three Months Ended March 31, (unaudited)						For the Years Ended December 31, (audited)
Statement of Operations Data:	2021			2020			2020			2019
Total revenues	$	30,628		$	17,103		$	76,454		$	52,324
Total expenses		30,685			17,632			77,470			53,944
Loss on sales of real estate		(75	)		(26	)		(930	)		(44	)

Operating loss		(132	)		(555	)		(1,946	)		(1,664	)
Casualty gain (loss), net of insurance proceeds		(9	)		—			281			22

Net loss		(141	)		(555	)		(1,665	)		(1,642	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—			1,052			—
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)		(190	)		(570	)		(967	)

Net loss attributable to common stockholders	$	(2,312	)	$	(365	)	$	(2,147	)	$	(675	)

Weighted average common shares outstanding - basic		10,417			5,907			7,175			3,221

Weighted average common shares outstanding - diluted		10,417			5,907			7,175			3,221

Loss per share – basic	$	(0.22	)	$	(0.06	)	$	(0.30	)	$	(0.21	)

Loss per share – diluted	$	(0.22	)	$	(0.06	)	$	(0.30	)	$	(0.21	)


(in thousands)	As of March 31, (unaudited)		As of December 31, (audited)
Balance Sheet Data:	2021		2020		2019
Cash and restricted cash		51,776	$	37,096	$	17,830
Total assets		1,347,881	$	779,968	$	536,636
Total debt		799,229	$	347,709	$	315,889
Total temporary equity (1)		248,436	$	212,157	$	93,933
Total stockholders’ equity		252,000	$	174,322	$	107,471


	As of March 31, (unaudited)
	2021
Other Data (unaudited):
Number of Homes		13,693
Occupancy (2)		97.5	%
Avg Effective Monthly Rent	$	1,039
Avg Sq Ft		1,318
% of homes that have been renovated		66.7	%
% of homes to be renovated		33.3	%
% of homes to be sold		0.0	%
% of homes in good condition		90.3	%

(1)

Includes the Company’s Series A Preferred Stock and redeemable noncontrolling interests in the Operating Partnership.

(2)

Occupancy is calculated as the number of units occupied as of a specific date, divided by the total number of stabilized units as of that date, expressed as a percentage.

Summary Pro Forma Financial Data

The following tables set forth, for the period and date indicated, our summary unaudited pro forma financial data. The summary unaudited pro forma financial data has been prepared to give effect to the acquisition of (1) a portfolio of 1,725 SFR properties from an unaffiliated third-party for approximately $228.0 million on January 22, 2021 (the “Conrex I Acquisition”) and (2) a portfolio of 2,170 SFR properties from an unaffiliated third-party for approximately $282.9 million on March 1, 2021 (the “Conrex II Acquisition”). In addition to the $228.0 million purchase price, in connection with the Conrex I Acquisition, we paid an approximately $2.5 million acquisition fee to the Manager which was capitalized as a transaction cost. In addition to the $282.9 million purchase price, in connection with the Conrex II Acquisition, we paid an approximately $3.0 million acquisition fee to the Manager which was capitalized as a transaction cost. We refer to the portfolios purchased in the Conrex I Acquisition and the Conrex II Acquisition as the “Acquired Portfolios.” The unaudited pro forma statement of operations data for the year ended December 31, 2020 and for the three months ended March 31, 2021 have been prepared to give effect to the acquisitions of the Acquired Portfolios as if the acquisitions occurred on January 1, 2020. The unaudited pro forma other data as of December 31, 2020 has been prepared to give effect to the acquisitions of the Acquired Portfolios as if the acquisitions occurred on December 31, 2020.

In connection with the Conrex I Acquisition and Conrex II Acquisitions, we did not receive historical audited or unaudited financial statements for the periods or dates presented relating to the Acquired Portfolios. Further, the sellers have not provided us with the information needed to prepare Rule 3-14 financial statements. We prepared the following summary unaudited pro forma statement of operations data for the three months ended March 31, 2021 based on actual operating data of the acquired portfolios from the date of acquisition through March 31, 2021 adjusted to reflect a full quarter of activity as if the homes were operating the whole quarter. We prepared the following summary unaudited pro forma statement of operations data for the year ended December 31, 2020 based on other information and data, including historical financial data used to calculate NOI, received in connection with management’s underwriting and analysis of the portfolios acquired in the Conrex I Acquisition and Conrex II Acquisition. The Company used the NOI data provided by the sellers to create annualized historical financial data for the acquired portfolios in order to prepare the following pro forma statement of operations data.

Based on the limited information available to management, we made estimates and assumptions about the acquired portfolios based on our Portfolio’s prior performance and knowledge of the markets that we believe are reasonable. Results could differ materially from the estimates and assumptions used in the pro forma adjustments. Despite the limited information available to management, management believes providing the summary unaudited pro forma financial and other data provides useful and relevant information about the Acquired Portfolios. This summary unaudited pro forma financial and other data has been prepared for informational purposes only and is not necessarily indicative of future results or of actual results that would have been achieved had the acquisitions of the Acquired Portfolios been consummated on January 1, 2020.

Management also used the data provided by the sellers to identify trends in the acquired portfolios. For example, management identified lower occupancy rates in the acquired portfolios in certain MSAs as compared to the Company’s historical portfolio performance. As a result, in its internal modeling of future performance, the Company assumed lower initial occupancy of the acquired portfolio in those MSAs as compared to its historical portfolio. Other than to create annualized historical financial data for use in the pro forma statement of operations data and to identify trends used in its internal modeling, the Company has not generally relied on the information and data provided by the sellers.

You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes to those statements included elsewhere in this Form 10.

All amounts presented in the following tables are displayed in thousands (except for per share data and data presented in the other data table).


Statement of Operations Data (unaudited):	Historical For the Three Months Ended March 31, 2021			Conrex I Acquisition (1)				Conrex II Acquisition (1)				Pro Forma For the Quarter Ended March 31, 2021
Total revenues	$	30,628		$	1,009		(2)	$	4,280		(3)	$	35,917
Total expenses		30,685			1,927		(4)		7,809		(5)		40,421
Loss on sales of real estate		(75	)		—				—				(75	)

Operating loss		(132	)		(918	)			(3,529	)			(4,579	)
Casualty loss, net of insurance proceeds		(9	)		—				—				(9	)

Net loss		(141	)		(918	)			(3,529	)			(4,588	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—				—				2,206
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)		(228	)			(876	)			(1,139	)

Net loss attributable to common stockholders	$	(2,312	)	$	(690	)		$	(2,653	)		$	(5,655	)

Weighted average common shares outstanding - basic		10,417											10,417

Weighted average common shares outstanding - diluted		10,417											10,417

Loss per share - basic	$	(0.22	)									$	(0.54	)

Loss per share - diluted	$	(0.22	)									$	(0.54	)


Statement of Operations Data:	Historical For the Year Ended December 31, 2020			Conrex I Acquisition(6)				Conrex II Acquisition(7)				Pro Forma For the Year Ended December 31, 2020
	(audited)			(unaudited)				(unaudited)				(unaudited)
Total revenues	$	76,454		$	23,328		(2)	$	20,723		(3)	$	120,505
Total expenses		77,470			24,642		(8)		35,335		(9)		137,447
Loss on sales of real estate		(930	)		—				—				(930	)

Operating loss		(1,946	)		(1,314	)			(14,612	)			(17,872	)
Casualty gain, net of insurance proceeds		281			—				—				281

Net loss		(1,665	)		(1,314	)			(14,612	)			(17,591	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		1,052			2,373		(10)		—				3,425
Net loss attributable to redeemable noncontrolling interests in the OP		(570	)		(450	)			(5,002	)			(6,022	)

Net loss attributable to common stockholders	$	(2,147	)	$	(3,237	)		$	(9,610	)		$	(14,994	)

Weighted average common shares outstanding - basic		7,175											7,175

Weighted average common shares outstanding - diluted		7,175											7,175

Loss per share - basic	$	(0.30	)									$	(2.09	)

Loss per share - diluted	$	(0.30	)									$	(2.09	)


Other Data (unaudited):	Historical as of 12/31/2020			Conrex I Acquisition			Conrex II Acquisition			Pro Forma as of December 31, 2020
Number of homes		9,282			1,725			2,170			13,177
Occupancy (11)		96.4	%		96.5	%		89.2	%		95.2	%
Avg Effective Monthly Rent	$	970		$	1,167		$	1,158		$	1,027
Avg Sq Ft		1,226			1,544			1,550			1,321
% of homes that have been renovated		63.5	%		99.6	%		99.6	%		74.1	%
% of homes to be renovated		36.5	%		0.4	%		0.4	%		25.9	%
% of homes to be sold		0.1	%		0.1	%		0.1	%		0.1	%
% of homes in good condition		87.2	%		99.6	%		99.6	%		90.9	%

(1)

Historical revenue data from the date of acquisition to March 31, 2021 adjusted to reflect a full quarter was used to derive pro forma revenue.

(2)

Includes rental and other income (not reflected in the historical consolidated statements of operations of the Company) as if the Conrex I Acquisition occurred on January 1, 2020 and the properties began operations on that date.

(3)

Includes rental and other income (not reflected in the historical consolidated statements of operations of the Company) as if the Conrex II Acquisition occurred on January 1, 2020 and the properties began operations on that date.

(4)

(5)

Includes the following adjustments to total expenses (not reflected in the historical consolidated statements of operations of the Company) as if the Conrex II Acquisition occurred on January 1, 2020 and the properties began operations on that date: (a) Total property operating expenses; (b) Advisory fees; (c) Depreciation and amortization expense (real estate-related depreciation and amortization are computed on a straight-line basis over the respective estimated useful lives of the assets); (d) Interest expense as if the borrowings attributable to the Conrex II Acquisition were borrowed on January 1, 2020 and includes the amortization of deferred financing costs incurred in connection with the borrowings. In connection with the Conrex II Acquisition, the Company entered into a credit facility with JP Morgan, which has an interest rate of LIBOR plus 2.75% and a two-year term and drew $320.0 million. For additional information regarding our debt arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt, Derivatives and Hedging Activity—Debt.”

(6)

Annualized historical revenue data provided by the sellers for six months of 2020 was used to derive pro forma revenue.

(7)

Historical revenue data provided by the sellers for the full year ended December 31, 2020 was used to derive pro forma revenue.

(8)

Includes the following adjustments to total expenses (not reflected in the historical consolidated statements of operations of the Company) as if the Conrex I Acquisition occurred on January 1, 2020 and the properties began operations on that date: (a) Total property operating expenses; (b) Advisory fees; (c) Depreciation and amortization expense (real estate-related depreciation and amortization are computed on a straight-line basis over the respective estimated useful lives of the assets); (d) Interest expense as if the borrowings attributable to the Conrex I Acquisition were borrowed on January 1, 2020 and includes the amortization of deferred financing costs incurred in connection with the borrowings. In connection with the Conrex II Acquisition, the Company entered into a $125.0 million note with MetLife, which has an interest rate of 3.25% and a five-year term. For additional information regarding our debt arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt, Derivatives and Hedging Activity—Debt.”

(9)

(10)

Includes dividends to our preferred stockholders (not reflected in the historical consolidated statements of operations of the Company) as if $36.5 million of our Series A Preferred Stock was issued on January 1, 2020.

(11)

Occupancy is calculated as the number of units occupied as of a specific date, divided by the total number of stabilized units as of that date, expressed as a percentage.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and our historical results of operations. The following should be read in conjunction with our financial statements and accompanying notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this annual report. See “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in this Form 10. Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements and accompanying notes may not be an indication of our financial condition and results of operations in the future.

Overview

The Company is an owner and operator of single-family homes for lease. As of March 31, 2021, our Portfolio consisted of 13,687 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of March 31, 2021, the Portfolio had occupancy of approximately 87.0% with a weighted average monthly effective rent of $1,039 per occupied home. As of March 31, 2021, the Portfolio had a stabilized occupancy of approximately 97.5% with a weighted average monthly stabilized effective rent of $1,001 per occupied home and 53.3% of homes in our Portfolio were excluded from being stabilized under the NRHC definition either because the homes were in rehabilitation or were purchased with tenants in place. Substantially all of the Company’s business is conducted through the Operating Partnership, as the Company owns its homes indirectly through the Operating Partnership. VineBrook Homes OP GP, LLC, is the general partner of the Operating Partnership. As of March 31, 2021, there were 12,988,961 OP Units outstanding, of which 9,513,087, or 73.2%, were owned by the Company. Please see the notes to the financial statements included within this Form 10 for the breakdown of the non-controlling ownership of our Operating Partnership.

As of December 31, 2020, our Portfolio consisted of 9,282 SFR homes primarily located in the midwestern, heartland and southeastern United States. As of December 31, 2020, the Portfolio had occupancy of approximately 83.7% with a weighted average monthly effective rent of $969 per occupied home. As of December 31, 2020, the Portfolio had a stabilized occupancy of approximately 96.5% with a weighted average monthly effective rent of $989 per occupied stabilized home and 36.6% of homes in our Portfolio were excluded from being stabilized under the NRHC definition either because the homes were in rehabilitation or were purchased with tenants in place. As of December 31, 2020, there were 11,479,785 OP Units outstanding, of which 8,045,094, or 70.1%, were owned by the Company. Please see the notes to the financial statements included within this Form 10 for the breakdown of the non-controlling ownership of our Operating Partnership.

We are primarily focused on acquiring, renovating, leasing, maintaining and otherwise managing SFR home investments primarily located in large to medium size cities and suburbs located in the midwestern, heartland and southeastern United States. We intend to employ targeted management and a value-add program at a majority of our homes in an attempt to improve rental rates and the net operating income (“NOI”) at our homes, maximize cash flow, provide quarterly cash distributions and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, for an initial term ending November 1, 2021 which will automatically renew for one-year terms thereafter.

We began operations on November 1, 2018 as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Executives and other third parties, which owned the Initial Portfolio of approximately 4,129 SFR assets located in Ohio, Kentucky and Indiana for a total purchase price of approximately $330.2 million, including closing and financing costs of approximately $6.0 million. On November 1, 2018, the Company accepted subscriptions for 1,097,367 shares of our common stock for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of such shares of our common stock were used to acquire OP Units. The Operating Partnership used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Executives, and $241.4 million from a Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage provided by KeyBank N.A (“KeyBank”).

On August 28, 2018, the Company authorized the offering of 40,000,000 shares of our common stock through a continuous private placement, under regulation D of the Securities Act of 1933 (and various state securities law provisions) for a maximum of $1.0 billion of its shares of our common stock. The Private Offering expires on November 1, 2023 but may be extended for up to two times for one year each. The

initial offering price for shares of our common stock sold through the Private Offering was $25.00 per share. The Company conducts periodic closings and sells shares of our common stock at a purchase price generally equal to NAV as determined using the valuation methodology and as recommended by the Adviser and approved by the pricing committee of the Board (the “Valuation Methodology”), plus applicable fees and commissions. For sales through Raymond James & Associates, Inc. (“Raymond James”), the purchaser subscribes for a gross amount based on NAV and separately pays the applicable fees upfront from the purchaser’s account with Raymond James. For sales through a broker-dealer other than Raymond James, the purchaser subscribers from a gross amount based on a public offering price (“POP”) which includes the applicable upfront fees and commissions. Additionally, an independent third-party valuation firm assesses and evaluates the appropriateness of our NAV calculations on a quarterly basis. NAV may differ from the values of our real estate assets as calculated in accordance with GAAP.

NexPoint Securities, Inc., an entity under common ownership with the Adviser, serves as the dealer manager (the “Dealer Manager”) for the Private Offering and Raymond James & Associates, Inc. and other unaffiliated broker-dealers serve as placement agents through selling agreements between each placement agent and the Company.

COVID-19

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term. In response to the COVID-19 pandemic, in March 2021, Congress finalized the American Rescue Plan, a $1.9 trillion relief bill, which includes an additional $1,400 stimulus payment, $25 billion in rental assistance for low and moderate-income households who have lost jobs during the COVID-19 pandemic, and $5 billion to help struggling renters pay their utility bills. The plan will also continue to protect tenants from eviction through September 30, 2021. Since the outbreak, we have provided limited payment plans if certain criteria are met by residents. The duration of a payment plan is determined on a case by case basis, and ultimately the tenant is expected to make rent payments in full over time. The Company has not granted any direct rent reductions to residents as of March 31, 2021. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of our business.

Our Portfolio

Since our formation, we have significantly grown our portfolio of homes. When the Company began operations on November 1, 2018, the Initial Portfolio consisted of 4,129 homes located in Ohio, Kentucky and Indiana. As of March 31, 2021 and 2020, the Company, through the Operating Partnership’s SPEs, indirectly owned an interest in 13,693 and 7,431 homes, respectively in 16 and 14 states, respectively. As of March 31, 2021 and 2020, the Portfolio had occupancy of 87.0% and 77.4%, respectively, and the weighted average monthly effective rent of $1,039 and $940, respectively per occupied home. As of March 31, 2021 and 2020, the occupancy of stabilized homes in our Portfolio was 97.5% and 94.7%, respectively, and the weighted average effective rent of occupied homes was $1,001 and $958, respectively. As of March 31, 2021 and 2020, 53.3% and 38.0%, respectively, of homes in our Portfolio were excluded from being stabilized under the NRHC definition either because the homes were in rehabilitation or were purchased with tenants in place.

As of December 31, 2020, the Company, through the Operating Partnership’s SPEs, indirectly owned an interest in 9,282 homes in 10 states. As of December 31, 2019, the Company, through the Operating Partnership’s SPEs, indirectly owned an interest in 6,910 homes. As of December 31, 2020 and 2019, the Portfolio had occupancy of 83.7% and 81.3% (excluding third-party managed units), respectively, and the weighted average monthly effective rent of $969 and $936 (excluding third-party managed units), respectively. As of December 31, 2020 and 2019, the occupancy of stabilized homes in our Portfolio was 96.5% and 94.0%, respectively, and the weighted average effective rent of stabilized occupied homes was $989 and $952, respectively. As of December 31, 2020 and 2019, 36.6% and 37.2%, respectively, of homes in our Portfolio were excluded from being “stabilized homes” either because the homes were in rehabilitation or were purchased with tenants in place.

Components of Revenues and Expenses

The following is a description of the components of our revenues and expenses.

Revenues

Rental Income. Our revenues are derived primarily from rental revenue, net of any concessions and uncollectible amounts, collected from residents of our single-family homes under lease agreements which typically have a term of one year. Also included are utility reimbursements, late fees, pet fees, and other rental fees charged to tenants.

Other income. Other income includes ancillary income earned from tenants such as non-refundable fees, application fees, move-out fees, and other miscellaneous fees charged to tenants.

Expenses

Property operating expenses. Property operating expenses include property maintenance costs, turn costs, salary and employee benefit costs, utilities and other property operating costs.

Real estate taxes and insurance. Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each home. Insurance includes the cost of property, general liability, and other needed insurance for each property.

Property management fees. Property management fees include fees paid to the Manager for managing each property (see Note 11 to our consolidated financial statements).

Advisory fees. Advisory fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 11 to our consolidated financial statements).

Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, tax preparation fees, board of director fees, equity-based compensation expense, investor relations costs and corporate payroll.

Property general and administrative expenses. Property general and administrative expenses include the costs of marketing, professional fees, legal fees, general office supplies, and other administrative related costs.

Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our homes and amortization of acquired in-place leases, recognized over their respective useful lives.

Interest expense. Interest expense primarily includes the cost of interest expense on debt, payments and receipts related to our interest rate swap agreements and the amortization of deferred financing costs.

Loss on sales of real estate. Loss on sales of real estate includes the loss recognized upon sales of homes. Loss on sales of real estate is calculated by deducting the carrying value of the real estate and costs incurred to sell the properties from the sales prices of the homes.

Casualty gain/(loss). Casualty gain/(loss) includes the gain or loss incurred on homes, net of insurance proceeds received, that experience an unexpected and unusual event such as a natural disaster or fire.

Results of Operations for the Three Months Ended March 31, 2021 and 2020

The three months ended March 31, 2021 compared to the three months ended March 31, 2020

The following table sets forth a summary of our operating results for the three months ended March 31, 2021 and 2020 (in thousands):


	For the Three Months Ended March 31,
	2021			2020			$ Change
Total revenues	$	30,628		$	17,103		$	13,525
Total expenses		(30,685	)		(17,632	)		(13,053	)

Loss on sales of real estate		(75	)		(26	)		(49	)
Operating loss		(57	)		(529	)		472
Casualty loss, net of insurance proceeds		(9	)		—			(9	)

Net loss		(141	)		(555	)		414
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—			2,206
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)		(190	)		155

Net loss attributable to common stockholders	$	(2,312	)	$	(365	)	$	(1,947	)

The change in our net loss between the periods primarily relates to increases in total property operating expenses of $6.0 million, depreciation and amortization expense of $3.1 million, advisory fees of $0.6 million, corporate general and administrative expenses of $1.0 million, and interest expense of $2.4 million, partially offset by an increase in rental income of $13.4 million.

Revenues

Rental income. Rental income was $30.1 million for the three months ended March 31, 2021 compared to $16.7 million for the three months ended March 31, 2020, which was an increase of $13.4 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates in 2021.

Other income. Other income was $0.5 million for the three months ended March 31, 2021 compared to $0.4 million for the three months ended March 31, 2020. The increase between the periods was primarily due to our acquisition activity in 2021.

Expenses

Property operating expenses. Property operating expenses were $5.2 million for the three months ended March 31, 2021 compared to $3.4 million for the three months ended March 31, 2020, which was an increase of $1.8 million. The increase between the periods was primarily due to our acquisition activity in 2021.

Real estate taxes and insurance. Real estate taxes and insurance were $6.3 million for the three months ended March 31, 2021 compared to $3.1 million for the three months ended March 31, 2020, which was an increase of $3.2 million. The increase between the periods was primarily due to our acquisition activity in 2021 as well as increases in our real estate taxes as a result of increases in property valuations.

Property management fees. Property management fees were $2.0 million for the three months ended March 31, 2021 compared to $1.4 million for the three months ended March 31, 2020, which was an increase of $0.6 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates in 2021.

Advisory fees. Advisory fees were $1.3 million for the three months ended March 31, 2021 compared to $0.7 million for the three months ended March 31, 2020, which was an increase of $0.6 million. The increase between the periods was primarily due to our equity raising activity in 2021 and increases in total debt principal outstanding.

Corporate general and administrative expenses. Corporate general and administrative expenses were $1.5 million for the three months ended March 31, 2021 compared to $0.5 million for the three months ended March 31, 2020, which was an increase of $1.0 million. The increase between the periods was primarily due to increases in equity-based compensation expense and other corporate expenses as our operations continued to gain scale.

Property general and administrative expenses. Property general and administrative expenses were $1.3 million for the three months ended March 31, 2021 compared to $0.8 million for the three months ended March 31, 2020, which was an increase of $0.5 million. The increase between the periods was primarily due to our acquisition activity in 2021.

Depreciation and amortization. Depreciation and amortization costs were $8.0 million for the three months ended March 31, 2021 compared to $4.9 million for the three months ended March 31, 2020, which was an increase of $3.1 million. The increase between the periods was primarily due to our acquisition activity in 2021.

Interest expense. Interest expense was $5.1 million for the three months ended March 31, 2021 compared to $2.7 million for the three months ended March 31, 2020, which was an increase of $2.4 million. The increase between the periods was primarily due to an increase on interest on debt, as we increased our total debt principal outstanding during 2021. The following table details the various costs included in interest expense for the three months ended March 31, 2021 and 2020 (in thousands):


	For the Three Months Ended March 31,
	2021		2020		$ Change
Interest on debt	$	4,595	$	2,547	$	2,048
Amortization of deferred financing costs		531		167		364

Total	$	5,126	$	2,714	$	2,412

Loss on sales of real estate. Loss on sales of real estate was $0.1 million for the three months ended March 31, 2021 compared to less than $0.1 million for the three months ended March 31, 2020, which was an increase of approximately less than $0.1 million. During the three months ended March 31, 2021, we sold 4 homes; during the three months ended March 31, 2020, we sold 9 homes. The homes sold were generally not part of the Company’s expansion strategy but were acquired as part of larger portfolio transactions. The homes sold were immediately categorized as held for sale upon acquisition and were subsequently sold.

Casualty loss, net of insurance proceeds. Casualty loss, net of insurance proceeds, was less than $0.1 million for the three months ended March 31, 2021. No casualty gain or loss was recognized during the three months ended March 31, 2020.

Results of Operations for the Years Ended December 31, 2020 and 2019

The year ended December 31, 2020 compared to the year ended December 31, 2019

The following table sets forth a summary of our operating results for the years ended December 31, 2020 and 2019 (in thousands):


	For the Year Ended December 31,
	2020			2019			$ Change
Total revenues	$	76,454		$	52,324		$	24,130
Total expenses		(77,470	)		(53,944	)		(23,526	)
Loss on sales of real estate		(930	)		(44	)		(886	)

Operating loss		(1,946	)		(1,664	)		(282	)
Casualty gain, net of insurance proceeds		281			22			259

Net loss		(1,665	)		(1,642	)		(23	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		1,052			—			1,052
Net loss attributable to redeemable noncontrolling interests in the Operating Partnership		(570	)		(967	)		397

Net loss attributable to common stockholders	$	(2,147	)	$	(675	)	$	(1,472	)

The change in our net loss between the periods primarily relates to increases in total property operating expenses of $13.6 million, depreciation and amortization expense of $4.4 million, corporate general and administrative expenses of $2.9 million, advisory fees of $1.6 million, interest expense of $1.1 million, partially offset by increases in rental income of $23.9 million.

Revenues

Rental income. Rental income was $74.9 million for the year ended December 31, 2020 compared to $51.0 million for the year ended December 31, 2019, which was an increase of $23.9 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates and occupancy levels in 2020.

Other income. Other income was $1.6 million for the year ended December 31, 2020 compared to $1.4 million for the year ended December 31, 2019, which was an increase of $0.2 million. The increase between the periods was primarily due to our acquisition activity in 2020, which was partially offset by decreases in certain other income items as a result of the impact of COVID-19 such as move-out charges.

Expenses

Property operating expenses. Property operating expenses were $15.7 million for the year ended December 31, 2020 compared to $10.7 million for the year ended December 31, 2019, which was an increase of $5.0 million. The increase between the periods was primarily due to our acquisition activity in 2020.

Real estate taxes and insurance. Real estate taxes and insurance were $15.4 million for the year ended December 31, 2020 compared to $9.4 million for the year ended December 31, 2019, which was an increase of $6.0 million. The increase between the periods was primarily due to our acquisition activity in 2020 as well as increases in our real estate taxes as a result of increases in property valuations.

Property management fees. Property management fees were $4.6 million for the year ended December 31, 2020 compared to $3.2 million for the year ended December 31, 2019, which was an increase of $1.4 million. The increase between the periods was primarily due to our acquisition activity and increases in rental rates and occupancy levels in 2020.

Advisory fees. Advisory fees were $3.3 million for the year ended December 31, 2020 compared to $1.7 million for the year ended December 31, 2019, which was an increase of $1.6 million. The increase between the periods was primarily due to our equity raising activity in 2020 and increases in total debt principal outstanding.

Corporate general and administrative expenses. Corporate general and administrative expenses were $4.3 million for the year ended December 31, 2020 compared to $1.4 million for the year ended December 31, 2019, which was an increase of $2.9 million. The increase between the periods was primarily due to increases in equity-based compensation expense and other corporate expenses as our operations gained scale.

Property general and administrative expenses. Property general and administrative expenses were $2.8 million for the year ended December 31, 2020 compared to $1.6 million for the year ended December 31, 2019, which was an increase of $1.2 million. The increase between the periods was primarily due to our acquisition activity in 2020.

Depreciation and amortization. Depreciation and amortization costs were $20.4 million for the year ended December 31, 2020 compared to $16.1 million for the year ended December 31, 2019, which was an increase of $4.3 million. The increase between the periods was primarily due to our acquisition activity in 2020.

Interest expense. Interest expense was $10.9 million for the year ended December 31, 2020 compared to $9.8 million for the year ended December 31, 2019, which was an increase of $1.1 million. The increase between the periods was primarily due to an increase on interest on debt, as we increased our total debt principal outstanding during 2020, which was partially offset by a decrease in LIBOR. The following table details the various costs included in interest expense for the years ended December 31, 2020 and 2019 (in thousands):


	For the Year Ended December 31,
	2020		2019			$ Change
Interest on debt	$	7,470	$	9,866		$	(2,396	)
Interest rate swap expense		2,714		(450	)		3,164
Amortization of deferred financing costs		717		397			320

Total	$	10,901	$	9,813		$	1,088

Loss on sales of real estate. Loss on sales of real estate was $0.9 million for the year ended December 31, 2020 compared to less than $0.1 million for the year ended December 31, 2019, which was an increase of approximately $0.9 million. During the year ended December 31, 2020, we sold 69 homes and during the year ended December 31, 2019, we sold 13 homes. The homes sold were generally not part of the Company’s expansion strategy but were acquired as part of larger portfolio transactions. They were immediately categorized as held for sale and were subsequently sold.

Casualty gain, net of insurance proceeds. Casualty gain, net of insurance proceeds, was $0.3 million for the year ended December 31, 2020 compared to less than $0.1 million for the year ended December 31, 2019, which was an increase of $0.3 million. The increase between the periods was primarily due to an increase in homes affected by fires which resulted in increased insurance proceeds.

Non-GAAP Measurements

Net Operating Income

NOI is a non-GAAP financial measure of performance. NOI is used by our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is not affected by (1) the cost of funds, (2) acquisition costs, (3) advisory fees, (4) the impact of depreciation and amortization expenses, (5) gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (6) corporate general and administrative expenses, (8) casualty gains or losses and (9) other gains and losses that are specific to us.

The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, or in the case of assumed debt, decisions made by others, which may have changed or may change in the future. Acquisition costs and advisory fees are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our homes that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a

manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. Corporate general and administrative are eliminated because they do not reflect the ongoing operating activity performed at the properties. Casualty gains or losses are excluded because of the infrequent and unusual nature of the sustained damages, they do not reflect continuing operating costs of the property owner and typically the economic impact, aside from deductible or risk retention, is covered by insurance. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these items from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

However, the usefulness of NOI is limited because it excludes corporate general and administrative expenses, interest expense, acquisition costs, casualty gains or losses, advisory fees, depreciation and amortization expense, gains or losses from the sale of properties, and other gains and losses as determined under GAAP, and the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income, which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere regarding the components of net income (loss) that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI for the three months ended March 31, 2021 and 2020 and for the years ended December 31, 2020 and 2019 to net loss, the most directly comparable GAAP financial measure (in thousands):


	For the Three Months Ended March 31,						For the Year Ended December 31,
	2021			2020			2020			2019
Net loss	$	(141	)	$	(555	)	$	(1,665	)	$	(1,642	)
Adjustments to reconcile net loss to NOI:
Advisory fees		1,291			713			3,271			1,710
Corporate general and administrative expenses		1,481			498			4,313			1,414
Depreciation and amortization		8,044			4,922			20,447			16,081
Interest expense		5,126			2,714			10,901			9,813
Loss on sales of real estate		75			26			930			44
Casualty loss (gain), net of insurance proceeds		9			—			(281	)		(22	)

NOI	$	15,885		$	8,318		$	37,916		$	27,398

Net Operating Income for Our Same Home and Non-Same Home Properties for the Three Months Ended March 31, 2021 and 2020

There are 4,163 homes in our same home pool for the three months ended March 31, 2021 and 2020 (our “Q1 Same Home” properties). To be included as a “Same Home,” homes must have been stabilized for at least 90 days in advance of the first day of the previous period and be held constant for the entirety of the comparable reporting period. For example, Same Home properties for the period ended March 31, 2021 and March 31, 2020 were stabilized by October 1, 2019 and held through March 31, 2021. Same Home properties do not include homes held for sale or in rehabilitation. Homes that are stabilized are included as Same Home properties, whether occupied or vacant. See Item 1 “Business—Our Portfolio” for a discussion of homes included in “stabilized”. We view Same Home NOI as an important measure of the operating performance of our homes because it allows us to compare operating results of homes owned for the entirety of the current and comparable periods and therefore eliminated variations caused by acquisitions or dispositions during the periods.

The following table reflects the revenues, property operating expenses and NOI for the three months ended March 31, 2021 and 2020 for our Q1 Same Home and Non-Same Home properties (dollars in thousands):


	For the Three Months Ended March 31,
	2021		2020		$ Change			% Change
Revenues
Same Home
Rental income	$	12,522	$	11,648	$	874			7.5	%
Other income		212		296		(84	)		-28.4	%

Same Home revenues		12,734		11,944		790			6.6	%
Non-Same Home
Rental income		17,614		5,054		12,560			248.5	%
Other income		280		105		175			166.7	%

Non-Same Home revenues		17,894		5,159		12,735			246.9	%

Total revenues		30,628		17,103		13,525			79.1	%

Operating expenses
Same Home
Property operating expenses		1,669		1,929		(260	)		-13.5	%
Real estate taxes and insurance		2,491		1,913		578			30.2	%
Property management fees (1)		853		756		97			12.8	%
Property general and administrative expenses		13		15		(2	)		-13.3	%

Same Home operating expenses		5,026		4,613		413			9.0	%
Non-Same Home
Property operating expenses		3,484		1,518		1,966			129.5	%
Real estate taxes and insurance		3,803		1,218		2,585			212.2	%
Property management fees (1)		1,120		606		514			84.8	%
Property general and administrative expenses		1,310		830		480			57.8	%

Non-Same Home operating expenses		9,717		4,172		5,545			132.9	%

Total operating expenses		14,743		8,785		5,958			67.8	%

NOI
Same Home		7,708		7,331		377			5.1	%
Non-Same Home		8,177		987		7,190			728.5	%

Total NOI	$	15,885	$	8,318	$	7,567			91.0	%

(1)

Fees incurred to the Manager.

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the Three Months Ended March 31, 2021 and 2020

As of March 31, 2021, our Q1 Same Home properties were approximately 98.0% occupied with a weighted average monthly effective rent per occupied home of $1,004. As of March 31, 2020, our Q1 Same Home properties were approximately 95.4% occupied with a weighted average monthly effective rent per occupied home of $961. For our Q1 Same Home properties, we recorded the following operating results for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020:

Revenues

Rental income. Rental income was $12.5 million for the three months ended March 31, 2021 compared to $11.6 million for the three months ended March 31, 2020, which was an increase of approximately $0.9 million, or 7.5%. The increase is related to a 4.5% increase in the weighted average monthly effective rent per occupied apartment unit and a 2.6% increase in occupancy.

Other income. Other income was $0.2 million for the three months ended March 31, 2021 compared to $0.3 million for the three months ended March 31, 2020, which was a decrease of approximately $0.1 million, or 28.4%. The majority of the decrease is related to a $0.1 million, or 29.3%, decrease in move-out charges.

Expenses

Property operating expenses. Property operating expenses were $1.7 million for the three months ended March 31, 2021 compared to $1.9 million for the three months ended March 31, 2020, which was a decrease of approximately $0.2 million, or 13.5%. The majority of the decrease is related to a $0.2 million, or 25.3%, decrease in payroll costs.

Real estate taxes and insurance. Real estate taxes and insurance costs were $2.5 million for the three months ended March 31, 2021 compared to $1.9 million for the three months ended March 31, 2020, which was an increase of approximately $0.6 million, or 30.2%. The majority of the increase is related to a $0.4 million, or 24.6%, increase in property taxes.

Property management fees. Property management fees were $0.9 million for the three months ended March 31, 2021 compared to $0.8 million for the three months ended March 31, 2020, which was an increase of approximately $0.1 million, or 12.8%.

Property general and administrative expenses. Property general and administrative expenses remained flat at less than $0.1 million for the three months ended March 31, 2021 compared to less than $0.1 million for the three months ended March 31, 2020.

Net Operating Income for Our Same Home Properties and Non-Same Home Properties for the Years Ended December 31, 2020 and 2019

There are 3,759 homes in our same home pool for the years ended December 31, 2020 and 2019 (our “Same Home” properties). See “—Net Operating Income for Our Same Home and Non-Same and Non-Same Home Properties for the Three Months Ended March 31, 2021 and 2020” for a discussion of homes included in “same home”. The following table reflects the revenues, property operating expenses and NOI for the years ended December 31, 2020 and 2019 for our Same Home and Non-Same Home properties (dollars in thousands):


	For the Year Ended December 31,
	2020		2019		$ Change			% Change
Revenues
Same Home
Rental income	$	43,009	$	40,792	$	2,217			5.4	%
Other income		1,124		1,269		(145	)		-11.4	%

Same Home revenues		44,133		42,061		2,072			4.9	%
Non-Same Home
Rental income		31,856		10,179		21,677			213.0	%
Other income		465		84		381			453.6	%

Non-Same Home revenues		32,321		10,263		22,058			214.9	%

Total revenues		76,454		52,324		24,130			46.1	%

Operating expenses
Same Home
Property operating expenses		7,288		7,794		(506	)		-6.5	%
Real estate taxes and insurance		8,094		7,110		984			13.8	%
Property management fees (1)		2,827		2,764		63			2.3	%
Property general and administrative expenses		50		53		(3	)		-5.7	%

Same Home operating expenses		18,259		17,721		538			3.0	%
Non-Same Home
Property operating expenses		8,715		2,940		5,494			186.9	%
Real estate taxes and insurance		7,313		2,259		5,054			223.7	%
Property management fees (1)		1,784		426		1,358			318.8	%
Property general and administrative expenses		2,467		1,580		1,168			73.9	%

Non-Same Home operating expenses		20,279		7,205		13,074			181.5	%

Total operating expenses		38,538		24,926		13,612			54.6	%

NOI
Same Home		25,874		24,340		1,534			6.3	%
Non-Same Home		12,042		3,058		8,984			293.8	%

Total NOI	$	37,916	$	27,398	$	10,518			38.4	%

(1)

Fees incurred to Manager.

See reconciliation of net income (loss) to NOI above under “—Net Operating Income.”

Same Home Results of Operations for the Years Ended December 31, 2020 and 2019

As of December 31, 2020, our Same Home properties were approximately 98.2% leased with a weighted average monthly effective rent per occupied home of $1,007. As of December 31, 2019, our Same Home properties were approximately 95.2% leased with a weighted average monthly effective rent per occupied home of $967. For our Same Home properties, we recorded the following operating results for the year ended December 31, 2020 as compared to the year ended December 31, 2019:

Revenues

Rental income. Rental income was $43.0 million for the year ended December 31, 2020 compared to $40.8 million for the year ended December 31, 2019, which was an increase of approximately $2.2 million, or 5.4%. The increase is related to a 4.1% increase in the weighted average monthly effective rent per occupied home and a 3.0% increase in occupancy.

Other income. Other income was $1.1 million for the year ended December 31, 2020 compared to $1.3 million for the year ended December 31, 2019, which was a decrease of approximately $0.2 million, or 11.4%. The majority of the decrease is related to a $0.2 million, or 16.1%, decrease in move-out charges.

Expenses

Property operating expenses. Property operating expenses were $7.3 million for the year ended December 31, 2020 compared to $7.8 million for the year ended December 31, 2019, which was a decrease of approximately $0.5 million, or 6.5%. The majority of the decrease is related to a $0.6 million, or 13.1%, decrease in repairs and maintenance costs.

Real estate taxes and insurance. Real estate taxes and insurance costs were $8.1 million for the year ended December 31, 2020 compared to $7.1 million for the year ended December 31, 2019, which was an increase of approximately $1.0 million, or 13.8%. The majority of the increase is related to a $0.6 million, or 9.0%, increase in property taxes as a result of appreciation in property values of our homes and a $0.4 million, or 59.5% increase in insurance costs.

Property management fees. Property management fees remained flat at $2.8 million for the year ended December 31, 2020 compared to $2.8 million for the year ended December 31, 2019.

Property general and administrative expenses. Property general and administrative expenses remained flat at $0.1 million for the year ended December 31, 2020 compared to $0.1 million for the year ended December 31, 2019.

FFO, Core FFO and AFFO

We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations (“FFO”) as defined by the National Association of Real Estate Investments Trusts (“NAREIT”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

Since the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost deprecation and amortization, among other items, from net income (loss), as defined by GAAP. FFO is defined by NAREIT as net income (loss) computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. We compute FFO in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) attributable to common stockholders and net income (loss) attributable to NCI of the OP and then make the adjustments to arrive at FFO.

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our portfolio. Core FFO adjusts FFO to remove items such as casualty gains or losses, the amortization of deferred financing costs and equity-based compensation expense. We believe Core FFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and the method of calculating AFFO is divergent across the industry. AFFO adjusts Core FFO to remove recurring capital expenditures. We believe AFFO is useful as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

Basic and diluted weighted average shares in our FFO table includes both our common stock and OP units.

We believe that the use of FFO, Core FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs and makes comparisons of operating results among such companies more meaningful. While FFO, Core FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative or substitute to those measures in evaluating our liquidity or operating performance. FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO, Core FFO and AFFO may not be comparable to FFO, Core FFO and AFFO reported by other REITs.

The three months ended March 31, 2021 as compared to the three months ended March 31, 2020

The following table reconciles our calculations of FFO, Core FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the three month periods ended March 31, 2021 and 2020 (in thousands, except per share amounts):


	For the Three Months Ended March 31,
	2021			2020
Net loss attributable to common stockholders	$	(2,312	)	$	(365	)
Net loss attributable to NCI of the OP		(35	)		(190	)
Depreciation and amortization		8,044			4,922
Loss on sales of real estate		75			26

FFO		5,772			4,393

FFO per share - basic	$	0.42		$	0.49

FFO per share - diluted	$	0.40		$	0.48

Casualty (gain)/loss, net of insurance proceeds		9			—
Amortization of deferred financing costs		531			167
Equity-based compensation expense		930			383

Core FFO		7,242			4,943

Core FFO per share - basic	$	0.52		$	0.55

Core FFO per share - diluted	$	0.51		$	0.54

Recurring capital expenditures		(797	)		(1,037	)

AFFO		6,445			3,906

AFFO per share - basic	$	0.46		$	0.44

AFFO per share - diluted	$	0.45		$	0.43

Weighted average shares outstanding - basic		13,904			8,971

Weighted average shares outstanding - diluted		14,305			9,165

Dividends declared per share	$	0.5301		$	0.5301
FFO Coverage - diluted⁽¹⁾		0.76x			0.90x
Core FFO Coverage - diluted⁽¹⁾		0.96x			1.02x
AFFO Coverage - diluted⁽¹⁾		0.85x			0.80x

(1)

Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

FFO was $5.8 million for the three months ended March 31, 2021 compared to $4.4 million for the three months ended March 31, 2020, which was an increase of approximately $1.4 million. The change in our FFO between the periods primarily relates to an increase in rental income of $13.4 million, partially offset by total property operating expenses of $6.0 million, depreciation and amortization expense of $3.1 million, advisory fees of $0.6 million, corporate general and administrative expenses of $1.0 million and interest expense of $2.4 million.

Core FFO was $7.2 million for the three months ended March 31, 2021 compared to $4.9 million for the three months ended March 31, 2020, which was an increase of approximately $2.3 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and increases in amortization of deferred financing costs of $0.3 million and equity-based compensation expense of $0.5 million.

AFFO was $6.4 million for the three months ended March 31, 2021 compared to $3.9 million for the three months ended March 31, 2020, which was an increase of approximately $2.5 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and a decrease in recurring capital expenditures of $0.2 million.

The year ended December 31, 2020 as compared to the year ended December 31, 2019

The following table reconciles our calculations of FFO, Core FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the years ended December 31, 2020 and 2019 (in thousands, except per share amounts):


	For the Year Ended December 31,
	2020			2019
Net loss attributable to common stockholders	$	(2,147	)	$	(675	)
Net loss attributable to NCI of the OP		(570	)		(967	)
Depreciation and amortization		20,447			16,081
Loss on sales of real estate		930			44

FFO		18,660			14,483


FFO per share - basic	$	1.79		$	2.34

FFO per share - diluted	$	1.74		$	2.32


Casualty gain, net of insurance proceeds		(281	)		(22	)
Amortization of deferred financing costs		717			397
Equity-based compensation expense		2,638			315

Core FFO		21,734			15,173


Core FFO per share - basic	$	2.08		$	2.45

Core FFO per share – diluted	$	2.02		$	2.43


Recurring capital expenditures		(2,844	)		(2,312

AFFO		18,890			12,861


AFFO per share - basic	$	1.81		$	2.08

AFFO per share – diluted	$	1.76		$	2.06


Weighted average shares outstanding - basic		10,424			6,182

Weighted average shares outstanding – diluted		10,744			6,243


Dividends declared per share	$	2.1204		$	2.1204

FFO Coverage – diluted⁽¹⁾		0.82x			1.09x
Core FFO Coverage – diluted⁽¹⁾		0.95x			1.15x
AFFO Coverage – diluted⁽¹⁾		0.83x			0.97x

(1) Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

FFO was $18.7 million for the year ended December 31, 2020 compared to $14.5 million for the year ended December 31, 2019, which was an increase of approximately $4.2 million. The change in our FFO between the periods primarily relates to an increase in total revenues of $23.9 million, partially offset by an increase in total property operating expenses of $13.6 million, advisory fees of $1.6 million, corporate general and administrative expenses of $2.9 million and interest expense of $1.0 million.

Core FFO was $21.7 million for the year ended December 31, 2020 compared to $15.2 million for the year ended December 31, 2019, which was an increase of approximately $6.5 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and an increase in equity-based compensation expense of $2.3 million.

AFFO was $18.9 million for the year ended December 31, 2020 compared to $12.9 million for the year ended December 31, 2019, which was an increase of approximately $6.0 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and recurring capital expenditures of $0.5 million.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay for debt maturities, operating expenses and other expenditures directly associated with our homes, including:

•

recurring maintenance necessary to maintain our homes;

•

interest expense and scheduled principal payments on outstanding indebtedness;

•

distributions necessary to qualify for taxation as a REIT;

•

advisory fees payable to our Adviser;

•

general and administrative expenses;

•

offering expenses related to raising equity from our Private Offering;

•

property management fees payable to the Manager.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations and existing cash balances. Additionally, as of March 31, 2021, we had significant access to credit through our credit facilities. The Warehouse Facility (as defined below) has an additional $150 million of capacity (based on total borrowings of $100 million as of March 31, 2021 and our ability to increase the total commitment to $250 million) and the JPM facility (as defined below) has an additional $180 million of capacity.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional homes, renovations and other capital expenditures to improve our homes and scheduled debt payments and distributions. We expect to meet our long-term liquidity requirements through various sources of capital, which will include equity issuances through the Private Offering, issuance of preferred equity, draws on our revolving credit facilities, existing working capital, net cash provided by operations, long-term mortgage indebtedness and may include other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity, market perceptions about us and restrictions on sales of properties under the Code. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

Our homes will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions of new homes will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures and acquisitions through retained earnings long-term is limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations, and prospects could be materially and adversely affected.

We believe that our available cash, expected operating cash flows, and potential debt or equity financings will provide sufficient funds for our operations, acquisitions, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following March 31, 2021.

Cash Flows

The three months ended March 31, 2021 as compared to the three months ended March 31, 2020

The following table presents selected data from our consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 (in thousands):


	For the Three Months Ended March 31,
	2021			2020
Net cash provided by operating activities	$	12,250		$	5,793
Net cash used in investing activities		(556,805	)		(41,521	)
Net cash provided by financing activities		559,235			64,866

Change in cash and restricted cash		14,680			29,138
Cash and restricted cash, beginning of period		37,096			17,830

Cash and restricted cash, end of period	$	51,776		$	46,968

Cash flows from operating activities. During the three months ended March 31, 2021, net cash provided by operating activities was $12.3 million compared to net cash provided by operating activities of $5.8 million for the three months ended March 31, 2020. The change in cash flows from operating activities was mainly due to an increase in total revenues, partially offset by an increase in total property operating expenses.

Cash flows from investing activities. During the three months ended March 31, 2021, net cash used in investing activities was $556.8 million compared to net cash used in investing activities of $41.5 million for the three months ended March 31, 2020. The change in cash flows from investing activities was mainly due to a significant increase in acquisitions and capital expenditures.

Cash flows from financing activities. During the three months ended March 31, 2021, net cash provided by financing activities was $559.2 million compared to net cash provided by financing activities of $64.9 million for the three months ended March 31, 2020. The change in cash flows from financing activities was mainly due to an increase in proceeds from notes payable and credit facilities, and partially due to an increase in proceeds from the issuance of our Shares and our Preferred Shares.

The year ended December 31, 2020 as compared to the year ended December 31, 2019

The following table presents selected data from our consolidated statements of cash flows for the years ended December 31, 2020 and 2019 (in thousands):


	For the Year Ended December 31,
	2020			2019
Net cash provided by operating activities		30,365			16,806
Net cash used in investing activities		(245,470	)		(185,542	)
Net cash provided by financing activities		234,371			139,869

Change in cash and restricted cash		19,266			(28,867	)
Cash and restricted cash, beginning of period		17,830			46,697

Cash and restricted cash, end of period	$	37,096		$	17,830

Cash flows from operating activities. During the year ended December 31, 2020, net cash provided by operating activities was $30.4 million compared to net cash provided by operating activities of $16.8 million for the year ended December 31, 2019. The change in cash flows from operating activities was mainly due to an increase in total revenues, partially offset by an increase in total property operating expenses.

Cash flows from investing activities. During the year ended December 31, 2020, net cash used in investing activities was $245.5 million compared to net cash used in investing activities of $185.5 million for the year ended December 31, 2019. The change in cash flows from investing activities was mainly due to an increase in acquisitions and capital expenditures.

Cash flows from financing activities. During the year ended December 31, 2020, net cash provided by financing activities was $234.4 million compared to net cash provided by financing activities of $139.9 million for the year ended December 31, 2019. The change in cash flows from financing activities was mainly due to an increase in proceeds from the issuance of our Series A Preferred Stock, and partially due to an increase in proceeds from the issuance of our shares of common stock.

Debt, Derivatives and Hedging Activity

Debt

As of March 31, 2021, we and our subsidiaries had aggregate debt outstanding to third parties of approximately $808.6 million at a weighted average interest rate of 2.5800% and an adjusted weighted average interest rate of 3.1022%. For purposes of calculating the adjusted weighted average interest rate of our debt outstanding, we have included the weighted average fixed rate of 1.4309% for LIBOR based on our combined $320.0 million notional amount of interest rate swap agreements, which effectively fix the interest rate on $320.0 million of our floating rate debt. See Notes 5 and 6 to our consolidated financial statements for additional information.

The following table sets forth a summary of our mortgage loan indebtedness as of March 31, 2021:


	Type		Outstanding Principal as of March 31, 2021			Interest Rate (1)
Initial Mortgage		Floating	$	241,400			1.66	%
Warehouse Facility		Floating		100,000			2.36	%
JPM Facility		Floating		320,000			2.86	%
MetLife Note		Fixed		125,000			3.25	%
TrueLane Mortgage		Fixed		10,526			5.35	%
Colony Note		Fixed		9,318			6.06	%
CoreVest Note		Fixed		2,364			6.12	%

			$	808,608
Debt premium, net (2)				563
Deferred financing costs, net of accumulated amortization of $1,794				(9,942	)

			$	799,229

(1)

Represents the interest rate as of March 31, 2021. Except for fixed rate debt, the interest rate is one-month LIBOR plus an applicable margin. One-month LIBOR as of March 31, 2021 was 0.1111%.

(2)

The Company reflected valuation adjustments on its assumed fixed rate debt to adjust it to fair market value on the dates of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining terms of the debt.

On November 1, 2018, the Operating Partnership, as guarantor, and certain entities that acquired properties from our predecessor, as borrowers, entered into a $241.4 million Freddie Mac mortgage loan (the “Initial Mortgage”) with KeyBank. The Initial Mortgage is secured by certain properties that we acquired from our predecessor and equity pledges of the entities that own those properties and bears interest at a variable rate equal to LIBOR plus 1.55%. The Initial Mortgage is interest-only for the first 48 months of the term and principal amortizes at a rate of 30 years over the last 36 months of the term. The Initial Mortgage matures and is due in full on December 1, 2025.

On September 20, 2019, the Operating Partnership, as guarantor, and VB One, LLC, as borrower, entered into a credit facility (as amended from time to time, the “Warehouse Facility”) with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC and bears interest at a variable rate equal to LIBOR plus 2.25%. The Warehouse Facility is a full-term, interest-only facility with an initial 36-month term, has one 12- month extension option, and the Company has the right to request an increase in the facility amount of up to $250.0 million. As of March 31, 2021, the commitment amount of the Warehouse Facility was $135.0 million.

On August 22, 2019, the Company, through the Operating Partnership, entered into an approximately $1.3 million subordinated convertible note (the “NREO Note”) with NREO, who is an affiliate of the Adviser. The NREO Note bears interest at a variable rate equal to LIBOR plus 2.25% and is full interest-only. The NREO Note is convertible at any time to equity at the election of the Company or upon its maturity on September 19, 2022. On January 26, 2021, the Company, through the Operating Partnership, paid down the principal of approximately $1.3 million and accrued interest of approximately $0.1 million on the NREO Note. This extinguished the NREO Note.

On September 30, 2019, in relation with the TrueLane Portfolio acquisition, the Operating Partnership, as guarantor, assumed an approximately $10.8 million Freddie Mac mortgage loan (as amended from time to time, the “TrueLane Mortgage”) with Berkadia Commercial Mortgage LLC as a result of the Operating Partnership’s acquisition of True FM 2017-1, LLC. The TrueLane Mortgage is secured by certain of our properties and equity pledges in the entity that owns those properties and bears interest at a fixed rate equal to 5.35%. The TrueLane Mortgage matures and is due in full on February 1, 2028 and requires monthly principal and interest payments.

On October 7, 2020, the Company issued 2,440,000 shares of our Series A Preferred Stock at a price of $25.00 per share, for gross proceeds of $61.0 million before deducting offering costs of approximately $2.3 million. These proceeds were in turn used to purchase 2,440,000 6.50% Series A Cumulative Redeemable Preferred Units of the Operating Partnership (“OP Preferred Units”). The Operating Partnership used $50.0 million of those net proceeds to partially pay down the Warehouse Facility. On January 13, 2021, the Operating Partnership drew $50.0 million under the Warehouse Facility. The proceeds were used to fund a portion of the purchase price of the Conrex I Acquisition. On March 8, 2021, the Operating Partnership paid down $35.0 million under the Warehouse Facility. As of March 31, 2021, the outstanding balance of the Warehouse Facility was $100.0 million.

On December 28, 2020, in relation to the acquisition of a 161-home portfolio, the Operating Partnership provided a non-recourse carveout guaranty related to an approximately $9.2 million mortgage loan assumed by a subsidiary of the Operating Partnership (the “Colony Note”) with Colony American Finance Lender, LLC as a result of the Operating Partnership’s acquisition of SMP Homes 3B, LLC. The Colony Note is secured by the properties in SMP Homes 3B, LLC and an equity pledge in SMP Homes 3B, LLC and bears interest at a fixed rate equal to 6.06%. The Colony Note matures and is due in full on December 9, 2021 and requires monthly principal and interest payments.

On December 28, 2020, in relation the acquisition of a 45-home portfolio, the Operating Partnership provided a non-recourse carveout guaranty related to an approximately $2.4 million mortgage loan assumed by a subsidiary of the Operating Partnership (the “CoreVest Note”) with CoreVest American Finance Lender LLC as a result of the Operating Partnership’s acquisition of SMP Homes 5B, LLC. The CoreVest Note is secured by the properties in SMP Homes 5B, LLC and an equity pledge in SMP Homes 5B, LLC and bears interest at a fixed rate equal to 6.12%. The CoreVest Note matures and is due in full on January 9, 2023 and requires monthly principal and interest payments.

On January 6, 2021, the Company (as guarantor) and VB Two, LLC (as borrower) entered into a $125.0 million note with Metropolitan Life Insurance (the “MetLife Note”). The MetLife Note is secured by equity pledges in VB Two, LLC and its wholly owned subsidiaries and bears interest at a fixed rate of 3.25%. The MetLife Note is interest-only and matures and is due in full on January 31, 2026. The net proceeds received were used to fund a portion of the purchase price of the Conrex I Acquisition.

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC and its wholly owned subsidiaries and bears interest at a variable rate equal to LIBOR plus 2.75%. The JPM Facility is interest-only and matures and is due in full on March 1, 2023. On March 1, 2021, in conjunction with the Conrex II Acquisition, the Company drew $320.0 million on the JPM Facility. As of March 31, 2021, the outstanding balance of the JPM Facility was $320.0 million.

As of March 31, 2021, the Company was in compliance with the debt covenants in each of its debt agreements.

We intend to invest in additional homes as suitable opportunities arise and adequate sources of equity and debt financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the proceeds from additional issuances of common stock, preferred stock or other securities or property dispositions.

Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock, preferred stock or other debt or equity securities, on terms that are acceptable to us or at all.

Furthermore, following the completion of our renovations and depending on the interest rate environment at the applicable time, we may seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.

Interest Rate Swap Agreements

We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding. The interest rate swap agreements generally have a term of five years and effectively establish a fixed interest rate on debt on the underlying notional amounts. In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through the OP, have entered into 5 interest rate swap transactions with KeyBank with a combined notional amount of $320.0 million. As of March 31, 2021, the interest rate swaps we have entered into effectively replace the floating interest rate (LIBOR) with respect to $320.0 million of our floating rate mortgage debt outstanding with a weighted average fixed rate of 1.43%. As of March 31, 2021, interest rate swap agreements effectively covered $320.0 million, or 48%, of our $661.4 million of floating rate debt outstanding. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.43%, on a weighted average basis, on the notional amounts, while KeyBank is obligated to make monthly floating rate payments based on LIBOR to us referencing the same notional amounts. For purposes of hedge accounting under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, we have designated these interest rate swaps as cash flow hedges of interest rate risk. See Notes 6 and 7 to our consolidated financial statements for additional information.

The interest rate cap agreement has a term of three years, covering the outstanding principal amount of the Initial Mortgage which was required by the lender. Under the interest rate cap agreements, we pay a fixed fee in exchange for the counterparty to pay any interest above a maximum rate. As of March 31, 2021, interest rate cap agreements covered $241.4 million of our $661.4 million of floating rate debt outstanding. The interest rate cap agreement effectively caps LIBOR on $241.4 million of our floating rate mortgage debt at 6.60%.

Reference Rate Reform

On March 5, 2021, the FCA announced that LIBOR will no longer be published after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to SOFR. Additionally, banking regulators are encouraging banks to discontinue new LIBOR debt issuances by December 31, 2021.

The Company anticipates that LIBOR will continue to be available at least until June 30, 2023. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

The Company has contracts that are indexed to LIBOR and we are monitoring and evaluating the related risks, which include interest on loans and amounts received/paid on derivative instruments. These risks arise in connection with transitioning contracts to an alternative rate, including any resulting value transfer that may occur, and are likely to vary by contract. The value of loans, securities, or derivative instruments tied to LIBOR, as well as interest rates on our current or future indebtedness, may also be impacted if LIBOR is limited or discontinued. For some instruments the method of transitioning to an alternative reference rate may be challenging, especially if we cannot agree with the respective counterparty about how to make the transition.

While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if a sufficient amount of banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Alternative rates and other market changes related to the replacement of LIBOR, including the introduction of financial products and changes in market practices, may lead to risk modeling and valuation challenges, such as adjusting interest rate accrual calculations and building a term structure for an alternative rate.

The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR.

Adjustments to systems and mathematical models to properly process and account for alternative rates will be required, which may strain the model risk management and information technology functions and result in substantial incremental costs for the company.

REIT Tax Election and Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code and expect to continue to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. Taxable income from certain non-REIT activities would be managed through a TRS and would be subject to applicable U.S. federal, state, and local income and margin taxes.

We did not have a TRS as of March 31, 2021, March 31, 2020, December 31, 2020 and December 31, 2019. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT.

We anticipate that we will continue to qualify to be taxed as a REIT for U.S. federal income tax purposes, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.

If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.

We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time.

We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

We had no material unrecognized tax benefit or expense, accrued interest or penalties as of March 31, 2021. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of various state and local jurisdictions. The 2020, 2019 and 2018 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income.

Dividends

We intend to make regular quarterly dividend payments to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains. As a REIT, we will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and

(3) 100% of our undistributed income from prior years. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

We will make dividend payments based on our estimate of taxable earnings per share of common stock, but not earnings calculated pursuant to GAAP. Our dividends and taxable income and GAAP earnings will typically differ due to items such as depreciation and amortization, fair value adjustments, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. Our dividends per share may be substantially different than our taxable earnings and GAAP earnings per share.

Inflation

The real estate market has not been affected significantly by inflation in the past several years due to a relatively low inflation rate. The majority of our lease terms are for a period of one year or less and reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities. Should inflation return, due to the short-term nature of our leases, we do not believe our results will be materially affected.

Inflation may also affect the overall cost of debt, as the implied cost of capital increases. Currently, interest rates are less than historical averages. However, the Federal Reserve, in response to or in anticipation of continued inflation concerns, could continue to raise interest rates. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate hedges, which to date have included interest rate caps and interest rate swap agreements.

Seasonality

We believe that our business and related operating results will be impacted by seasonal factors throughout the year. We experience higher levels of tenant move-outs and move-ins during the late spring and summer months, which impacts both our rental revenues and related turnover costs. Furthermore, our property operating costs are seasonally impacted in certain markets for expenses such as HVAC repairs, turn costs and landscaping expenses during the summer season. Additionally, our single-family properties are at greater risk in certain markets for adverse weather conditions such as extreme cold weather in winter months and hurricanes in late summer months.

Off-Balance Sheet Arrangements

As of March 31, 2021 and 2020 and December 31, 2020 and 2019, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure

of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management’s historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. Below is a discussion of the accounting policies that we consider critical to understanding our financial condition or results of operations where there is uncertainty or where significant judgment is required. A discussion of recent accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this Form 10.

Real Estate Investments

Upon acquisition, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (the “total consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.

The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement (“ASC 820”) (see Note 6), is based on an independent third-party valuation firm’s estimate of the fair value of the tangible and intangible assets and liabilities acquired. The Valuation Methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the total consideration to intangible lease assets represents the value associated with the in-place leases, as one month’s worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized or accreted as interest expense over the life of the debt assumed.

Real estate assets, including land, buildings, improvements, fixtures, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. The Company also incurs costs to prepare acquired properties for rental. These costs are capitalized to the cost of the property during the period the property is undergoing activities to prepare it for its intended use. We capitalize interest costs as a cost of the property only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest costs have been incurred. Upon completion of the renovation of our properties, all costs of operations, including repairs and maintenance, are expensed as incurred, unless the renovation meets the Company’s capitalization criteria.

Impairment

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. The process whereby we assess our single-family homes for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. No significant impairments on operating properties were recorded during the years ended December 31, 2020 and 2019 or the three months ended March 31, 2021 and 2020.

Recent Accounting Pronouncements

See Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements for the years ended December 31, 2020 and 2019 included elsewhere in this Form 10 for a discussion of recently issued accounting pronouncements.

Implications of being an Emerging Growth Company and Smaller Reporting Company

We are an “emerging growth company,” as defined in the JOBS Act and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

ITEM 3. PROPERTIES.

Please refer to Item 1. “Business” of this Form 10 for information concerning our properties.

ITEM 4.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following tables shows as of March 31, 2021, the amount of our common stock owned by any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock and the amount of common stock, our common units of the Operating Partnership and our Series A Preferred Stock beneficially owned (unless otherwise indicated) by (1) our directors, (2) our executive officers, and (3) all of our directors and executive officers as a group. As of March 31, 2021, none of the foregoing beneficially own any of our Series A cumulative redeemable preferred units of the Operating Partnership. The address for each beneficial owner is c/o VineBrook Homes Trust, Inc., 2515 McKinney Avenue, Suite 1100, Dallas, Texas 75201 unless otherwise provided.

Beneficial ownership and percentage of beneficial ownership is based on 11,499,045 shares of our common stock, 12,957,484 OP Units and 5,000,000 shares of our Series A Preferred Stock outstanding at March 31, 2021. Shares of common stock or OP Units that a person has the right to acquire within 60 days of March 31, 2021 upon the vesting of restricted stock units or profits interest units are deemed to be outstanding and beneficially owned by the person for the purpose of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person.


NAME OF BENEFICIAL OWNERS	COMMON STOCK BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNERS	NUMBER		PERCENT OF CLASS
5% Stockholders
APC-VB Homes, LLC		769,561.57		6.69	%


NAME OF BENEFICIAL OWNERS	COMMON STOCK BENEFICIALLY OWNED				OP UNITS BENEFICIALLY OWNED					SERIES A PREFERRED STOCK BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNERS	NUMBER		PERCENT OF CLASS		NUMBER		PERCENT OF CLASS			NUMBER		PERCENT OF CLASS
Directors and Executive Officers
James Dondero (1)		12,999.51		*		2,899,816.74		22.38	%		—		—
Matthew McGraner		8,790.65		*		—		—			—		—
Brian Mitts		4,220.51		*		—		—			—		—
Dana Sprong		—		—		48,932.71		*			—		—
Edward Constantino		13,492.78		*		—		—			—		—
Scott Kavanaugh		21,381.72		*		—		—			—		—
Arthur Laffer		9,913.16		*		—		—			—		—
Catherine Wood		—		—		—		—			—		—
All Directors and Executive Officers as a group (nine persons)		70,798.33		*		3,068,480.5		25.17	%		—		—

*	Reports less than 1%

(1)	James D. Dondero, NexPoint and Highland Capital Management Fund Advisors, L.P., or HCMFA have sole voting power, shared voting power, sole dispositive power and shared dispositive power as follows:


Name of Reporting Person	Sole Voting Power		Shared Voting Power		Sole Dispositive Power		Shared Dispositive Power
James D. Dondero		5,760.26		2,906,607		5,760.26		2,906,607
NexPoint Advisors, L.P.		—		2,774,832		—		2,774,832
Highland Capital Management Fund Advisors, L.P.		—		131,775		—		131,775

ITEM 5.

DIRECTORS AND EXECUTIVE OFFICERS.

Our Directors and Executive Officers

Our directors and executive officers and their positions and ages are as follows:


Name	Age	Position
Scott Kavanaugh	60	Independent Director
Arthur Laffer	80	Independent Director
Edward Constantino	74	Independent Director
Catherine Wood	65	Independent Director
James Dondero	58	Director, Chief Executive Officer and President
Brian Mitts	50	Director, Chief Financial Officer, Assistant Secretary and Treasurer
Dana Sprong	42	Director, Senior Vice President of Acquisitions & Dispositions and member of Investment Committee
Matt McGraner	37	Executive Vice President, Chief Investment Officer, Secretary and member of Investment Committee
Ryan McGarry	35	Senior Vice President of Asset Management and member of Investment Committee

Below is a biography for each director who is not an employee of our Adviser or our Manager. For biographical information on our directors who also serve as our executive officers and our executive officers, see “—Key Employees of our Adviser” and “—Key Employees of our Manager.”

Scott Kavanaugh

Mr. Kavanaugh has served as a member of our Board since December 2018. Mr. Kavanaugh has also served as a member of the board of directors of NexPoint Residential Trust, Inc., a publicly traded multifamily REIT (“NXRT”), since March 2015, and as a member of the board of directors of NexPoint Real Estate Finance, Inc. (“NREF”) since February 2020. Mr. Kavanaugh is, and since December 2009 has been, the CEO of First Foundation Inc. (“FFI”), a financial services company. From June 2007 until December 2009, he served as President and Chief Operating Officer of FFI. Mr. Kavanaugh has been the Vice-Chairman of FFI since June 2007. He also is, and since September 2007 has been, the Chairman and CEO of FFI’s wholly owned banking subsidiary, First Foundation Bank. Mr. Kavanaugh was a founding stockholder and served as an Executive Vice President and Chief Administrative Officer and a member of the board of directors of Commercial Capital Bancorp, Inc., the parent holding company of Commercial Capital Bank, from 1999 until 2003. From 1998 until 2003, Mr. Kavanaugh served as the Executive Vice President and Chief Operating Officer and a director of Commercial Capital Mortgage. From 1993 to 1998, Mr. Kavanaugh was a partner and head of trading for fixed income and equity securities at Great Pacific Securities, Inc., a west coast-based regional securities firm. Mr. Kavanaugh is, and since 2009 has been, a member of the board of directors of Colorado Federal Savings Bank and its parent holding company, Silver Queen Financial Services, Inc. Mr. Kavanaugh also served as a member of the board of directors of NexBank, SSB (“NexBank”) and its parent holding company, NexBank Capital, Inc., from 2014 until 2015. Mr. Kavanaugh was selected to serve on our Board because of his expertise in investment management and his experience as both an executive officer and a director of multiple companies.

Arthur Laffer

Dr. Laffer has served as a member of our Board since December 2018. Dr. Laffer has also served as a member of the board of directors of NXRT since May 2015 and as a member of the board of directors of NREF since February 2020. Dr. Laffer is the founder and chairman of Laffer Associates, an economic research and consulting firm and served as the chairman and director of Laffer Investments, a registered investment advisor, from 1999 to 2019. Dr. Laffer served as a director of GEE Group, Inc., a provider of specialized staffing solutions, from 2014 to 2020. A former member of President Reagan’s Economic Policy Advisory Board during the 1980s, Dr. Laffer’s economic acumen and influence have earned him the distinction in many publications as The Father of Supply-Side Economics. He has served on several boards of directors of public and private companies, including staffing company MPS Group, Inc., which was sold to Adecco Group for $1.3 billion in 2009. Dr. Laffer has served as a director of VerifyMe, Inc. since 2019. Dr. Laffer was previously a consultant to Secretary of the Treasury William Simon, Secretary of Defense Donald Rumsfeld, and Secretary of the Treasury George Shultz. In the early 1970s, Dr. Laffer was the first to hold the title of Chief Economist at the Office of Management and Budget under Mr. Shultz. Additionally, Dr. Laffer was formerly the Distinguished University Professor at Pepperdine University and a member of the Pepperdine University board of directors. He also served as Charles B. Thornton Professor of Business Economics at the University of Southern California and as Associate Professor of Business Economics at the University of Chicago. Dr. Laffer was selected to serve on our Board because of his expertise in economics and his experience as a director of multiple companies.

Edward Constantino

Mr. Constantino has served as a member of our Board since February 2019. Mr. Constantino has also served as a member of the board of directors of NXRT since March 2015, as a member of the board of directors of NREF since February 2020 and as a member of the board of directors of NexPoint Strategic Opportunities Fund (“NHF”), a closed-end mutual fund, since March 2020. Mr. Constantino has over 40 years of audit, advisory and tax experience working for two major accounting firms, Arthur Andersen LLP and KPMG. Mr. Constantino retired from KPMG in late 2009, where he was an audit partner in charge of the firm’s real estate and asset management businesses. Mr. Constantino is, and since 2010 has been, a member of the board of directors of Patriot Bank N.A. Mr. Constantino has also served as a consultant for the law firm Skadden, Arps, Slate, Meagher & Flom LLP. He is a licensed CPA, a member of the American Institute of Certified Public Accountants and a member of the New York State Society of Public Accountants. He is currently a member of the board of trustees and the audit committee chairman of St. Francis College in Brooklyn Heights, New York. Mr. Constantino was selected to serve on our Board because of his extensive accounting experience, particularly in the real estate field.

Catherine Wood

Ms. Wood has served as a member of our Board since July 2020. In addition, she has served as a member of the board of directors of NXRT and the board of directors of NREF since July 2020. Ms. Wood is currently Chief Executive Officer and Chief Investment Officer of ARK Investment Management LLC (“ARK”), an SEC registered investment advisor, which she founded in January 2014. Prior to ARK, Ms.

Wood spent 12 years at AllianceBernstein as Chief Investment Officer of Global Thematic Strategies. Ms. Wood joined AllianceBernstein from Tupelo Capital Management, a hedge fund she co-founded. Prior to her tenure at Tupelo Capital Management, Ms. Wood worked for 18 years at Jennison Associates LLC as Chief Economic Officer and several other positions. Ms. Wood started her career in Los Angeles at The Capital Group as an Assistant Economist. Ms. Wood received her Bachelor of Science, summa cum laude, in Finance and Economics from the University of Southern California. Ms. Wood was selected to serve on our Board because of her experience as it relates to disruptive technologies, business models and processes, which provides a unique and important perspective to the Board.

Board of Directors

We are managed by our Board, which is comprised of seven persons. Each director serves a one-year term expiring at each annual meeting of stockholders and lasting until his or her respective successor is duly elected and qualified. Pursuant to the terms of the Advisory Agreement, our Adviser has the right to designate individuals (the “Adviser Designees”) to be nominated for election (or re-election) to our Board, such that, if elected, there shall be two Adviser Designees serving on our Board, and we will take all reasonably necessary action to nominate and include the Adviser Designees in the slate of nominees recommended by our Board for election as directors at each applicable annual meeting of stockholders or special meeting of stockholders at which directors are to be elected. To the extent the Adviser Designees are not elected, our Adviser may terminate the Advisory Agreement and receive the Adviser Termination Fee (as defined below).

Our Board has determined that each of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood is independent in accordance with the New York Stock Exchange (“NYSE”) listing standards. Of the remaining directors, (a) one of the directors is independent of our Adviser (Dana Sprong) and (b) two of the directors are independent of our Manager (James Dondero and Brian Mitts). Generally, all actions by our Board require the affirmative approval or consent of a majority of the directors present at a meeting at which a quorum is present. Based on the composition of our Board, all actions taken by our Board require the approval or consent of at least one of the directors who is independent of both our Adviser and our Manager. In regard to actions impacting our Adviser, our Adviser’s Board representatives (James Dondero and Brian Mitts) abstain from voting on those matters and in regard to actions impacting our Manager, our Manager’s Board representative (Dana Sprong) abstains from voting on those matters.

The Company has a policy that all directors are expected to attend the annual meeting.

Committees of the Board of Directors

Our Board may establish committees it deems appropriate to address specific areas in more depth than may be possible at a full meeting of our Board. Our Board established effective immediately prior to the effectiveness of this Form 10 an audit committee, a compensation committee and a nominating and corporate governance committee, the composition and responsibilities of which are described below. Members will serve on the committees until their resignation or until otherwise determined by our Board.

Audit Committee

Upon effectiveness of this Form 10, our audit committee will consist of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood, with Edward Constantino serving as chair of the committee. Our Board has determined that Edward Constantino qualifies as an

“audit committee financial expert” as that term is defined by the applicable SEC regulations. Our Board has also determined that each of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood is independent as defined by NYSE listing standards and SEC requirements relating to the independence of audit committee members. Our Board adopted an audit committee charter effective immediately prior to the effectiveness of this Form 10, which details the principal functions of the audit committee, including oversight related to:

•

our accounting and financial reporting processes;

•

the integrity of our consolidated financial statements;

•

our systems of disclosure controls and procedures and internal control over financial reporting;

•

our compliance with financial, legal and regulatory requirements;

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the performance of our internal audit function; and

•

our overall risk assessment and management.

Our audit committee will also be responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The audit committee will also prepare the audit committee report required by SEC regulations to be included in our annual proxy statement beginning with our annual meeting of stockholders to be held in 2022. Our audit committee charter will be available upon effectiveness of this Form 10 on our website at www.investors.vinebrookhomes.com.

Compensation Committee

Upon effectiveness of this Form 10, our compensation committee will consist of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood, with Dr. Arthur Laffer serving as chair of the committee. Our Board has determined that each of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood is independent as defined by NYSE listing standards and SEC requirements relating to the independence of compensation committee members. Our Board adopted a compensation committee charter effective immediately prior to the effectiveness of this Form 10, which details the principal functions of the compensation committee, including:

•

reviewing our compensation policies and plans;

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implementing and administering the VineBrook Homes Trust, Inc., 2018 Long-Term Incentive Plan (the “LTIP”);

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assisting management in complying with our proxy statement and annual report disclosure requirements;

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producing a report on compensation to be included in our annual proxy statement; and

•

reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

Our compensation committee will have the sole authority to retain and terminate compensation consultants to assist in the evaluation of our compensation and the sole authority to approve the fees and other retention terms of such compensation consultants. The committee will also be able to retain independent counsel and other independent advisors to assist it in carrying out its responsibilities. Our compensation committee charter will be available upon effectiveness of this Form 10 on our website at www.investors.vinebrookhomes.com.

Nominating and Corporate Governance Committee

Upon effectiveness of this Form 10, our nominating and corporate governance committee will consist of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood, with Scott Kavanaugh serving as chair of the committee. The Board has determined that each of Edward Constantino, Scott Kavanaugh, Dr. Arthur Laffer and Catherine Wood is independent as defined by NYSE listing standards. Our Board adopted a nominating and corporate governance committee charter effective immediately prior to the effectiveness of this Form 10, which details the principal functions of the nominating and corporate governance committee, including:

•

identifying and recommending to the full Board qualified candidates for election as directors and recommending nominees for election as directors at the annual meeting of stockholders;

•

developing and recommending to the Board corporate governance guidelines and implementing and monitoring such guidelines;

•

reviewing and making recommendations on matters involving the general operation of the Board, including board size and composition, and committee composition and structure;

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recommending to the Board nominees for each committee of the Board;

•

annually facilitating the assessment of the Board’s performance, as required by applicable law, regulations and the NYSE corporate governance listing standards; and

•

annually reviewing and making recommendations to the Board regarding revisions to the corporate governance guidelines and the code of business conduct and ethics.

Our nominating and corporate governance committee will have the sole authority to retain and terminate any search firm to assist in the identification of director candidates and the sole authority to set the fees and other retention terms of such search firms. The committee will also be able to retain independent counsel and other independent advisors to assist it in carrying out its responsibilities. Our nominating and corporate committee charter will be available upon effectiveness of this Form 10 on our website at www.investors.vinebrookhomes.com.

Our Adviser

Our Adviser is an affiliate of NREA. NREA is wholly owned by NexPoint and is a leading real estate manager. Pursuant to the Advisory Agreement, our operations are managed by our Adviser. Our Adviser’s responsibilities include, among other duties, recommending distributions to our Board, preparing our quarterly consolidated unaudited financial statements and annual consolidated financial statements in accordance with GAAP, managing our annual audit, developing and maintaining appropriate

internal accounting controls, maintaining our REIT status, calculating our NAV, processing purchases and redemptions of shares of our common stock, reporting to investors, preparing our tax filings, raising capital for us and procuring debt financing. Additionally, certain employees of our Adviser serve as some of our directors and executive officers.

Key Employees of Our Adviser

James Dondero

Mr. Dondero has served as a member of our Board and as our Chief Executive Officer and President since February 2019. Mr. Dondero has also served as the President and chairman of the board of directors of NXRT since May 2015 and as President and chairman of the board of directors of NREF since February 2020. Mr. Dondero is also: founder and president of NexPoint, an investment advisor registered with the Securities and Exchange Commission (the “SEC”) and chairman of NexBank. Mr. Dondero co-founded Highland Capital Management, L.P. (“Highland”), a former affiliate of NexPoint, in 1993 with Mark Okada and served as President from 2004 to 2020. Mr. Dondero has over 30 years of experience investing in credit and equity markets and has helped pioneer credit asset classes. Mr. Dondero has also served as the Chief Executive Officer of NexPoint Hospitality Trust, Inc. (“NHT”), a publicly traded hospitality REIT listed on the TSX Venture Exchange (the “TSXV”) since December 2018. Mr. Dondero served as a director of Jernigan Capital, Inc., a self-storage lending REIT, from August 2016 to November 2020. Mr. Dondero currently serves on the boards of directors of Metro-Goldwyn-Mayer, Cornerstone Healthcare Group, SeaOne Holdings, LLC and Texmark Timber Treasury, L.P. He also serves as president of NexPoint Capital, Inc. (“NexPoint Capital”), NexPoint Real Estate Strategies Fund (“NRESF”), and NexPoint Healthcare Opportunities Fund, all of which are affiliates of our Adviser. On October 16, 2019, Highland filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Delaware. Mr. Dondero was selected to serve on our Board because of his prior service as a director and his experience as an executive officer.

Matt McGraner

Mr. McGraner has served as our Executive VP, Chief Investment Officer and Secretary and as a member of the Investment Committee since 2018. Mr. McGraner co-founded NREA as well as NXRT, NREF and other real estate businesses with Mr. Mitts and Mr. Dondero. Mr. McGraner has also served as the Executive VP and Chief Investment Officer of NXRT since March 2015 and has served as the Executive VP and Chief Investment Officer of NREF since February 2020 and as a member of the board of directors and President of NexPoint Storage Partners, Inc. (“NSP”) since November 2020. From September 2014 to March 2015, Mr. McGraner served as NXRT’s Secretary. Mr. McGraner has also served as Chief Investment Officer of NHT since December 2018 and as a Managing Director at NexPoint since 2016. With over ten years of real estate, private equity and legal experience, his primary responsibilities are to lead the operations of the real estate platform at NexPoint, as well as source and execute investments, manage risk and develop potential business opportunities, including fundraising, private investments and joint ventures. Mr. McGraner is also a licensed attorney and was formerly an associate at Jones Day from 2011 to 2013, with a practice primarily focused on private equity, real estate and mergers and acquisitions. While at Jones Day, Mr. McGraner led the acquisition and financing of over $200 million of real estate investments and advised on $16.3 billion of M&A and private equity transactions. Since 2013, Mr. McGraner has led the acquisition and financing of approximately $11.8 billion of real estate investments.

Brian Mitts

Mr. Mitts has served as a member of our Board since July 2018, and as our Chief Financial Officer, Treasurer and Assistant Secretary since November 2018. Mr. Mitts co-founded NREA as well as NXRT, NREF and other real estate businesses with Mr. McGraner and Mr. Dondero. Currently, Mr. Mitts leads our financial reporting and accounting teams and is integral in financing and capital allocation decisions. Prior to co-founding NREA, NXRT and NREF, Mr. Mitts was Chief Operations Officer of HCMFA, the external advisor of open-end and closed-end funds where he managed the operations of these funds and helped develop new products. Mr. Mitts was also a co-founder of NexPoint, the parent of NREA. He has worked for NREA or its affiliates since 2007. Mr. Mitts has also served as a director of NXRT since September 2014 and as the Chief Financial Officer, Executive Vice President-Finance and Treasurer of NXRT since March 2015. In February 2019, Mr. Mitts was also appointed Secretary of NXRT. From September 2014 to March 2015, Mr. Mitts served as President and Treasurer of NXRT. Mr. Mitts has also served as the Chief Financial Officer, Executive VP-Finance, Treasurer and Corporate Secretary of NHT since December 2018, as the Chief Financial Officer, Executive Vice President-Finance, Secretary and Treasurer of NREF since February 2020, and as a member of the board of directors of NREF since June 2019. Mr. Mitts also served as our President and Treasurer from July 2018 until October 2018. Since November 2020, Mr. Mitts has also served as Chief Financial Officer, Secretary and Treasurer of NSP. Mr. Mitts was selected to serve on our Board because of his prior service as a director and his experience as an executive officer.

Paul Richards

Mr. Richards (32) has served as our Vice President of Asset Management and Financing since 2018. Mr. Richards has also served as Vice President of Asset Management of NHT since March 2019, as a Director at NREA since 2019 and as VP of Originations and Investments of NREF since February 2020. His primary responsibilities are to research and conduct due diligence on new investment ideas, perform valuation and benchmark analysis, monitor and manage investments in the existing real estate portfolio, and provide industry support for NexPoint’s real estate team. Mr. Richards serves as a Director for NREA and joined in 2017. From 2016 to 2017, Mr. Richards served as a Product Strategy Associate at HCMFA, where he was responsible for evaluating and optimizing the registered product lineup. Previously, Mr. Richards was also employed with Deloitte & Touche LLP’s state and local tax practice where he served as a tax consultant specializing in state strategic tax reviews, voluntary disclosure agreements, state tax exposure research, and overall state tax compliance.

Jackie Graham

Ms. Graham (31) has served as the Director, Investor Relations and Capital Markets at NexPoint since 2016. Ms. Graham is responsible for leading investor relations and capital markets efforts for NexPoint’s public and private real estate companies. Prior to joining NexPoint in November 2016, she worked as a marketing consultant at The Nautilus Group, a service of New York Life Insurance Company. At the Nautilus Group, Ms. Graham consulted with agents who work in the high net worth market. She was responsible for event planning, creating custom marketing collateral, and developing continuing education programs for attorneys, accountants, and other financial planning professionals. Ms. Graham received a BS in Political Science with a pre-law emphasis and a minor in Communications from Santa Clara University. She also holds FINRA Series 7 and 63 licenses.

David Willmore

Mr. Willmore, CPA, (36) has served as the Chief Accounting Officer for NexPoint since 2021. Mr. Willmore has also served as the VP of Finance for NREF and NexPoint Residential Trust, Inc. since February 2020. Mr. Willmore has also served as Senior Manager at NXRT since March 2019 and was previously a Senior Manager at a former NexPoint affiliate from February 2017 to March 2019. With over ten years of accounting, auditing, and financial reporting experience, his primary responsibilities are to implement the financial and operational strategies of NexPoint’s public and private REITs and registered investment funds as well as ensure timely and accurate accounting and reporting. As a Senior Manager, Mr. Willmore was responsible for the accounting, reporting and operations for hedge funds, separately managed accounts and private equity business lines. Before joining in October 2011, Mr. Willmore began his career at Deloitte & Touche LLP as an auditor in the Audit and Enterprise Risk Services Group.

Tom Chapline

Mr. Chapline, CPA, (30) has served as a Senior Fund Analyst at NexPoint since 2017. With seven years of financial reporting experience, Mr. Chapline’s responsibilities include managing VineBrook’s consolidated financial reporting, accounting and operations. Mr. Chapline also manages the financial reporting, accounting and operations of private REITs on the NexPoint platform. Prior to joining NexPoint in 2017, Mr. Chapline was a Senior Associate at KPMG. Over his three years at KPMG, Mr. Chapline was responsible for leading teams on hedge fund and private equity audit engagements. Mr. Chapline received his MS and BBA in Accounting from Southern Methodist University and is a licensed Certified Public Accountant in the state of Texas.

Our Manager

The VineBrook Executives have operated in the workforce SFR market since the inception of the VineBrook Companies in 2007, participating in several large acquisition and financing transactions, demonstrating the ability to identify consolidation and growth opportunities and to subsequently integrate new properties into an existing portfolio. Pursuant to the Management Agreements, our Manager is generally the sole and exclusive manager for our properties (subject to the terms of the Management Agreements), responsible for managing, coordinating and supervising the ordinary and usual business and affairs pertaining to the operation, maintenance, leasing, and management of properties in an efficient manner satisfactory to us and in compliance with the Management Agreements. In addition, our Manager is primarily responsible for the identification of potential SFR properties and the acquisition and disposition of SFR properties, subject to oversight from the Investment Committee and the terms of the OP LPA. Additionally, certain employees of our Manager serve on our Board, as our executive officers and on the Investment Committee.

Key Employees of Our Manager

Dana Sprong

Dana Sprong has served as a member of the Board since November 2018 and has served as our Senior Vice President of Acquisitions and Dispositions since 2018. He is also the Chief Executive Officer of our Manager and was a prior owner of our predecessor. Mr. Sprong founded our predecessor, purchased our first rental home in December of 2007, and led the due diligence, acquisition, and management of over 13,000 SFR homes. Since its inception, he has grown VineBrook from zero employees to over 350 professionals. Prior to founding our predecessor, Mr. Sprong was a senior manager at JW Construction (“JWC”), an eastern Massachusetts residential construction and development firm. Prior to JWC, he was a senior manager at DJ Dowling Inc., a builder on the San Francisco Peninsula. Mr. Sprong is a licensed General Contractor and Real Estate Broker. He is also an Auxiliary On-Call Firefighter. He graduated with honors from Harvard University. Mr. Sprong also serves as a member of the Investment Committee. Mr. Sprong was selected to serve on our Board because of his prior service as a director and his experience as an executive officer.

Ryan McGarry

Ryan McGarry has served as our Senior Vice President of Asset Management since 2018. He has also served as the COO of our Manager since 2018 and is responsible for managing our property operations, including leasing homes, maintaining homes, making homes ready for leasing and other operational aspects. Mr. McGarry joined our predecessor in 2010, and has focused on enhancing analytical capabilities to drive efficiency and scale, and helping build out technology to make operations run efficiently. With a focus on NOI margin enhancement, his focus is on driving efficiency and transparency via task-based management solutions and a robust, metric-based reporting infrastructure. Prior to joining our predecessor, Mr. McGarry worked at a national investment consulting firm, focused on investment policy direction and manager evaluation and selection. Mr. McGarry is a CFA Charterholder and a CAIA Charterholder. Mr. McGarry also serves as a member of the Investment Committee.

Graham Strong

Graham Strong (49) has served as our Manager’s Chief Financial Officer since 2018 and is responsible for administrative, financial and risk management functions including, but not limited to, the development of financial and operational strategies, metrics tied to strategy, and the ongoing development and monitoring of control systems designed to facilitate growth, preserve company assets and report accurate and timely financial results. Mr. Strong joined our predecessor in April 2013 after serving several years on the management team of one of the largest independent, middle market equipment and technology lessors in North America. Within that organization, Mr. Strong was charged with the management of the corporate treasury, accounting and tax functions. Prior to Mr. Strong’s stint within the equipment and technology leasing industry, he served as Vice President of Finance for a large, regional originator of residential mortgages. Mr. Strong received his Master of Business Administration with a Concentration in Finance from the Williams College of Business at Xavier University. Additionally, he received his Bachelor of Business Administration, Major in Accounting, from the Carl H. Lindner College of Business at the University of Cincinnati. He is a Certified Public Accountant (CPA) and a Chartered Global Management Accountant (CGMA).

ITEM 6.

EXECUTIVE COMPENSATION.

Compensation of Our Directors in 2020

Directors who also serve as our officers do not receive compensation for their service as directors.

Our Board has adopted a director compensation policy that provides the following compensation for non-management directors:

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each non-management director receives an annual director’s fee payable in cash equal to $20,000 and an annual grant of restricted stock units;

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the chair of the Audit Committee will receive an additional annual fee payable in cash equal to $15,000;

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the chair of the Compensation Committee will receive an additional annual fee payable in cash equal to $7,500;

•

the chair of the Nominating and Corporate Governance Committee will receive an additional annual fee payable in cash equal to $7,500; and

•

the Lead Independent Director will receive an additional annual fee payable in cash equal to $10,000.

We also reimburse directors for all expenses incurred in attending board and committee meetings.

Director Compensation Table

The following table provides information regarding the compensation of our directors for the year ended December 31, 2020:


NAME	FEES EARNED OR PAID IN CASH			STOCK AWARDS (2)		TOTAL
James Dondero		—			—		—
Brian Mitts		—			—		—
Dana Sprong		—			—		—
Edward Constantino	$	35,000		$	94,248	$	129,248
Scott Kavanaugh	$	37,500		$	94,248	$	131,748
Arthur Laffer	$	27,500		$	94,248	$	121,748
Catherine Wood	$	8,600	(1)		—	$	8,600

(1)

Ms. Wood joined our board on July 27, 2020. This reflects her pro-rated fee based on annual compensation of $20,000.

(2)

These restricted stock units were granted on May 11, 2020 and will vest on May 11, 2021, the first anniversary of the grant date. The grant date fair value of each award was equal to the NAV value of our common stock on the date of grant as calculated in accordance with FASB ASC Topic 718. Pursuant to the rules of the SEC, the amounts shown in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. See Note 7 to our consolidated financial statements included in this Form 10 for information regarding the assumptions made in determining these values. As of December 31, 2020, our non-management directors (except for Ms. Wood) each held 3,058 restricted stock units.

Compensation of Our Executive Officers in 2020

We are externally managed by our Adviser pursuant to the Advisory Agreement. In addition, our properties are managed by our Manager pursuant to the Management Agreements and Side Letter. Because our officers are employed by either our Adviser or our Manager, our officers have not received, nor do we expect they will in the future receive, any cash compensation from us for their services as our officers. The Company does not reimburse and does not plan to reimburse our Adviser for salary or benefits paid to the Company’s named executive officers. Instead, we pay our Adviser the fees described under Item 7. “Certain Relationships and Related Transactions—Transactions with Related Persons; Policies—Advisory Agreement” and our Manager the fees described under Item 7. “Certain Relationships and Related Transactions—Transactions with Related Persons; Policies—Management Agreements.” For the year ended December 31, 2020, we paid approximately $3.3 million and $4.6 million in fees to our Adviser and our Manager, respectively.

The LTIP authorizes our Board to provide equity-based compensation in the form of stock options, appreciation rights, restricted stock, restricted stock units, performance shares, performance units, profits interest units and certain other awards denominated or payable in, or otherwise based on, our common stock or factors that may influence the value of our common stock, plus cash incentive awards, for the purpose of providing our officers, our non-management directors, and potentially certain non-employees who perform employee-type functions, incentives and rewards for performance.

The restricted stock units granted under the LTIP vest according to the respective award agreement and typically contain time-based vesting provisions subject to continued employment and partial vesting at the successful completion of an initial public offering of our common stock. See “—Outstanding Equity Awards at Fiscal Year End” below for additional detail regarding vesting provisions. In the event of any officer’s employment with us or our Manager or Adviser, as applicable, is terminated involuntarily by our Manager or Adviser, as applicable, for reasons other than for cause, by the officer for good reason, or otherwise due to such officer’s death, disability or retirement, all outstanding restricted stock units that have not previously vested or been forfeited, will vest. In addition, in the event of a change of control under the LTIP, all outstanding restricted stock units that have not previously vested or been forfeited will vest following the passing of a specified waiting period. See “—Potential Payments upon Termination of Employment or Change of Control” below for additional information about changes of control under the LTIP.

Outstanding Equity Awards at Fiscal Year End

The following table contains information regarding outstanding equity awards held by our officers as of December 31, 2020:


NAME	STOCK AWARDS
NAME	NUMBER OF SHARES THAT HAVE NOT VESTED (#)			MARKET VALUE OF SHARES THAT HAVE NOT VESTED ($) (1)
James Dondero		74,911	(2)	$	2,738,746
Matt McGraner		74,911	(3)	$	2,738,746
Brian Mitts		29,537	(4)	$	1,079,873

(1)

Market value is based on the NAV of our common stock as of December 31, 2020 ($36.56).

(2)

Consists of restricted stock units granted on December 10, 2019 and May 11, 2020. With respect to the restricted stock units granted on December 10, 2019, as of December 31, 2020,

there were 16,997 restricted stock units not vested, which will vest one-third on December 10, 2021, one-third on December 10, 2022 and one-third on December 10, 2023. With respect to the restricted stock units granted on May 11, 2020, as of December 31, 2020, there were 57,914 restricted stock units not vested, which will vest one-eighth on May 11, 2021, one-eighth on May 11, 2022, one-eighth on May 11, 2023, one-eighth on May 11, 2024 and one-half on the date of the successful completion of an initial public offering of our common stock.

(3)

Consists of restricted stock units granted on December 10, 2019 and May 11, 2020. With respect to the restricted stock units granted on December 10, 2019, as of December 31, 2020, there were 16,997 restricted stock units not vested, which will vest one-third on December 10, 2021, one-third on December 10, 2022 and one-third on December 10, 2023. With respect to the restricted stock units granted on May 11, 2020, as of December 31, 2020, there were 57,914 restricted stock units not vested, which will vest one-eighth on May 11, 2021, one-eighth on May 11, 2022, one-eighth on May 11, 2023, one-eighth on May 11, 2024 and one-half on the date of the successful completion of an initial public offering of our common stock.

(4)

Consists of restricted stock units granted on December 10, 2019 and May 11, 2020. With respect to the restricted stock units granted on December 10, 2019, as of December 31, 2020, there were 10,502 restricted stock units not vested, which will vest one-third on December 10, 2021, one-third on December 10, 2022 and one-third on December 10, 2023. With respect to the restricted stock units granted on May 11, 2020, as of December 31, 2020, there were 19,034 restricted stock units not vested, which will vest one-eighth on May 11, 2021, one-eighth on May 11, 2022, one-eighth on May 11, 2023, one-eighth on May 11, 2024 and one-half on the date of the successful completion of an initial public offering of our common stock.

Pension Benefits

We do not provide any of our officers with pension benefits.

Nonqualified Deferred Compensation

We do not provide any of our officers with any nonqualified deferred compensation plans.

Potential Payments Upon Termination of Employment or Change in Control

In the event any officer’s employment with our Adviser is terminated involuntarily by the Adviser for reasons other than for cause or otherwise due to such officer’s death, disability (as defined in the Restricted Stock Units Agreement) or retirement (as defined in the Restricted Stock Units Agreement), all outstanding restricted stock units that have not previously vested or been forfeited, will vest, in each case conditioned upon timely execution of certain releases of claims and related requirements as further described in the LTIP and following the passing of a specified waiting period. In addition, in the event our Adviser is terminated or internalized, that termination or internalization will be deemed a change in control under the LTIP. If a change in control occurs, all outstanding restricted stock awards held by our officers that have not previously vested or been forfeited, will vest following the passing of a specified waiting period. See “—Outstanding Equity Awards at Fiscal Year-End” above for the market value of outstanding restricted stock units as of December 31, 2020 that would have vested if any of the events described above occurred on December 31, 2020.

In general, except as may be otherwise prescribed in the applicable award agreement, the LTIP provides that a change of control will be deemed to have occurred if: (a) a person or group becomes the beneficial owner of 50.1% or more of the then-outstanding shares of our common stock or the combined voting power of our then-outstanding securities entitled to vote generally in the election of directors, subject to certain exceptions (an “Ownership Change”), (b) we close a reorganization, merger, consolidation, significant sale or purchase of assets or other similar transaction resulting in a substantial change in our ownership or leadership, in each case which causes either (i) the persons or groups who are the beneficial owners of 50.1% or more of the then-outstanding shares of our common stock or the combined voting power of our then-outstanding securities entitled to vote generally in the election of directors to cease to be such beneficial owners of the entity resulting from such transaction, in substantially the same proportions of ownership as immediately prior to such transaction, or (ii) a person or group to become the beneficial owner of 50.1% or more of the outstanding shares of common stock or the combined voting power of the outstanding securities entitled to vote generally in the election of directors of the entity resulting from such transaction, subject to certain exceptions, in each case as further described in the LTIP, or (c) our stockholders approve our complete liquidation or dissolution. Each of the applicable award agreements for restricted stock units provide that an Ownership Change will only be deemed to have occurred if a person or group becomes the beneficial owner of 75% or more of the then-outstanding shares of our common stock or the combined voting power of our then-outstanding securities entitled to vote generally in the election of directors, subject to certain exceptions.

Compensation Committee Interlocks and Insider Participation

Other than Mr. Dondero and Mr. Mitts, none of our executive officers has served as a member of the board of directors or compensation committee of any related entity that has one or more executive officers serving on our Board. Other than Mr. Dondero, Mr. Mitts and Mr. Sprong, no director who served as a member of our Board during the prior fiscal year (1) was during such year, or had previously been, an officer or employee of the Company or any of our subsidiaries or (2) had any material interest in a transaction of the Company or a business relationship with, or any indebtedness to, the Company.

ITEM 7.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Transactions with Related Persons

Advisory Agreement

Our Adviser acts as our adviser under the Advisory Agreement. Pursuant to the Advisory Agreement, we pay our Adviser, on a monthly basis in arrears, an advisory fee at an annualized rate of 0.75% of our gross asset value. Gross asset value means the value of our total assets as determined in accordance with GAAP on an unconsolidated basis plus our pro rata share of leverage at our Operating Partnership. Our Adviser manages our operations and its responsibilities include, among other duties, recommending distributions and related amounts to our Board, preparing our quarterly consolidated unaudited financial statements and annual consolidated financial statements prepared under GAAP, managing our annual audit, developing and maintaining appropriate internal accounting controls, maintaining our REIT status, calculating our NAV, processing purchases and redemptions of shares of our common stock, reporting to investors, preparing our tax filings, raising capital for us, procuring debt financing and other responsibilities customary for an external advisor to an SFR REIT.

Additionally, we are required to pay directly or reimburse our Adviser for all of the documented “operating expenses” (all out-of-pocket expenses of our Adviser in performing services for us, including but not limited to the expenses incurred by our Adviser in connection with any provision by our Adviser of legal, accounting, financial and due diligence services performed by our Adviser that outside professionals or outside consultants would otherwise perform, compensation expenses under our LTIP and our pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of our Adviser required for our operations) and “offering expenses” (any and all expenses (other than underwriters’ discounts) paid or to be paid by us in connection with an offering of our securities, including, without limitation, our legal, accounting, printing, mailing and filing fees and other documented offering expenses) paid or incurred by our Adviser or its affiliates in connection with the services it provides to us pursuant to the Management Agreements.

Reimbursement of operating expenses plus the advisory fees paid to our Adviser, may not exceed 1.5% of our average total gross asset value for any calendar year or portion thereof, provided, however, that this limitation will not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with extraordinary litigation, an initial public offering of our equity securities, an internalization, mergers and acquisitions and other events outside our ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. Average total gross asset value means the average of the total assets of the Company and our Operating Partnership, as determined in accordance with GAAP on a consolidated basis, at the end of each month (or partial month) (1) for which any fee under the Advisory Agreement is calculated or (2) during the year for which any expense reimbursement under the Advisory Agreement is calculated.

For the years ended December 31, 2020 and 2019, we incurred advisory and administrative fees of approximately $3.3 million and $1.7 million, respectively.

The Advisory Agreement may be terminated with 180 days’ notice prior to the expiration of the then-current term, without cause, by either us or our Adviser. In addition, we may terminate the Advisory Agreement 30 days after the delivery of written notice to our Adviser stating that a Cause Event (as defined in the Advisory Agreement) has occurred. Our Adviser may terminate the Advisory Agreement (1) 30 days after written notice has been delivered to us if we default in the performance or observance of any material term, condition or covenant contained in the Advisory Agreement and such default has continued for a period of 30 days after receipt of written notice by us of such default or (2) by giving written notice to us in the event that any of our Adviser’s designees are not elected or appointed to our Board pursuant to the terms of the Advisory Agreement. The Advisory Agreement automatically terminates upon an internalization. If the Advisory Agreement is terminated other than as a result of a Cause Event or an internalization, our Adviser will be entitled to a termination fee (the “Adviser Termination Fee”) in the amount of three times the annual advisory fee earned by our Adviser for the trailing 12-month period prior to the termination. In instances where the Advisory Agreement is terminated as a result of a Cause Event or internalization, no Adviser Termination Fee is owed.

If we and our Adviser agree to internalize our Adviser, we will purchase all of the outstanding partnership interests of our Adviser and pay our Adviser the internalization fee in stock of the Company. The internalization fee equals three times the sum of the annual advisory fee for the trailing 12-month period as of the month end immediately preceding the date we and our Adviser agree to the internalization; provided, however, the fee shall be capped at 2.5% of the combined equity value of the Company and the Operating Partnership on a consolidated basis at the time of the internalization.

Under the Advisory Agreement, we are also required to indemnify our Adviser and pay or reimburse reasonable expenses in advance of final disposition of a proceeding with respect to certain of our Adviser’s acts or omissions.

Management Agreements and Side Letter

Pursuant to the Management Agreements, our Manager is generally the sole and exclusive manager for our properties (subject to the terms of the Management Agreements). Our Manager is responsible for the day-to-day management of the properties, leasing the properties, managing tenant situations, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, and other responsibilities customary for the management of SFR properties. In addition, subject to the limitations set forth in the OP LPA and oversight from the Investment Committee, our Manager is primarily responsible for the identification of potential SFR properties and the acquisition and disposition of SFR properties.

Monthly in arrears, our Manager is entitled to (1) an acquisition fee equal to 1.0% of the gross purchase price paid for any new property acquired during the month, (2) a construction fee monthly in arrears that shall not exceed the greater of 10% of construction costs or $1,000, whichever is higher, in connection with the repair, renovation, improvement or development of any property acquired during the month, and (3) a property management fee equal to a percentage of collected rental revenues for all properties managed during the month as follows:

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8.0% of collected rental revenue up to and including $45 million on an annualized basis;

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7.0% of the incremental collected rental revenue above $45 million but below and including $65 million on an annualized basis;

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6.0% of the incremental collected rental revenue above $65 million but below and including $85 million on an annualized basis; and

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5.0% of the incremental collected rental revenue above $85 million on an annualized basis.

As agreed by our Manager in the Side Letter, the Manager’s EBITDA (as defined in the Management Agreements) derived from management fees in any fiscal year is capped at the greater of (1) $1.0 million (the “Dollar Cap”) and (2) 0.5% of the combined equity value of the Company and our Operating Partnership on a consolidated basis per fiscal year (“Equity Cap”). The Dollar Cap or Equity Cap, as applicable, will be paid (1) in cash in an amount equal to the tax obligations of our Manager’s equityholders resulting from the aggregate management fees earned in such fiscal year (up to a maximum rate of 25%) and (2) with respect to the remaining portion of the Dollar Cap or Equity Cap, as applicable, in the form of OP Units issued to our Manager at a price per OP Unit equal to the Cash Amount (as defined in the OP LPA) as of the applicable date. The Equity Cap will reset each year as of the first business day of the fiscal year.

For the years ended December 31, 2020 and 2019, we incurred property management fees of approximately $4.6 million and $3.2 million, respectively.

Any Management Agreement may be terminated with 90 days’ notice without cause. In addition, all Management Agreements will automatically terminate upon (1) the sale or transfer of all or substantially all of the properties in our Portfolio or (2) the occurrence of a bankruptcy event with respect to our Manager. If a Management Agreement is terminated without cause or as a result of all or substantially all of the property being sold, our Manager will be entitled to a termination fee (the “Manager Termination Fee”) in the amount of three times the annual property management fee for the trailing 12-month period prior to the termination, with such Manager Termination Fee paid in cash. In instances where a Management Agreement is terminated for cause as the result of an uncured breach, no Manager Termination Fee is owed.

The entities that own the properties are required to indemnify, defend and hold harmless the Manager and its agents and employees from and against all claims, liabilities, losses, damages, and/or expenses arising out of (1) the Manager’s performance under the Management Agreements, or (2) facts, occurrences, or matters first arising before the date of the Management Agreements. The entities that own the properties are not required to indemnify the Manager against damages or expenses suffered as a result of the gross negligence, willful misconduct, or fraud on the part of the Manager, its agents, or employees.

The Manager is required to indemnify, defend, and hold harmless the entities that own the properties and their agents and employees from and against all claims, liabilities, losses, damages, and/or expenses arising out of the gross negligence, willful misconduct, or fraud on the part of the Manager, its agents, or employees, and shall at its own cost and expense defend any action or proceeding against us arising therefrom.

We have the right to acquire our Manager pursuant to the terms of the Side Letter. We will pay our Manager a fee equal to three times the annualized property management fee for the trailing 12-months’ property management fee reduced by $6,500,000 (the “Legacy Value”), then further reduced by 50% and then increased by the Legacy Value (the “Manager Internalization Fee”). The Manager Internalization Fee is capped at 2.5% of the combined equity value of the Company and the Operating Partnership combined at the time we exercise our right to acquire our Manager.

Pursuant to the Side Letter, the Manager may request from the Operating Partnership from time-to-time an advance on acquisition and construction fees (the “Fee Advances”) to fund the performance of its obligations under the Management Agreements. Each Fee Advance is repaid from future acquisition and construction fees earned by and owed to the Manager. Fee Advances are included in the line item Due from Manager on the consolidated balance sheets. As of December 31, 2020, the Company recorded no receivable for Fee Advances. As of December 31, 2019, the Company recorded a receivable on the consolidated balance sheet due from the Manager for Fee Advances of approximately $0.2 million.

Pursuant to the Side Letter, in the event the Manager does not have sufficient cash flow from operations to meet its budgeted obligations under the Management Agreements, the Manager may from time-to-time request from the Company a temporary loan (the “Backstop Loan”) to satisfy the shortfall. Backstop Loans are interest free, may be prepaid at any time and may not exceed a principal amount that is in the aggregate equal to the lesser of the Manager Internalization Fee or the Manager Termination Fee under the applicable Management Agreement. Unless otherwise repaid, each Backstop Loan is payable upon termination of the applicable Management Agreement. Backstop Loans are included in the line item Due from Manager on the consolidated balance sheets. As of December 31, 2020 and 2019, the Company recorded a receivable for Backstop Loans made to the manager of approximately $0.7 million and approximately $0.7 million, respectively.

Dealer Manager Fees

Investors in our Private Offering may be charged a dealer manager fee of between 0.50% and 3.00% of gross investor equity by the Dealer Manager for sales of shares in the Private Offering, subject to certain breakpoints and various terms of the agreements with the Dealer Manager. The Dealer Manager may re-allow the dealer manager fee, in whole or in part in its sole discretion, to one or more broker-dealers. At the sole discretion of the Dealer Manager, the dealer manager fee may be partially or fully waived. The Dealer Manager is an affiliate of the Adviser.

NexBank

The Company and the Operating Partnership maintain bank accounts with an affiliate of the Adviser, NexBank. NexBank charges no recurring maintenance fees on the accounts.

NREO Note

On August 22, 2019, the Company, through the Operating Partnership, entered into the approximately $1.3 million NREO Note with NREO, who is an affiliate of the Adviser. The NREO Note bears interest at a variable rate equal to LIBOR plus 2.25% and is full interest-only. The NREO Note is convertible at any time to equity at the election of the Company or upon its maturity on September 19, 2022. On January 26, 2021, the Company, through the Operating Partnership, paid down the principal of approximately $1.3 million and accrued interest of approximately $0.1 million on the NREO Note. This extinguished the NREO Note.

Conflicts of Interest

The following briefly summarizes the material potential and actual conflicts of interest which may arise from the overall investment activity of our Adviser and its respective clients and affiliates and our Manager, but is not intended to be an exhaustive list of all such conflicts. The scope of the activities of the affiliates of our Adviser and the funds and clients advised by affiliates of our Adviser may give rise to conflicts of interest or other restrictions and/or limitations imposed on us in the future that cannot be foreseen or mitigated at this time.

Manager Conflicts of Interest

Under our Management Agreement, our Manager is entitled to fees that are structured in a manner intended to provide incentives to our Manager to perform in our best interest and in the best interest of our stockholders. However, because performance is only one aspect of our Manager’s compensation, our Manager’s interests are not wholly aligned with those of our stockholders. In that regard, our Manager could be motivated to recommend riskier or more speculative investments that would entitle our Manager to a higher fee. For example, because management fees payable to our Manager are based in part on the purchase price paid for any new property acquisitions, our Manager may have an incentive to acquire a large number of new properties at a higher price in order to increase its fees. Externally managed REITs may also have conflicts of interest with their advisors that are not common with self-managed REITs.

Advisor Conflicts of Interest

Under our Advisory Agreement, our Adviser is entitled to an annual advisory fee at an annualized rate of 0.75% of our gross asset value, as well as reimbursement for all out-of-pocket expenses of our Adviser in performing services for us, subject to an expense cap. The advisory fee is structured in a manner intended to provide incentives to our Adviser to perform in our best interest and in the best interest of our stockholders. In that regard, our Adviser could be motivated to recommend riskier or more speculative investments that would entitle our Adviser to a higher fee. For example, because advisory fees payable to our Adviser are based on gross asset value of the Company, our Adviser may have incentive to acquire a large number of new properties in order to increase its fees. However, because affiliates of the Adviser own, and may continue to own in the future, other properties outside the Portfolio, it is possible that conflicts of allocation of services and costs may arise. Externally managed REITs may also have conflicts of interest with their advisors that are not common with self-managed REITs.

Other Accounts and Relationships

As part of their regular business, our Adviser, its affiliates and their respective officers, directors, trustees, stockholders, members, partners and employees and their respective funds and investment accounts (collectively, the “Related Parties”) hold, purchase, sell, trade or take other related actions both for their respective accounts and for the accounts of their respective clients, on a principal or agency basis, subject to applicable law with respect to loans, securities and other investments and financial instruments of all types. The Related Parties also provide investment advisory services, among other

services, and engage in private equity, real estate and capital markets-oriented investment activities. The Related Parties are not restricted in their performance of any such services or in the types of debt, equity, real estate or other investments which they may make. The Related Parties may have economic interests in or other relationships with respect to investments made by us. In particular, the Related Parties may make and/or hold an investment, including investments in securities, that may compete with, be pari passu, senior or junior in ranking to an, investment, including investments in securities, made and/or held by us or in which partners, security holders, members, officers, directors, agents or employees of such Related Parties serve on boards of directors or otherwise have ongoing relationships. Each of such ownership and other relationships may result in restrictions on transactions by us and otherwise create conflicts of interest for us. In such instances, the Related Parties may in their discretion make investment recommendations and decisions that may be the same as or different from those made with respect to our investments. In connection with any such activities described above, the Related Parties may hold, purchase, sell, trade or take other related actions in securities or investments of a type that may be suitable for us. The Related Parties are not required to offer such securities or investments to us or provide notice of such activities to us. In addition, in managing our business, our Adviser may take into account its relationship or the relationships of its affiliates with obligors and their respective affiliates, which may create conflicts of interest. Furthermore, in connection with actions taken in the ordinary course of business of our Adviser in accordance with its fiduciary duties to its other clients, our Adviser may take, or be required to take, actions which adversely affect our interests.

The Related Parties have invested and may continue to invest in investments that would also be appropriate for us. Such investments may be different from those made on our behalf. Neither our Adviser nor any Related Party has any duty, in making or maintaining such investments, to act in a way that is favorable to us or to offer any such opportunity to us, subject to our Adviser’s allocation policy set forth below. The investment policies, fee arrangements and other circumstances applicable to such other parties may vary from those applicable to us. Our Adviser and/or any Related Party may also have ongoing relationships with, render services to or engage in transactions with other clients, including: NREF, a publicly traded commercial mortgage REIT listed on the NYSE; NHT, a publicly traded hospitality REIT listed on the TSXV; NXRT, a publicly traded REIT listed on the NYSE; REITs that are wholly owned subsidiaries of registered investment companies advised by our Adviser and its affiliates; and other REITs, who make investments of a similar nature as we do, and with companies whose securities or properties are acquired by us and may own equity or debt securities issued by our joint ventures. In connection with the foregoing activities our Adviser and/or any Related Party may from time to time come into possession of material nonpublic information that limits the ability of our Adviser to effect a transaction for us, and our investments may be constrained as a consequence of our Adviser’s inability to use such information for advisory purposes or otherwise to effect transactions that otherwise may have been initiated on behalf of its clients, including us. In addition, officers or affiliates of our Adviser and/or Related Parties may possess information relating to our joint ventures that is not known to the individuals at our Adviser responsible for monitoring our joint ventures and performing the other obligations under the Advisory Agreement. Further, the Related Parties currently provide services to and may in the future provide services to other REITs or funds that compete with us for similar investments.

Although the professional staff of our Adviser will devote as much time to our business and investments as our Adviser deems appropriate to perform its duties in accordance with the Advisory Agreement and in accordance with reasonable commercial standards, the staff may have conflicts in allocating its time and services among us and any Related Parties’ other accounts.

The directors, officers, employees and agents of the Related Parties, and our Adviser may, subject to applicable law, serve as directors (whether supervisory or managing), officers, employees, partners, agents, nominees or signatories, and receive arm’s length fees in connection with such service, for us or any Related Party, or for any of our investments or any affiliate thereof, and neither we nor our stockholders have the right to any such fees.

The Related Parties serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as us, or of other investment funds managed by our Adviser or its affiliates. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in our best interest. We may compete with other entities managed by our Adviser and its affiliates for capital and investment opportunities.

There is no limitation or restriction on our Adviser or any of its Related Parties with regard to acting as investment manager (or in a similar role) to other parties or persons. This and other future activities of our Adviser and/or its Related Parties may give rise to additional conflicts of interest. Such conflicts may be related to obligations that our Adviser or its affiliates have to other clients.

Subject to prior approval of our Board, certain Related Parties, including NexBank and NexPoint Securities, Inc. among others, may provide banking, dealer manager, agency, insurance and other services to us and our operating affiliates for customary fees, and neither we, nor our subsidiaries will have a right to any such fees.

Allocation Policy

If a potential investment is appropriate for either us or another entity managed by our Adviser or its affiliates, such as Highland Income Fund, which as of December 31, 2020 has approximately $1.31 billion of assets under management, NHF, which as of December 31, 2020 has approximately $854.1 million of assets under management, NRESF, which as of December 31, 2020 has approximately $17.0 million of assets under management, NexPoint Capital, which as of December 31, 2020 has approximately $64.2 million of assets under management, Highland Global Allocation Fund, which as of December 31, 2020 has approximately $241.6 million of assets under management, NREF, which as of December 31, 2020 has a combined unpaid principal balance of approximately $2.9 billion under management, NXRT, which as of December 31, 2020 has an enterprise value of approximately $2.3 billion, and NHT, which as of December 31, 2020 has an enterprise value of approximately $332.9 million, our Adviser and its affiliates, including their respective personnel, have an allocation policy that provides that opportunities will be allocated among those accounts for which participation in their respective opportunity is considered most appropriate, taking into account the following objective factors.

First, the allocation policy looks to the investment objectives of the REITs managed by our Adviser and its affiliates. For example, our targeted investments differ from the targeted investments of NXRT, which generally are direct ownership of well-located middle-income multifamily properties with value-add potential. We believe that most investment opportunities will be more appropriate for us, NXRT or other entities based on the differences in our primary investment objectives. We expect we will remain the primary vehicle in which investments are made in SFR assets. Our Adviser is not required to offer to us any opportunities that do not meet our investment objectives and criteria. Personnel of our Adviser and its affiliates may invest in any such investment opportunities not required to be presented to us.

To the extent the opportunity is consistent with the investment objectives of more than one REIT managed by our Adviser and its affiliates, the allocation policy then looks to other factors, such as:

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which REIT has available cash (including availability under lines of credit) to acquire the investment;

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whether there are any positive or negative income tax effects on any of the REITs relating to the purchase;

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whether the investment opportunity creates geographic, asset class or tenant concentration / diversification concerns for any of the REITs;

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how the investment size, potential leverage, transaction structure and anticipated cash flows affect each REIT, including earnings and distribution coverage; and

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whether one or more of the REITs has an existing relationship with the tenant(s), operator, facility or system associated with the investment, or a significant geographic presence that would make the investment strategically more important.

Our Adviser will allocate investment opportunities across the entities for which such opportunities are appropriate, consistent with its internal conflict of interest and allocation policies. Our Adviser will seek to allocate investment opportunities among such entities in a manner that is fair and equitable over time and consistent with its allocation policy. However, there is no assurance that such investment opportunities will be allocated to us fairly or equitably in the short-term or over time, and there can be no assurance that we will be able to participate in all such investment opportunities that are suitable for us.

Cross Transactions and Principal Transactions

As further described below, our Adviser may effect client cross-transactions where our Adviser causes a transaction to be effected between us and another client advised by our Adviser or any of its affiliates. Our Adviser may engage in a client cross-transaction involving us any time that our Adviser believes such transaction to be fair to us and the other client of our Adviser or its affiliates in accordance with our Adviser’s internal written cross-transaction policies and procedures.

As further described below, our Adviser may effect principal transactions where we may make and/or hold an investment, including an investment in securities, in which our Adviser and/or its affiliates have a debt, equity or participation interest, in each case in accordance with applicable law and with our Adviser’s internal written policies and procedures for principal transactions, which may include our Adviser obtaining our consent and approval prior to engaging in any such principal transaction between us and our Adviser or its affiliates.

Our Adviser may direct us to acquire or dispose of investments in cross trades between us and other clients of our Adviser or its affiliates in accordance with applicable legal and regulatory requirements. In addition, we may make and/or hold an investment, including an investment in securities, in which our Adviser and/or its affiliates have a debt, equity or participation interest, and the holding and sale of such investments by us may enhance the profitability of our Adviser’s own investments in such companies. Moreover, we, along with our operating affiliates, may invest in assets originated by, or enter into loans, borrowings and/or financings with our Adviser or its affiliates, including but not limited to NexBank and NexPoint Securities, Inc., including in primary and secondary transactions with respect to which our Adviser or a Related Party may receive customary fees from the applicable issuer, and neither we nor our subsidiaries have the right to any such fees. In each such case, our Adviser and such affiliates may have a potentially conflicting division of loyalties and responsibilities regarding us and the other parties to such investment. Under certain circumstances, our Adviser and its affiliates may determine that it is appropriate to avoid such conflicts by selling an investment at a fair value that has been calculated pursuant to our Adviser’s valuation procedures to another fund managed or advised by our Adviser or such affiliates. In addition, our Adviser may enter into agency cross-transactions where it or any of its affiliates acts as broker for us and for the other party to the transaction, to the extent permitted under applicable law. Our Adviser may obtain our written consent as provided herein if any such transaction requires the consent of our Board.

Participation in Creditor Committees, Underwriting and Other Activities

Our Adviser and/or its Related Parties may participate in creditors or other committees with respect to the bankruptcy, restructuring or workout or foreclosure of our investments. In such circumstances, our Adviser may take positions on behalf of itself or Related Parties that are adverse to our interests.

Our Adviser and/or its Related Parties may act as an underwriter, arranger or placement agent, or otherwise participate in the origination, structuring, negotiation, syndication or offering of investments purchased by us. Such transactions are on an arm’s-length basis and may be subject to arm’s-length fees. There is no expectation for preferential access to transactions involving investments that are underwritten, originated, arranged or placed by our Adviser and/or its Related Parties and neither we nor our stockholders have the right to any such fees.

Material Non-Public Information

There are generally no ethical screens or information barriers among our Adviser and certain of its affiliates of the type that many firms implement to separate persons who make investment decisions from others who might possess material, non-public information that could influence such decisions. If our Adviser, any of its personnel or its affiliates were to receive material non-public information about an investment or issuer, or have an interest in causing us to acquire a particular investment, our Adviser may be prevented from causing us to purchase or sell such asset due to internal restrictions imposed on our Adviser. Notwithstanding the maintenance of certain internal controls relating to the management of material non-public information, it is possible that such controls could fail and result in our Adviser, or one of its investment professionals, buying or selling an asset while, at least constructively, in possession of material non-public information. Inadvertent trading on material non-public information could have adverse effects on our Adviser’s reputation, result in the imposition of regulatory or financial sanctions,

and as a consequence, negatively impact our Adviser’s ability to perform its investment management services to us. In addition, while our Adviser and certain of its affiliates currently operate without information barriers on an integrated basis, such entities could be required by certain regulations, or decide that it is advisable, to establish information barriers. In such event, our Adviser’s ability to operate as an integrated platform could also be impaired, which would limit our Adviser’s access to personnel of its affiliates and potentially impair its ability to manage our investments.

Other Benefits to Our Adviser and Manager

Our LTIP provides us with the ability to grant awards to directors and officers of, and certain consultants to, us, our Adviser, our Manager and their respective affiliates and other entities that provide services to us. The management team of our Adviser or our Manager may receive awards under the LTIP and will benefit from the compensation provided by these awards.

In addition to the compensation provided to our Adviser by the Advisory Agreement and any long-term incentive plan, our Adviser may also receive reputational benefits from our future growth through capital-raising transactions and acquisitions. The reputational benefit to our Adviser from our future growth could assist our Adviser and its affiliates in pursuing other real estate investments. These investments could be made through other entities managed by our Adviser or its affiliates, and there can be no assurance that we will be able to participate in all such investment opportunities.

In addition to the compensation provided to our Manager by the Management Agreement and any long-term incentive plan, our Manager may also receive reputational benefits from our future growth. Our Manager will also have an incentive to raise capital and cause us to acquire additional assets, which would then contribute to the management fee. The reputational benefit to our Manager from our future growth could assist our Manager and its affiliates in pursuing other real estate investments.

Director Independence

For information relating to our independent directors, see Item 5. “Directors and Executive Officers—Board of Directors” of this Form 10.

ITEM 8.

LEGAL PROCEEDINGS.

We are not currently a party to any legal proceedings which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, results of operations, or financial statements, taken as a whole, if determined adversely to us.

ITEM 9.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

There is no established trading market for our shares of common stock and we do not expect a public market to develop. We have not agreed to register for sale under the Securities Act any shares of our common stock. No shares of our common stock have been or are currently expected to be publicly offered by us. As of March 31, 2021, 6,620,662 shares of our common stock, subject to obtaining the prior written consent of the Company, and no shares of our Series A Preferred Stock issued in the Preferred Offering may be sold pursuant to Rule 144 of the Exchange Act. See Item 10. “Recent Sales of Unregistered Securities—Common Stock and Common Stock DRIP” and Item 10. “Recent Sales of Unregistered Securities—6.50% Series A Cumulative Redeemable Preferred Stock.”

Stockholders

As of March 31, 2021, there were 2,683 holders of shares of our common stock.

Long Term Incentive Plan

Our Board and stockholders adopted the LTIP whereby our Board may grant awards based on our common stock or OP Units (including profits interest units) to certain directors, officers and other key employees and advisors of us and our affiliates to provide them incentives to increase stockholder value and reward performance. The LTIP reserves 10% of the number of OP Units, with a minimum of 426,307 shares (the “Share Reserve”). The Share Reserve will automatically increase on January 1st of each year, for a period of not more than five years, commencing on January 1, 2019 to an amount equal to 10% of the total number of OP Units outstanding on December 31st of the precedent calendar year; provided, our Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares. Grants may be made annually by our Board or more or less frequently in our Board’s sole discretion. Vesting of grants made under the LTIP will occur ratably over a period of time as determined by our Board and may include the achievement of performance metrics also as determined by our Board. The awards granted will be valued based on the then-current NAV at the date of grant.

As of March 31, 2021, 345,290 profits interest units in our Operating Partnership have been granted to certain employees of our Manager, 18,940 restricted stock units and 6,699 profits interests units have been granted to our non-management directors and 426,121 restricted stock units have been granted to certain employees of our Adviser.

The following table provides certain information as of the end of our most recently completed fiscal year with respect to compensation plans (including any individual compensation arrangements, of which there are none) under which our equity securities are authorized for issuance, aggregated as follows:


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities issuable upon exercise of outstanding options, warrants and rights)
Equity compensation plans approved by securityholders
LTIP	587,122 shares of the Company’s common stock (1)	N/A	542,431 shares of the Company’s common stock
Equity compensation plans not approved by security holders
None	—	N/A	—
Total	587,122 shares of the Company’s common stock	N/A	542,431 shares of the Company’s common stock

(1)

Represents 333,564 restricted stock units issued under our LTIP and 253,558 profits interests units issued under our LTIP.

Distributions

We intend to declare dividends on our shares of common stock on a monthly basis, payable on the last business day of each fiscal quarter end (although our Board may elect to modify the frequency or suspend the declaration and payment of dividends). U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains. As a REIT, we are subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our Board.

Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

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ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

Common Stock and Common Stock DRIP

On August 28, 2018, we commenced a continuous private placement of up to 40,000,000 shares of our common stock pursuant to the safe harbor of Rule 506(b) of Regulation D under Section 4(a)(2) of the Securities Act (the “Private Offering”). The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act.

Each investor in the Private Offering is required to make certain representations to us, including that such investor is an “accredited investor”, as defined in Rule 501(a) under the Securities Act, and that such investor is acquiring our common stock for such investor’s own account, for investment purposes only and not with a view to its distribution.

As of March 31, 2021, we have issued 11,533,512 shares of common stock through the Private Offering and under our DRIP, including 411,577 shares issued under our DRIP, resulting in gross offering proceeds of approximately $370.2 million. As of March 31, 2021, we have paid (or Raymond James has collected upfront) an aggregate of approximately $15.7 million in selling commissions and we have incurred approximately $2.0 million in additional offering expenses, resulting in net proceeds to us of approximately $352.4 million. No underwriting discount or commission is applicable to sales through the common stock DRIP. We contributed the majority of the net proceeds from the Private Offering to our Operating Partnership in exchange for OP Units. Our Operating Partnership has used the net proceeds from the Private Offering primarily to acquire additional SFR properties in new and existing markets and maintain existing SFR properties in our Portfolio.

The following table provides information regarding the sale of shares of our common stock in the Private Offering and through the common stock DRIP during the previous three years ended December 31, 2020, and for the three months ended March 31, 2021 (dollar amounts in thousands, except per share sale price):


Month	Year		Common Stock Private Offering						Common Stock DRIP						Total Gross Proceeds
Month	Year		Shares Sold		Sale Price (1)		Gross Proceeds		Shares Reinvested		Sale Price (2)		Gross Proceeds (3)		Total Gross Proceeds
October		2018		1,097,367	$	26.10	$	28,638		—	$	—	$	—	$	28,638
November		2018		—		—		—		—		—		—		—
December		2018		803,291		25.76		20,690		6,112		24.25		148		20,838
January		2019		—		—		—		—		—		—		—
February		2019		7,075		28.27		200		—		—		—		200
March		2019		562,226		29.79		16,749		14,002		27.42		384		17,133
April		2019		2,196		31.42		69		—		—		—		69
May		2019		11,230		28.94		325		—		—		—		325
June		2019		809,292		30.16		24,409		17,442		27.89		486		24,895
July		2019		141,511		29.19		4,130		—		—		—		4,130
August		2019		49,176		31.56		1,552		—		—		—		1,552
September		2019		870,560		30.42		26,480		27,205		28.01		762		27,242
October		2019		79,871		30.73		2,455		—		—		—		2,455
November		2019		45,973		31.54		1,450		—		—		—		1,450
December		2019		581,062		31.43		18,263		36,941		29.01		1,071		19,335
January		2020		315,766		32.14		10,148		—		—		—		10,148
February		2020		466,439		32.12		14,980		—		—		—		14,980
March		2020		637,111		32.10		20,452		46,813		29.65		1,388		21,840
April		2020		34,609		32.49		1,125		—		—		—		1,125
May		2020		25,928		32.98		855		—		—		—		855
June		2020		50,009		32.35		1,618		54,294		30.15		1,637		3,255
July		2020		407,618		32.28		13,158		—		—		—		13,158
August		2020		271,444		33.02		8,963		—		—		—		8,963
September		2020		333,897		33.36		11,137		58,911		31.91		1,880		13,017
October		2020		438,856		34.99		15,356		—		—		—		15,356
November		2020		429,126		35.87		15,394		—		—		—		15,394
December		2020		489,128		36.11		17,686		69,364		33.35		2,314		20,000
January		2021		593,303		36.07		21,398		—		—		—		21,398
February		2021		582,140		38.19		22,231		—		—		—		22,231
March		2021		985,731		37.84		37,297		80,493	$	35.75		2,878		40,175
TOTAL				11,121,935			$	357,208		411,577			$	12,949	$	370,157

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(1) Sale price is the per share weighted average for the corresponding month which includes upfront selling costs.

(2) Common stock DRIP shares are generally purchased at a discounted rate of 97% of the NAV in effect.

(3) For shares of common stock issued under the common stock DRIP, we do not receive any cash proceeds from the transaction as the shareholder receives shares in lieu of the cash dividend. Refer to Note 7 to the consolidated financial statements included in this Form 10 for further discussion.

NexPoint Securities, Inc., an entity under common ownership with the Adviser, serves as the Dealer Manager for the Private Offering and Raymond James and other unaffiliated broker-dealers serve as non-exclusive placement agents through selling agreements between each placement agent and the Company.

None of the shares of our common stock set forth in the table above were registered under the Securities Act, in reliance upon the exemptions from registration under the Securities Act provided by Rule 506(b) under Regulation D promulgated under the Securities Act and Section 4(a)(2) of the Securities Act. All of the shares of our common stock set forth in the table above were sold to persons who represented to us in writing that they qualified as an “accredited investor,” as such term is defined by Regulation D promulgated under the Securities Act.

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6.50% Series A Cumulative Redeemable Preferred Stock

On September 30, 2020, we commenced a private placement in an initial amount of up to $75 million of shares of our Series A Preferred Stock pursuant to the safe harbor of Rule 506(b) of Regulation D under Section 4(a)(2) of the Securities Act (the “Preferred Offering”), which was subsequently increased to $125 million. The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act.

Each investor in the Preferred Offering is required to make certain representations to us, including that such investor is an “accredited investor”, as defined in Rule 501(a) under the Securities Act, and that such investor is acquiring our Series A Preferred Stock for such investor’s own account, for investment purposes only and not with a view to its distribution.

The initial closing of the Preferred Offering occurred on October 7, 2020, and subsequent closings occurred on December 30, 2020 and January 8, 2021. Raymond James & Associates, Inc. served as the exclusive placement agent for the Preferred Offering. As of March 31, 2021, we have issued 5,000,000 shares of Series A Preferred Stock, resulting in gross offering proceeds of approximately $125.0 million. As of March 31, 2021, we have paid an aggregate of approximately $3.9 million in selling commissions and incurred approximately $1.1 million in additional offering expenses, resulting in net proceeds to us of approximately $120.0 million.

We contributed the net proceeds from the Preferred Offering to our Operating Partnership in exchange for Series A cumulative redeemable preferred units of our Operating Partnership, which units have the same or substantially similar designations, preferences and rights as our Series A Preferred Stock. Our Operating Partnership has used the net proceeds from the Preferred Offering primarily to acquire new SFR properties, repay a portion of the indebtedness outstanding under the Warehouse Facility and for general corporate purposes.

The following table provides information regarding the sale of shares of our Series A Preferred Stock by us during the previous three years ended December 31, 2020, and for the three months ended March 31, 2021 (gross proceeds in thousands).


Sale Date	Series A Preferred Stock Private Offering
Sale Date	Number Sold		Sale Price (1)		Gross Proceeds
October 7, 2020		2,440,000	$	25.00	$	61,000,000
December 30, 2020		1,100,000		24.995		27,494,500
January 8, 2021		1,460,000		25.032		36,546,720

TOTAL		5,000,000				125,041,220

(1) The Sales Prices for the December 30, 2020 and January 8, 2021 sales equaled $25 per share adjusted for dividends based on the sale date relative to the dividend record date.

Except as set forth above, we have not sold any securities which were not registered under the Securities Act during the previous three years.

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ITEM 11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.

The following is a summary of the rights and preferences of our capital stock. We encourage you to read carefully this entire Form 10, our charter, including the articles supplementary designating the Series A Preferred Stock, and bylaws, and the relevant provisions of the Maryland General Corporation Law (“MGCL”) for a more complete understanding of our capital stock. Our Board has approved, subject to stockholder approval, an amended and restated charter. References in this Form 10 to our “charter” refer to the form of amended and restated charter we expect to be approved. Copies of our form of amended and restated charter, including the articles supplementary designating the Series A Preferred Stock, and bylaws are filed as exhibits to this Form 10, and the following summary, to the extent it relates to those documents, is qualified in its entirety by references thereto.

General

Our charter authorizes the issuance of 500,000,000 shares of capital stock, consisting of 300,000,000 shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”), 100,000,000 shares of Class I common stock, par value $0.01 per share (“Class I Common Stock” and, in this Item 11, together with the Class A Common Stock, our “common stock”) and 100,000,000 shares of preferred stock, par value $0.01 per share, 16,000,000 shares of which have been classified as Series A Preferred Stock. Our Board may amend our charter from time to time to increase or decrease the aggregate number of shares of stock of any class or series that we have the authority to issue, without any action by the stockholders. Our Board may classify any unissued shares of capital stock into one or more classes or series of stock, may designate the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption, and other terms, of any class or series of capital stock, and may reclassify any previously classified but unissued shares of capital stock into one or more classes or series of stock. Under Maryland law, our stockholders generally are not liable for our debts or obligations solely as a result of their status as stockholders.

Description of Common Stock

As of March 31, 2021, 11,499,045 shares of our Class A Common Stock were issued and outstanding and no shares of our Class I Common Stock were issued and outstanding.

Subject to the preferential rights, if any, of holders of any other class or series of our stock and to the provisions of our charter relating to the restrictions on ownership and transfer of our stock, holders of our common stock are entitled to receive dividends and other distributions on such shares of stock when, as and if authorized by our Board and declared by us out of assets legally available for distribution to our stockholders and will be entitled to share ratably in our net assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.

Subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock and except as may be otherwise specified in the terms of any class or series of common stock, each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as may be provided with respect to any other class or series of our stock, the holders of shares of our common stock will possess the exclusive voting power. Each of our directors elected by our stockholders is elected to serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualified. There is no cumulative voting in the election of directors. Consequently, the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors. Directors will be elected by a plurality of all of the votes cast in the election of directors.

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Holders of shares of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any securities of our Company. Subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, shares of our common stock will have equal distribution, liquidation and other rights. Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge or consolidate with, or convert into, another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless the action is advised by our Board and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter, unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is specified in the corporation’s charter. Our charter provides that these actions must be approved by a majority of all of the votes entitled to be cast on the matter.

Maryland law also permits a corporation to transfer all or substantially all of its assets without the approval of its stockholders to an entity owned, directly or indirectly, by the corporation.

Description of Series A Preferred Stock

As of March 31, 2021, 5,000,000 shares of our Series A Preferred Stock were issued and outstanding. Each class or series of our preferred stock will have the designations, voting powers, preferences, conversion or other rights, qualifications, limitations, restrictions, terms and conditions of redemption, and other terms as Maryland law may permit and our Board may determine by adoption of applicable articles supplementary to our charter. Our Board may, without notice to or the consent of holders of Series A Preferred Stock, authorize the issuance and sale of additional shares of Series A Preferred Stock and authorize and issue additional shares of stock ranking junior to the Series A Preferred Stock (“Junior Stock”) or shares of preferred equity ranking on parity with the Series A Preferred Stock (“Parity Stock”) from time to time. The following is a summary of the material terms of our Series A Preferred Stock and certain provisions of our charter.

Overview

The Series A Preferred Stock accrues a 6.50% per annum dividend (the “Annual Preferred Dividend”), have a priority on distribution of cash from operations, and capital items proceeds as set forth below. The Series A Preferred Stock is subject to a redemption right of the Company beginning on October 7, 2023.

Dividends

Dividends on the Series A Preferred Stock will accrue on the liquidation preference per share of Series A Preferred Stock from the respective original issuance date on a cumulative basis, quarterly in arrears, on the last day of March, June, September and December of each year. The dividend rate will consist of the Annual Preferred Dividend on the Series A Preferred Stock, through October 7, 2027 (the

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“Mandatory Redemption Date”), unless extended as further described under the heading “—Mandatory Redemption.” Dividends on the Series A Preferred Stock, when, as and if declared by our Board (or a duly authorized committee of our Board) are intended to be paid quarterly (at the rate of one-quarter of the Annual Preferred Dividend) on April 10, July 10, October 10 and January 10 of each year (or the next successive business day if such date falls on a non-business day), to holders of record of the Series A Preferred Stock as they appear on our records at the close of business on the 25th day of the month preceding the applicable payment date, i.e., March 25, June 25, September 25 and December 25, respectively. The first payment was made on January 11, 2021. Dividends will be paid from funds legally available for the payment of dividends, as determined by our Board (or a duly authorized committee of our Board) and shall be prorated for partial quarters. Dividends will continue to accrue even if not authorized, declared or paid. The rate of the Annual Preferred Dividend is subject to adjustment as further described below.

Unless full cumulative and compound dividends on the Series A Preferred Stock have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods that have ended, no dividends (other than a dividend in shares of Junior Stock) or in options, warrants or rights to subscribe for or purchase any such shares of Junior Stock) will be declared and paid or declared and set apart for payment nor will any other distribution be declared and made upon the Junior Stock or the Parity Stock, nor will any shares of Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of Junior Stock or Parity Stock) by the us (except (1) by conversion into or exchange for Junior Stock, (2) the purchase of Series A Preferred Stock, Junior Stock or Parity Stock pursuant to our charter to the extent necessary to preserve our qualification as a REIT or (3) the purchase of shares of Parity Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series A Preferred Stock). Holders of Series A Preferred Stock are not entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative and compounding dividends on the Series A Preferred Stock as provided above. Any dividend payment made on the Series A Preferred Stock will first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.

In the event that distributable cash flow is not sufficient to pay any scheduled Annual Preferred Dividend, we will accrue the Annual Preferred Dividend. We believe that we have and will continue to have sufficient distributable cash flow to service its Annual Preferred Dividend obligations.

Upon liquidation of us, after satisfaction of liabilities and funding or any reserves necessary for wind up, holders of Series A Preferred Stock will be entitled to be paid out of the assets of the Company legally available for distribution to stockholders, a liquidation preference of $25.00 per share of Series A Preferred Stock plus an amount equal to any accrued and unpaid dividends thereon, including the Annual Preferred Dividend. If the assets of the Company legally available for distribution to stockholders are insufficient to pay in full the liquidation preference on the Series A Preferred Stock and the liquidation preference on the shares of any Parity Stock, all assets distributed to the holders of Series A Preferred Stock and the holders of any class or series of Parity Stock will be distributed pro rata so that the amount of assets distributed per share of Series A Preferred Stock and per share of such class or series of Parity Stock will in all cases bear to each other the same ratio that the liquidation preference per share of Series A Preferred Stock and per share of such class or series of Parity Stock bear to each other.

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The Series A Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to the our common stock; (2) on parity with all equity securities issued by us with terms specifically providing that those equity securities rank on parity with the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (3) junior to all of our existing and future indebtedness and to the indebtedness and other liabilities of our existing subsidiaries and any future subsidiaries.

Voting Rights

Except as set forth in the articles supplementary, the Series A Preferred Stock have no voting rights.

So long as any shares of Series A Preferred Stock remain outstanding, the holders of shares of Series A Preferred Stock will have the exclusive right to vote on any amendment, alteration or repeal of our charter, including the terms of the Series A Preferred Stock, that would alter only the contract rights, as expressly set forth in our Charter, of the Series A Preferred Stock, and the holders of any other classes or series of our capital stock will not be entitled to vote on any such amendment, alteration or repeal. Any such amendment, alteration or repeal will require the affirmative vote or consent of the holders of two-thirds of the shares of Series A Preferred Stock issued and outstanding at the time. With respect to any amendment, alteration or repeal of our charter, including the terms of the Series A Preferred Stock, that equally affects the terms of the Series A Preferred Stock and any Parity Stock upon which like voting rights have been conferred, the holders of shares of Series A Preferred Stock and such Parity Stock (voting together as a single class) also will have the exclusive right to vote on any amendment, alteration or repeal of our charter, including the terms of the Series A Preferred Stock, that would alter only the contract rights, as expressly set forth in our charter, of the Series A Preferred Stock and such Parity Stock, and the holders of any other classes or series of our capital stock will not be entitled to vote on any such amendment, alteration or repeal. Any such amendment, alteration or repeal shall require the affirmative vote or consent of the holders entitled to cast two-thirds of the votes entitled to be cast by the holders of shares of Series A Preferred Stock and such Parity Stock issued and outstanding at the time, voting together as a single class, with each share of Series A Preferred Stock and share of such Parity Stock entitled to one vote for each $25.00 of liquidation preference.

Fixed Charge Coverage Ratio

We must maintain a fixed charge coverage ratio (“FCCR”) of 1.10x or higher as of the last day of each fiscal quarter. “FCCR” means Cash Flow Before Debt Service (as defined below) for the four consecutive fiscal quarter period ending on the calculation date divided by the total of our consolidated debt service plus preferred payments for the four consecutive fiscal quarter period ending on the calculation date. For the avoidance of doubt, preferred payments will not include payments on preferred units of our Operating Partnership, including the Series A Preferred Units, that track the Series A Preferred Stock. “Cash Flow Before Debt Service” means for any fiscal quarter, our total revenue on a consolidated basis less (i) our total operating expenses on a consolidated basis, (ii) recurring capital expenditures of $87.50 per home owned (directly or indirectly) by us as of the last day of the fiscal quarter and (iii) our total general and administrative expenses on a consolidated basis.

If at any time the FCCR falls below 1.10x as of the last day of a fiscal quarter (an “FCCR Default”),

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then as of the date of the occurrence of the FCCR Default to, but not including, the date on which such FCCR Default is no longer continuing (as evidenced by notice to the holders of the Series A Preferred Stock, which may be by press release, of an FCCR necessary to cure such FCCR Default), the rate of the Annual Preferred Dividend will increase by 50 basis points. The rate of the Annual Preferred Dividend will return to 6.50% upon us achieving an FCCR of 1.10x (or higher).

Restrictions on New Issuances

Unless the (1) holders of a majority of the shares of the Series A Preferred Stock then outstanding consent, or (2) indebtedness is being incurred or an additional class or series of preferred equity of us is being issued in connection with a full redemption of the Series A Preferred Stock pursuant to an Optional Redemption (defined below) or Mandatory Redemption (defined below), we may not: (a) issue a new class, or issue any additional amounts of any existing class, of preferred equity with payment priority senior to that of the Series A Preferred Stock, (b)(i) incur any additional indebtedness or (ii) issue additional preferred equity that is pari passu to the Series A Preferred Stock, solely with respect to subclauses (i) and (ii), if, after such incurrence or issuance, the aggregate principal amount of long-term indebtedness and dividends on each existing class or series of our preferred equity pari passu with the Series A Preferred Stock would be greater than 75% of the gross value of the assets of us and our subsidiaries (such ratio, the “Senior Capital Leverage Ratio”). Subject to compliance with the immediately preceding sentence, we may, without consent of the holders of the Series A Preferred Stock then outstanding, issue additional Series A Preferred Stock with identical terms to those offered hereby. We will determine the values of all of our and our subsidiaries’ assets (including all real estate assets) in our good faith reasonable judgment, which may include (but is not required to include) input from third party valuation experts.

If we exceed a Senior Capital Leverage Ratio of 75%, the rate of the Annual Preferred Dividend will increase by 50 basis points. The rate of the Annual Preferred Dividend will return to 6.50% upon the Company achieving a Senior Capital Leverage Ratio of 75% (or less).

Optional Redemption

The Series A Preferred Stock are not redeemable prior to October 7, 2023, except (1) in order to preserve our qualification as a REIT and as described under “—Special Redemption Option upon a Change of Control” below and (2) at any time that the aggregate distributions to the Series A Preferred Stock result in a multiple on invested capital with respect to each share of Series A Preferred Stock equal to the sum of (x) $25.00 plus (y) the product of the Annual Preferred Dividend and three, such sum of (x) and (y) divided by $25.00 (e.g., a multiple of invested capital of 1.195x assuming a 6.50% Annual Preferred Dividend).

We may, at our option, redeem the Series A Preferred Stock, in whole or in part, from time to time, at any time on or after October 7, 2023 (each such redemption being an “Optional Redemption”) at a redemption price equal to $25.00 per share of Series A Preferred Stock, plus any accrued and unpaid dividends (whether or not declared), including the Annual Preferred Dividend, to, but excluding, the date fixed for redemption.

Special Redemption Option upon a Change of Control

Upon the occurrence of a Change of Control (as defined in the articles supplementary), we may

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redeem for cash, in whole or in part, the Series A Preferred Stock within 120 days after the date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends (whether or not declared), including the Annual Preferred Dividend, to, but excluding, the date fixed for redemption (the “Change of Control Offer”), regardless of whether the multiple on invested capital described in the first paragraph under the heading “—Optional Redemption” above has been achieved.

Mandatory Redemption

On the Mandatory Redemption Date, we will at our option (i) redeem all the outstanding shares of the Series A Preferred Stock in cash by paying $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but excluding, the Mandatory Redemption Date or (ii) effect a Listing Event, as defined below (such redemption or effecting of a Listing Event, the “Mandatory Redemption”). The Mandatory Redemption Date may be extended by consent of 60% of the outstanding Series A Preferred Stock, subject to approval by our Board in its sole discretion. We are not required to set aside funds to redeem the Series A Preferred Stock. Accordingly, the Series A Preferred Stock may remain outstanding until redeemed on the Mandatory Redemption Date, unless redeemed earlier.

Unless the Mandatory Redemption Date is extended, if we fail to effect a Mandatory Redemption of the Series A Preferred Stock by the Mandatory Redemption Date, and such non-compliance remains uncured by us on the nine-month anniversary following the Mandatory Redemption Date (a “Failed Redemption”), (i) the number of directors shall be automatically increased to such number as is necessary so that a majority of the outstanding shares of Series A Preferred Stock shall have the right at any time after such date to elect a majority of the members of our Board (such newly elected directors, the “Preferred Share Majority Directors”) and (ii) we will schedule a meeting of the then outstanding shares of Series A Preferred Stock to elect the Preferred Share Majority Directors. If at any time following a Failed Redemption, we complete the Mandatory Redemption, the terms of any and all Preferred Share Majority Directors shall automatically expire immediately following such Mandatory Redemption and the number of directors shall be automatically decreased by a corresponding number.

At our option, and in lieu of redemption, the shares of Series A Preferred Stock may be listed on a public exchange at any time before or concurrent with the Mandatory Redemption Date, assuming there is at least $200 million of the Series A Preferred Stock outstanding and we have a BBB- rating or higher at the time of listing (a “Listing Event”).

Additionally, if the Mandatory Redemption has not occurred by the Mandatory Redemption Date (as may be extended), the rate of the Annual Preferred Dividend will increase by 50 basis points (notwithstanding the provisions contained under the heading “—Rating” below, if we have a rating lower than BBB- after the Mandatory Redemption Date, the maximum the Annual Preferred Dividend will increase is 50 basis points). If, after the Mandatory Redemption Date, the Series A Preferred Stock has not been redeemed and is subsequently subject to a Listing Event, the rate of the Annual Preferred Dividend will return to 6.50% upon listing.

Restrictions on Ownership and Transfer

For information regarding restrictions on ownership and transfer of the Series A Preferred Stock, see “—Restrictions on Ownership and Transfer” herein.

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The articles supplementary for the Series A Preferred Stock provides that the ownership limitations described in “—Restrictions on Ownership and Transfer” herein apply to ownership of shares of Series A Preferred Stock pursuant to Article VII of our charter, under which shares of Series A Preferred Stock owned by a stockholder in excess of an ownership limit will be transferred to a charitable trust and may be purchased by us under certain circumstances. Our Board may, in its sole discretion, except a person from an ownership limit, as described in “—Restrictions on Ownership and Transfer” herein.

Ownership limits also apply to shares of our common stock. See “—Restrictions on Ownership and Transfer” herein. Notwithstanding any other provision of the Series A Preferred Stock, no holder of shares of the Series A Preferred Stock are entitled to convert any shares of Series A Preferred Stock into shares of our common stock to the extent that receipt of our common stock would cause such holder or any other person to exceed the ownership limits contained in our charter or in the articles supplementary for the Series A Preferred Stock.

Preemptive Rights

No holders of Series A Preferred Stock shall, as the holders, have any preemptive rights to purchase or subscribe for our common stock or any other security of our company.

Rating

Egan Jones Rating Company (the “Rating Company”) assigned the Series A Preferred Stock a “BBB-” indicative rating. We will be required to maintain this “BBB-” rating or higher. The rating is subject to review on an annual basis based upon the outlook and historical performance of our Portfolio. We will continue the review and ratings process regarding the Series A Preferred Stock on an annual basis unless either (1) we are unable to engage a ratings company that will accord a rating to the Series A Preferred Stock or (2) holders of a majority of the Series A Preferred Stock approve cessation of obtaining such a rating for the Series A Preferred Stock. Subject to the immediately preceding sentence, if at any time the Rating Company can no longer provide a rating with respect to the Series A Preferred Stock, we will use reasonable best efforts to obtain a rating from another rating agency. Provision of a rating is not an assurance as to current or future performance of our Portfolio.

If the rating falls below BBB-, the rate of the Annual Preferred Dividend will increase by 25 basis points. The rate of the Annual Preferred Dividend will return to 6.50% upon our receipt of a BBB- rating (or higher).

Power to Increase or Decrease Authorized Shares of Stock, Reclassify Unissued Shares of Stock and Issue Additional Shares of Common and Preferred Stock

Our charter authorizes our Board, with the approval of a majority of our Board and without stockholder approval, to amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of any class or series of stock that we are authorized to issue. In addition, our charter authorizes our Board to authorize the issuance from time to time of shares of our common and preferred stock.

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Our charter also authorizes our Board to classify and reclassify any unissued shares of our common or preferred stock into other classes or series of stock, including one or more classes or series of stock that have priority over our common stock with respect to voting rights, distributions or upon liquidation, and authorize us to issue the newly classified shares. Prior to the issuance of shares of each new class or series, our Board is required by Maryland law and by our charter to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption for each class or series. Therefore, although our Board does not currently intend to do so, it could authorize the issuance of shares of common or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.

We believe that the power of our Board to approve amendments to our charter to increase or decrease the number of authorized shares of stock, to authorize us to issue additional authorized but unissued shares of common or preferred stock and to classify or reclassify unissued shares of common or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise.

Restrictions on Ownership and Transfer

In order for us to qualify as a REIT under the Code, shares of our stock must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to qualify as a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of our stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). To qualify as a REIT, we must satisfy other requirements as well.

Except for Permitted Transfers (defined below) or transfers otherwise permitted by our charter or bylaws, holders of our common stock or preferred stock are prohibited from transferring any such shares of common stock or preferred stock without our prior written consent. Our charter provides that the section of our charter containing this prohibition will not apply to any common stock or preferred stock listed on a national securities exchange. Our consent may only be withheld if, in our reasonable judgment, such transfer would violate applicable federal or state securities laws. “Permitted Transfers” include transfers (a) by the holder to us, (b) in connection with a transfer to an unaffiliated third party pursuant to a merger, consolidation, stock-for-stock exchange, tender offer or similar transaction, (c) to a family member or a controlled entity for bona fide estate planning purposes and (d) by a trust to the trust’s beneficiaries. Transfers under clauses (b), (c) and (d) are subject to the transferee agreeing to be bound by the restrictions on transfer set forth under Article VII of our charter.

Our charter, including the articles supplementary setting for the terms of the Series A Preferred Stock, also contains restrictions on the ownership and transfer of our stock that became effective on the date upon which the outstanding shares of our stock is beneficially owned by at least 100 persons (the “Initial Date”). The relevant sections of our charter provide that, subject to the exceptions described

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below, from and after the Initial Date, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 9.8%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock (the “common stock ownership limit”), or 9.8% in value of the outstanding shares of all classes or series of our stock, including the Series A Preferred Stock (the “aggregate stock ownership limit”). We refer to the common stock ownership limit and the aggregate stock ownership limit collectively as the “ownership limits.” We refer to the person or entity that, but for operation of the ownership limits or another restriction on ownership and transfer of our stock as described below, would beneficially own or constructively own shares of our stock in violation of such limits or restrictions and, if appropriate in the context, a person or entity that would have been the record owner of such shares of our stock as a “prohibited owner.”

The constructive ownership rules under the Code are complex and may cause shares of stock owned beneficially or constructively by a group of related individuals and/or entities to be owned beneficially or constructively by one individual or entity. As a result, the acquisition of less than 9.8%, in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, or less than 9.8% in value of the outstanding shares of all classes and series of our stock, including the Series A Preferred Stock (or the acquisition by an individual or entity of an interest in an entity that owns, beneficially or constructively, shares of our stock), could, nevertheless, cause that individual or entity, or another individual or entity, to own beneficially or constructively shares of our stock in excess of the ownership limits.

Our Board, in its sole discretion, may exempt, prospectively or retroactively, a particular stockholder from the ownership limits or establish a different limit on ownership (the “excepted holder limit”) if our Board determines that:

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no individual’s beneficial or constructive ownership of our stock will result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise result in our failing to qualify as a REIT or result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h) of the Code; and

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such stockholder does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity owned or controlled by us) that would cause us to own, actually or constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (or our Board determines that revenue derived from such tenant will not affect our ability to qualify as a REIT).

Our charter provides that any violation or attempted violation of any such representations or undertakings will result in such stockholder’s shares of stock being automatically transferred to a charitable trust. As a condition of granting the waiver or establishing the excepted holder limit, our Board may require an opinion of counsel or a ruling from the IRS, in either case in form and substance satisfactory to our Board, in its sole discretion, in order to determine or ensure our status as a REIT and such representations and undertakings from the person requesting the exception as our Board may require

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in its sole discretion to make the determinations above. Our Board may impose such conditions or restrictions as it deems appropriate in connection with granting such a waiver or establishing an excepted holder limit. These waivers will be subject to certain initial and ongoing conditions designed to preserve our status as a REIT.

In connection with granting a waiver of the ownership limits or creating an excepted holder limit or at any other time, our Board may from time to time increase or decrease the common stock ownership limit, the aggregate stock ownership limit or both, for all other persons, unless, after giving effect to such increase, five or fewer individuals could beneficially own, in the aggregate, more than 49.9% in value of our outstanding stock or we would otherwise fail to qualify as a REIT. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common stock or our stock of all classes and series, as applicable, is, at the effective time of such reduction, in excess of such decreased ownership limit until such time as such person’s or entity’s percentage ownership of our common stock or our stock of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of shares of our common stock or stock of all other classes or series, as applicable, will violate the decreased ownership limit.

Our charter further prohibits:

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any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify as a REIT;

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any person from transferring shares of our stock if the transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code); and

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any person from beneficially or constructively owning shares of our stock to the extent such ownership would result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h) of the Code.

Our charter provides that any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate the ownership limits or any of the other restrictions on ownership and transfer of our stock described above, or who would have owned shares of our stock transferred to the trust as described below, must immediately give notice to us of such event or, in the case of an attempted or proposed transaction, give us at least 15 days’ prior written notice and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on ownership and transfer of our stock will not apply if our Board determines that it is no longer in our best interest to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limits on ownership and transfer of our stock described above is no longer required in order for us to qualify as a REIT.

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Our charter further provides that, if any transfer of shares of our stock would result in shares of our stock being beneficially owned by fewer than 100 persons, the transfer will be null and void and the intended transferee will acquire no rights in the shares. In addition, our charter provides that, if any purported transfer of shares of our stock or any other event would otherwise result in any person violating the ownership limits or an excepted holder limit established by our Board, or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT or as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code, then that number of shares (rounded up to the nearest whole share) that would cause the violation will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us, and the intended transferee or other prohibited owner will acquire no rights in the shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. If the transfer to the trust as described above would not be automatically effective for any reason to prevent violation of the applicable ownership limits or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or our otherwise failing to qualify as a REIT or as a “domestically controlled qualified investment entity,” then our charter provides that the transfer of the shares will be null and void and the intended transferee will acquire no rights in such shares.

Shares of our stock held in the trust will be issued and outstanding shares. Our charter provides that the prohibited owner will not benefit economically from ownership of any shares of our stock held in the trust and will have no rights to distributions and no rights to vote or other rights attributable to the shares of our stock held in the trust. The trustee of the trust will exercise all voting rights and receive all distributions with respect to shares held in the trust for the exclusive benefit of the charitable beneficiary of the trust. Any distribution made before we discover that the shares have been transferred to a trust as described above must be repaid by the recipient to the trustee upon demand. Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority to rescind as void any vote cast by a prohibited owner before our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

Shares of our stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (a) the price paid by the prohibited owner for the shares (or, in the case of a devise or gift, the market price at the time of such devise or gift) and (b) the market price on the date we accept, or our designee, accepts such offer. We may reduce the amount so payable to the trustee by the amount of any distribution that we made to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed by the prohibited owner to the trustee as described above, and we may pay the amount of any such reduction to the trustee for distribution to the charitable beneficiary. We have the right to accept such offer until the trustee has sold the shares of our stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, and the trustee must distribute the net proceeds of the sale to the prohibited owner and must distribute any distributions held by the trustee with respect to such shares to the charitable beneficiary.

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If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits or the other restrictions on ownership and transfer of our stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (a) the price paid by the prohibited owner for the shares (or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the trust (for example, in the case of a gift, devise or other such transaction), the market price of the shares on the day of the event causing the shares to be held in the trust) and (b) the sales proceeds (net of any commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed by the prohibited owner to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner must be paid immediately to the charitable beneficiary, together with any distributions thereon. In addition, if, prior to the discovery by us that shares of stock have been transferred to a trust, such shares of stock are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and, to the extent that the prohibited owner received an amount for, or in respect of, such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. Our charter provides that the prohibited owner has no rights in the shares held by the trustee.

In addition, if our Board determines that a transfer or other event has occurred that would violate the restrictions on ownership and transfer of our stock described above, our Board may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem shares of our stock, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.

Our charter provides that every owner of 5% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) of our stock, within 30 days after the end of each taxable year, must give us written notice stating the stockholder’s name and address, the number of shares of each class and series of our stock that the stockholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us in writing such additional information as we may request in order to determine the effect, if any, of the stockholder’s beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, our charter provides that any person or entity that is a beneficial owner or constructive owner of shares of our stock and any person or entity (including the stockholder of record) who is holding shares of our stock for a beneficial owner or constructive owner must, on request, provide to us such information as we may request in good faith in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the ownership limits.

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Any certificates representing shares of our stock, or the notice in lieu of a certificate, will bear a legend referring to the restrictions on ownership and transfer of our stock described above.

These restrictions on ownership and transfer of our stock will take effect on the Initial Date and will not apply if our Board determines that it is no longer in our best interest to attempt to qualify, or to continue to qualify, as a REIT or that compliance is no longer required in order for us to qualify as a REIT.

The restrictions on ownership and transfer of our stock described above could delay, defer or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Lock-Up Agreements

Our charter provides that in connection with the initial public offering of our equity securities pursuant to a registration statement under the Securities Act, each holder of our common stock or preferred stock is required to execute and deliver a lock-up agreement in the form executed by our officers and directors, if determined or requested by our Board. Our charter further provides that upon the listing of any of our common stock or preferred stock on a national securities exchange, such requirement will no longer apply to such common stock or preferred stock, provided that the validity of any lock-up agreements entered into by such holders will not be affected.

Distribution Reinvestment Plans

Our Board has adopted the DRIP whereby investors who purchase shares of our common stock in the Private Offering may elect at the time of subscription or upon subsequent enrollment to have their dividends reinvested through purchase of additional shares of our common stock (each electing investor, a “participant”). Any cash distributions attributable to shares of our common stock owned by participants in the DRIP will be immediately reinvested in shares of our common stock on behalf of the participants on the business day such distribution would have been paid to such participant. The per share purchase price for shares of our common stock purchased pursuant to the DRIP will be equal to the transaction price at the time the distribution is payable, which will generally be equal to the most recent NAV in effect less a 3.0% discount to the applicable NAV.

In addition, owners of OP Units (other than the Company), have the right to elect to participate in a distribution reinvestment plan, consented to by the Board and approved by VineBrook Homes OP GP, LLC, the general partner of our Operating Partnership, that mirrors the terms and conditions of the DRIP.

Share Repurchase Plan

Investors may request on a quarterly basis that we repurchase all or any portion of their shares of our common stock pursuant to our Share Repurchase Plan. We are not obligated to repurchase any shares of our common stock and may choose to repurchase only some, or even none, of the shares of our common stock that we have been asked to repurchase in any particular quarter, in the sole discretion of the Board. The total amount of aggregate repurchases of shares of our common stock will be limited to no more than 5% of our aggregate NAV per calendar quarter. We began the Share Repurchase Plan on November 1, 2019.

Under our Share Repurchase Plan, investors may request that we repurchase all or a portion of their shares of our common stock by submitting a repurchase request and required documentation to our transfer agent by 4:00 p.m. (Eastern time) on the business day before the last calendar day of any particular quarter (a “repurchase date”). Settlements of share repurchases will be made in cash within three business days of the repurchase date. An investor may withdraw his or her repurchase request by notifying the transfer agent, directly or through his or her financial intermediary, on the Company’s toll-free automated telephone customer service number by 4:00 p.m. (Eastern time) on the applicable repurchase date (or, if such repurchase date is not a business day, the prior business day). If a repurchase order is received after 4:00 p.m. (Eastern time) on the business day before the repurchase date, the purchase order will be executed, if at all, on the next quarter’s redemption date at the transaction price applicable to that quarter, unless such request is withdrawn prior to the repurchase.

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In the event that any investor fails to maintain the minimum balance of $10,000 of shares of our common stock, the Company may repurchase all of the shares held by that investor at the repurchase price in effect on the date the Company determines that such investor failed to meet the minimum balance. Minimum account repurchases will apply even in the event that the failure to meet the minimum balance is caused solely by a decline in our NAV.

Certain Provisions of Maryland Law and Our Charter and Bylaws

Business Combinations

Under the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock or an affiliate or associate of the corporation who, at any time during the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding stock of the corporation) or an affiliate of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder.

Thereafter, any such business combination must generally be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (b) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation, other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as determined in accordance with the applicable provisions of the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. A corporation’s board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

Pursuant to the statute, the Board has by resolution exempted business combinations (a) between us, our Adviser and our Manager and its respective affiliates and (b) between us and any other person, provided that in the latter case the business combination is first approved by the Board (including a majority of our directors who are not affiliates or associates of such person). Consequently, the five-year prohibition and the supermajority vote requirements will not apply to a business combination between us, our Adviser or our Manager and/or their affiliates or to a business combination between us and any other person if the Board has first approved the combination. As a result, any person described in the preceding sentence may be able to enter into business combinations with us that may not be in the best interest of our stockholders, without compliance with the supermajority vote requirements and other provisions of the statute. We cannot assure you that the Board will not amend or repeal this resolution in the future.

Control Share Acquisitions

The MGCL provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights with respect to such shares except to the extent approved by the affirmative vote of at least two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from shares entitled to vote on the matter.

“Control shares” are voting shares of stock that, if aggregated with all other such shares of stock owned by the acquirer, or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

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one-tenth or more but less than one-third;

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one-third or more but less than a majority; or

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a majority or more of all voting power.

Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A “control share acquisition” means the acquisition, directly or indirectly of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel the board of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or, if a meeting of stockholders was held at which the voting rights of such shares are considered and not approved, as of the date of such meeting. If voting rights for control shares are approved at a stockholders’ meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or statutory share exchange if the corporation is a party to the transaction or acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. This provision may be amended or eliminated at any time in the future by the Board.

Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions of the MGCL that provide, respectively, for:

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a classified board of directors;

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a two-thirds vote requirement for removing a director;

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a requirement that the number of directors be fixed only by vote of the board of directors;

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a requirement that a vacancy on the board of directors be filled only by the remaining directors in office and (if the board of directors is classified) for the remainder of the full term of the class of directors in which the vacancy occurred; and

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a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

Through provisions in our charter and bylaws unrelated to Subtitle 8, we already, subject to the terms of any class or series of preferred stock, (a) require a two-thirds vote for removing a director in the event that none of our common stock is listed on a national securities exchange, (b) vest in the Board the exclusive power to fix the number of directorships, and (c) require, unless called by our chairman of the Board, our chief executive officer, our president or the Board, the written request of stockholders entitled to cast a majority of all of the votes entitled to be cast at such a meeting to call a special meeting. If we made an election to be subject to the provisions of Subtitle 8 relating to a classified Board, our Board would automatically be classified into three classes with staggered terms of office of three years each. In such instance, the classification and staggered terms of office of the directors would make it more difficult for a third party to gain control of the Board since at least two annual meetings of stockholders, instead of one, generally would be required to effect a change in the majority of the directors.

The Board

Our charter provides that the number of directors on the Board is to be fixed exclusively by the Board pursuant to our bylaws, but may not be fewer than the minimum required by Maryland law, which is one. Our bylaws provide that the Board is to consist of not less than one and not more than 15 directors. The Board currently consists of seven directors.

Subject to the terms of any class or series of preferred stock, the Advisory Agreement and other contractual rights, our charter and bylaws provide that vacancies on the Board may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will hold office for the remainder of the full term of the directorship in which the vacancy occurred and until his or her successor is duly elected and qualified.

Each of our directors elected by our stockholders is elected to serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualified. Holders of common stock will have no right to cumulative voting in the election of directors. Consequently, the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors, subject to the terms of the Series A Preferred Stock. Directors are elected by a plurality of all of the votes cast in the election of directors.

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Removal of Directors

Subject to the terms of any class or series of preferred stock, our charter provides that a director may be removed from office at any time, but only for cause and (a) in the event that none of the Company’s common stock is listed on a national securities exchange, then only by the affirmative vote of holders of shares entitled to cast at least two-thirds of all the votes entitled to be cast generally in the election of directors, or (b) in the event that any of the Company’s common stock is listed on a national securities exchange, then only by the affirmative vote of holders of shares entitled to cast at least a majority of all of the votes entitled to be cast generally in the election of directors. This provision, when coupled with the power of the Board to fill vacancies on the Board, may preclude stockholders from removing incumbent directors (except for cause and upon a substantial or majority affirmative vote) and filling the vacancies created by such removal with their own nominees.

Meetings of Stockholders

Pursuant to our bylaws, a meeting of our stockholders for the election of directors and the transaction of any business will be held annually on a date and at the time and place set by the Board. The chairman of the Board, our chief executive officer, our president or the Board may call a special meeting of our stockholders. Subject to the provisions of our bylaws, a special meeting of our stockholders to act on any matter that may properly be brought before a meeting of our stockholders must also be called by our secretary upon the written request of the stockholders entitled to cast a majority of all the votes entitled to be cast on such matter at the meeting and containing the information required by our bylaws. Our secretary will inform the requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of meeting (including our proxy materials), and the requesting stockholder must pay such estimated cost before our secretary is required to prepare and deliver the notice of the special meeting.

Amendments to Our Charter and Bylaws

Except for those amendments permitted to be made without stockholder approval under Maryland law or our charter, our charter generally may be amended only if the amendment is first declared advisable by the Board and thereafter approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter. However, amendments to certain provisions in our charter, including, among others, the provisions relating to the number of directors and certain prohibitions on transfer of our stock, must first be declared advisable by our Board and thereafter be approved by the affirmative vote of stockholders entitled to cast at least two-thirds of all of the votes entitled to be cast on the matter, provided that, upon the listing of our common stock on a national securities exchange, certain such amendments will be valid if declared advisable by our Board and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.

The Board has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

Transactions Outside the Ordinary Course of Business

Under the MGCL, a Maryland corporation generally may not dissolve, merge or consolidate with, or convert into, another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless the action is declared advisable by the Board and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter, unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is specified in the corporation’s charter. Our charter provides that these actions must be approved by a majority of all of the votes entitled to be cast on the matter.

Dissolution

The dissolution of the Company must be declared advisable by a majority of the entire Board and approved by the affirmative vote of the holders of a majority of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide that, with respect to an annual meeting of our stockholders, nominations of individuals for election to the Board and the proposal of other business to be considered by our stockholders may be made only (a) pursuant to our notice of the meeting, (b) by or at the direction of the Board or (c) by any stockholder who was a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting on such business or in the election of such nominee and has provided notice to us within the time period, and containing the information and other materials, specified in the advance notice provisions of our bylaws.

118

With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to the Board may be made only (a) by or at the direction of the Board or (b) if the meeting has been called for the purpose of electing directors, by any stockholder who was a stockholder of record both at the time of giving the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each such nominee and who has provided notice to us within the time period, and containing the information and other materials, specified in the advance notice provisions of our bylaws.

The advance notice procedures of our bylaws provide that, to be timely, a stockholder’s notice with respect to director nominations or other proposals for an annual meeting must be delivered to our corporate secretary at our principal executive office not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for our preceding year’s annual meeting. In the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, to be timely, a stockholder’s notice must be delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made.

REIT Qualification

Our charter provides that the Board may authorize us to revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.

Our charter provides for certain restrictions on ownership and transfer. See Item 11. “Description of Registrant’s Securities to be Registered—Restrictions on Ownership and Transfer.”

Forum Selection Clause

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, other than actions arising under federal securities laws, (b) any action asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders, (c) any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws or (d) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine shall be, in each case, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division.

Effects of Certain Provisions of Maryland Law and of Our Charter and Bylaws

Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change in control or other transaction that might involve a premium price for shares of our capital stock or otherwise be in the best interest of our stockholders, including business combination provisions, supermajority vote requirements and advance notice requirements for director nominations and other stockholder proposals. Likewise, if the provision in our bylaws opting out of the control share acquisition provisions of the MGCL or the resolution of the Board exempting certain business combinations from the business combination provisions of the MGCL were amended or rescinded or if we elect to be subject to any of the provisions of Subtitle 8, these provisions of the MGCL could have similar anti-takeover effects.

119

Stockholders’ Consent in Lieu of Meeting

Our bylaws provide that any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (a) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders or (b) if the action is advised, and submitted to the stockholders for approval, by the Board and a consent in writing or by electronic transmission of stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders is delivered to the Company in accordance with the MGCL.

The Articles Supplementary setting forth the terms of the Series A Preferred Stock provide that the holders of the Series A Preferred Stock may take action or consent to any action by providing a consent in writing or by electronic transmission of the holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of holders of the Series A Preferred Stock at which all stockholders entitled to vote on the action were present and voted if the Company gives notice of the action to each holder of the Series A Preferred Stock not later than 10 days after the effective time of the action.

120

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty that is established by a final judgment and that is material to the cause of action. Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law.

The MGCL requires us (unless our charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

•

the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty;

•

the director or officer actually received an improper personal benefit in money, property or services; or

•

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Under the MGCL, we may not indemnify a director or officer in a suit by us or in our right in which the director or officer was adjudged liable to us or in a suit in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

•

a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by us; and

•

a written undertaking by or on behalf of the director or officer to repay the amount paid or reimbursed by us if it is ultimately determined that the director or officer did not meet the standard of conduct.

121

Our charter provides that we have the power to obligate the Company, and our bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

•

any present or former director or officer who is made or threatened to be made a party to, or witness in, a proceeding by reason of his or her service in that capacity; or

•

any individual who, while a director or officer of our Company and at our request, serves or has served as a director, officer, partner, trustee, member or manager of another corporation, REIT, limited liability company, partnership, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us, upon the approval of our Board, to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of our Company or a predecessor of our Company.

We have entered into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law.

122

ITEM 13. FINANCIAL SUPPLEMENTS AND SUPPLEMENTARY DATA.

See “Index to Financial Statements” on page F-1 of this Form 10.

123

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

124

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements. See “Index to Financial Statements” on page F-1 of this Form 10.

(b) Exhibits.


Exhibit No.		Description

2.1*		Contribution and Assignment of Interests Agreement, dated as of November 1, 2018, by and among VBAnnex C LP, VineBrook Homes Operating Partnership, L.P., VB OP Holdings LLC and VB Annex C Ohio LLC

2.2		Purchase and Sale Agreement, dated as of August 16, 2019, by and among Vinebrook Homes Operating Partnership, L.P., Timber Real Estate Holdings, LLC and the other parties thereto

2.3		First Amendment to Purchase and Sale Agreement, dated September 10, 2019, by and among Vinebrook Homes Operating Partnership, L.P., Timber Real Estate Holdings, LLC and the other parties thereto

2.4		Second Amendment to Purchase and Sale Agreement, dated as of September 26, 2019, by and among Vinebrook Homes Operating Partnership, L.P., Timer Real Estate Holdings, LLC and the other parties thereto

2.5		Agreement for Purchase and Sale of Membership Interests, dated as of October 19, 2020, by and between Conrex Residential Property Group 2013-1, LLC, Conrex Residential Property Group 2013-2 Operating Company, LLC, Conrex Residential Property Group 2013-3 Operating Company, LLC, Conrex Residential Property Group 2013-4 Operating Company, LLC, Conrex Residential Property Group 2013-5 Operating Company, LLC, Conrex Residential Property Group 2013-6 Operating Company, LLC, Conrex Residential Property Group 2013-7 Operating Company, LLC, Conrex Residential Property Group 2013-8 Operating Company, LLC, Conrex Residential Property Group 2013-9 Operating Company, LLC, Conrex Residential Property Group 2013-10 Operating Company, LLC, Conrex Residential Property Group 2013-11 Operating Company, LLC, Conrex Residential Property Group 2013-12 Operating Company, LLC, Conrex Residential Property Group 2013-13 Operating Company, LLC and Vinebrook Homes Trust, Inc.

2.6		Agreement for Purchase and Sale of Membership Interests, dated as of December 16, 2020, by and Rex Residential Property Owner, LLC, Rex Residential Property Owner A, LLC, Rex Residential Property Owner II, LLC, Rex Residential Property Owner III, LLC, Rex Residential Property Owner IV, LLC, Rex Residential Property Owner V, LLC, Rex Residential Property Owner VI, LLC and Vinebrook Homes Operating Partnership, L.P.

125


Exhibit No.		Description

3.1*		Form of Articles of Amendment and Restatement of Vinebrook Homes Trust, Inc.

3.2*		Articles Supplementary of VineBrook Homes Trust, Inc. establishing and fixing the rights and preferences of the Series A Preferred Stock

3.3		Amended and Restated Bylaws of Vinebrook Homes Trust, Inc.

10.1		Amended and Restated Advisory Agreement, dated as of May 4, 2020, by and between Vinebrook Homes Trust, Inc. and NexPoint Real Estate Advisors V, L.P.

10.2		Management Agreement, dated as of November 1, 2018, by and among NREA VB I, LLC, NREA VB II, LLC, NREA VB III, LLC, NREA VB IV, LLC, NREA VB V, LLC, NREA VB VI, LLC, NREA VB VII, LLC and VineBrook Homes, LLC

10.3		First Amendment to Management Agreement, dated as of May 4, 2020, by and among NREA VB I, LLC, NREA VB II, LLC, NREA VB III, LLC, NREA VB IV, LLC, NREA VB V, LLC, NREA VB VI, LLC, NREA VB VII, LLC and VineBrook Homes, LLC

10.4		Management Agreement, dated September 30, 2019, by and among VB One, LLC, TI Pennsylvania Holdings, LLC, True JACK2017-2, LLC, True JACK2017-1, LLC, True OM2016-1, LLC, True KC2016-1, True PIT2017-1, LLC, True PIT2017-2, LLC, True MEM2016-1, LLC, TI KC Bravo, LLC and VineBrook Homes, LLC

10.5		First Amendment to Management Agreement, dated as of May 4, 2020, by and among VB One, LLC, TI Pennsylvania Holdings, LLC, True JACK2017-2, LLC, True JACK2017-1, LLC, True OM2016-1, LLC, True KC2016-1, True PIT2017-1, LLC, True PIT2017-2, LLC, True MEM2016-1, LLC, TI KC Bravo, LLC and VineBrook Homes, LLC

10.6		Management Agreement, dated September 30, 2019, by and between True FM2017-1, LLC and VineBrook Homes, LLC

10.7		First Amendment to Management Agreement, dated as of May 4, 2020, by and between True FM2017-1, LLC and VineBrook Homes, LLC

10.8		Amended and Restated Side Letter, dated July 31, 202, by and among VineBrook Homes Operating Partnership, L.P., VineBrook Homes Trust, Inc., Vinebrook Homes, LLC, VineBrook Homes OP GP, LLC, VineBrook Management, LLC, Vinebrook Development Corporation, Vinebrook Homes Property Management Company, Inc., Vinebrook Homes Realty Company, Inc., Vinebrook Homes Services Company, Inc., Dana Sprong and Ryan McGarry

126


Exhibit No.		Description

10.9		Management Agreement, dated as of January 22, 2021, by and between Conrex Residential Property Group 2013-1, LLC, Conrex Residential Property Group 2013-2 Operating Company, LLC, Conrex Residential Property Group 2013-3 Operating Company, LLC, Conrex Operating Company 2013-4 Operating Company, LLC, Conrex Residential Property Group 2013-5 Operating Company, LLC, Conrex Residential Property Group 2013-6 Operating Company, LLC, Conrex Residential Property Group 2013-7 Operating Company, LLC, Conrex Residential Property Group 2013-8 Operating Company, LLC, Conrex Residential Property Group 2013-9 Operating Company, LLC, Conrex Residential Property Group 2013-10 Operating Company, LLC, Conrex Residential Property Group 2013-11 Operating Company, LLC, Conrex Residential Property Group 2013-12 Operating Company, LLC, Conrex Residential Property Group 2013-13 Operating Company, LLC and VineBrook Homes, LLC

10.10		First Amendment to Management Agreement, dated as of March 1, 2021, by and among Conrex Residential Property Group 2013-1, LLC, Conrex Residential Property Group 2013-2 Operating Company, LLC, Conrex Residential Property Group 2013-3 Operating Company, LLC, Conrex Residential Property Group 2013-4 Operating Company, LLC, Conrex Residential Property Group 2013-5 Operating Company, LLC, Conrex Residential Property Group 2013-6 Operating Company, LLC, Conrex Residential Property Group 2013-7 Operating Company, LLC, Conrex Residential Property Group 2013-8 Operating Company, LLC, Conrex Residential Property Group 2013-9 Operating Company, LLC, Conrex Residential Property Group 2013-10 Operating Company, LLC, Conrex Residential Property Group 2013-11 Operating Company, LLC, Conrex Residential Property Group 2013-12 Operating Company, LLC, Conrex Residential Property Group 2013-13 Operating Company, LLC, Rex Residential Property Owner, LLC, Rex Residential Property Owner A, LLC, Rex Residential Property Owner II, LLC, Rex Residential Property Owner III, LLC, Rex Residential Property Owner IV, LLC, Rex Residential Property Owner V, LLC, Rex Residential Property Owner VI, LLC and VineBrook Homes, LLC

10.11*		Amended and Restated Limited Partnership Agreement of Vinebrook Homes Operating Partnership, L.P., dated as of November 1, 2018, as amended

10.12		Loan Agreement, dated as of November 18, 2018, by and between NREA VB I LLC, NREA VB II LLC, NREA VB III LLC, NREA VB IV LLC, NREA VB V LLC, NREA VB VI LLC, NREA VB VII LLC and KeyBank National Association

10.13*		Revolving Credit Agreement, dated as of March 1, 2021, by and among each person listed on Schedule I thereto, VineBrook Homes Trust, Inc., VB Three Equity, LLC, VB Three, LLC, JPMorgan Chase Bank, National Association and the other lenders party thereto

10.14*†		VineBrook Homes Trust, Inc. 2018 Long Term Incentive Plan

10.15*†		Form of Restricted Stock Units Agreement (Officers)

10.16*†		Form of Restricted Stock Units Agreement (Directors)

10.17*†		Form of Profits Interest Units Agreement

10.18*†		Form of Indemnification Agreement

21.1*		List of Subsidiaries of the Registrant

*	Previously filed.

†	Management contract, compensatory plan or arrangement.

127

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

VINEBROOK HOMES TRUST, INC.

INDEX TO FINANCIAL STATEMENTS


	Page
Report of the Independent Registered Public Accounting Firm		F-2

Audited Consolidated Financial Statements as of and for the years ended December 31, 2020 and 2019:

Consolidated Balance Sheets		F-3
Consolidated Statements of Operations and Comprehensive Loss		F-4
Consolidated Statements of Equity		F-5
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-9

Unaudited Consolidated Financial Statements as of and for the three months ended March 31, 2021 and 2020

Consolidated Balance Sheets		F-35
Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss)		F-36
Consolidated Unaudited Statements of Equity		F-37
Consolidated Unaudited Statements of Cash Flows		F-38
Notes to Consolidated Unaudited Financial Statements		F-40

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of VineBrook Homes Trust, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of VineBrook Homes Trust, Inc. and Subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, equity and cash flows for the years then ended, and the related notes and the financial statement schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2018.

Phoenix, Arizona

April 2, 2021

F-2

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	December 31, 2020			December 31, 2019
ASSETS
Operating real estate investments
Land	$	171,062		$	128,718
Buildings and improvements		582,610			391,240
Intangible lease assets		795			1,126

Total gross operating real estate investments		754,467			521,084
Accumulated depreciation and amortization		(34,396	)		(15,391	)

Total net operating real estate investments		720,071			505,693
Real estate held for sale, net		675			7,163

Total net real estate investments		720,746			512,856
Cash		31,225			11,896
Restricted cash		5,871			5,934
Accounts receivable		3,983			1,679
Due from Manager (see Note 11)		663			1,686
Prepaid and other assets		17,480			958
Fair market value of interest rate swaps		—			1,627

TOTAL ASSETS	$	779,968		$	536,636


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable, net	$	262,522		$	250,771
Warehouse facility, net		83,937			63,868
NREO Note Payable, net (see Note 11)		1,250			1,250
Accounts payable and other accrued liabilities		8,573			3,130
Accrued real estate taxes payable		12,591			9,668
Accrued interest payable		616			970
Security deposit liability		7,292			4,958
Prepaid rents		1,255			617
Fair market value of interest rate swaps		15,453			—

Total Liabilities		393,489			335,232

Redeemable Series A preferred stock, $0.01 par value: 16,000,000 shares authorized; 3,540,000 and 0 shares issued and outstanding, respectively		85,067			—
Redeemable noncontrolling interests in the OP		127,090			93,933

Stockholders’ Equity:
Common stock, $0.01 par value: 300,000,000 shares authorized; 9,260,805 and 5,162,532 shares issued and outstanding, respectively		93			52
Additional paid-in capital		210,381			114,589
Distributions in excess of retained earnings		(26,002	)		(8,235	)
Accumulated other comprehensive income (loss)		(10,150	)		1,065

Total Stockholders’ Equity		174,322			107,471

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	779,968		$	536,636

See Accompanying Notes to Consolidated Financial Statements

F-3

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except for per share amounts)


	For the Year Ended December 31,
	2020			2019
Revenues
Rental income	$	74,865		$	50,971
Other income		1,589			1,353

Total revenues		76,454			52,324

Expenses
Property operating expenses		15,722			10,734
Real estate taxes and insurance		15,407			9,369
Property management fees		4,611			3,190
Advisory fees		3,271			1,710
Corporate general and administrative expenses		4,313			1,414
Property general and administrative expenses		2,798			1,633
Depreciation and amortization		20,447			16,081
Interest expense		10,901			9,813

Total expenses		77,470			53,944
Loss on sales of real estate		(930	)		(44	)

Operating loss		(1,946	)		(1,664	)
Casualty gain, net of insurance proceeds		281			22

Net loss		(1,665	)		(1,642	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		1,052			—
Net loss attributable to redeemable noncontrolling interests in the OP		(570	)		(967	)

Net loss attributable to common stockholders	$	(2,147	)	$	(675	)


Other comprehensive income/(loss)
Unrealized gain/(loss) on interest rate swaps		(17,080	)		1,627

Total comprehensive loss		(18,745	)		(15	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		1,052			—
Comprehensive loss attributable to redeemable noncontrolling interests in the OP		(6,435	)		(405	)

Comprehensive income/(loss) attributable to common stockholders	$	(13,362	)	$	390


Weighted average common shares outstanding - basic		7,175			3,221

Weighted average common shares outstanding - diluted		7,175			3,221

Loss per share - basic		(0.30	)		(0.21	)

Loss per share - diluted		(0.30	)		(0.21	)

See Accompanying Notes to Consolidated Financial Statements

F-4

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands)


	Class A Common Stock
	Number of Shares			Par Value		Additional Paid-in Capital			Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balances, December 31, 2019		5,162,532		$	52	$	114,589		$	(8,235	)	$	1,065		$	107,471
Net loss attributable to common stockholders							—			(2,147	)		—			(2,147	)
Issuance of Class A common stock		4,129,621			41		131,503			—			—			131,544
Redemptions of Class A common stock		(44,441	)		—		(1,413	)		—			—			(1,413	)
Offering costs							(983	)		—			—			(983	)
Equity-based compensation		13,083			—		1,147			—			—			1,147
Common stock dividends declared ($2.1204 per share)							—			(15,620	)		—			(15,620	)
Other comprehensive income attributable to common stockholders							—			—			(11,215	)		(11,215	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP							(34,462	)		—			—			(34,462	)

Balances, December 31, 2020		9,260,795		$	93	$	210,381		$	(26,002	)	$	(10,150	)	$	174,322

See Accompanying Notes to Consolidated Financial Statements

F-5

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands)


	Class A Common Stock
	Number of Shares		Par Value		Additional Paid-in Capital			Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income		Total
Balances, December 31, 2018		1,906,770	$	19	$	47,440		$	(836	)	$	—	$	46,623
Net loss attributable to common stockholders						—			(675	)		—		(675	)
Issuance of Class A common stock		3,255,762		33		94,162			—			—		94,195
Offering costs						(483	)		—			—		(483	)
Equity-based compensation						33			—			—		33
Common stock dividends declared						—			(6,724	)		—		(6,724	)
Other comprehensive income						—			—			1,065		1,065
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP						(26,563	)		—			—		(26,563	)

Balances, December 31, 2019		5,162,532	$	52	$	114,589		$	(8,235	)	$	1,065	$	107,471

See Accompanying Notes to Consolidated Financial Statements

F-6

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


	For the Year Ended December 31,
	2020			2019
Cash flows from operating activities
Net loss	$	(1,665	)	$	(1,642	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on sales of real estate		930			44
Depreciation and amortization		20,447			16,081
Amortization of deferred financing costs		733			403
Change in fair value on derivative instruments included in interest expense		1,957			(419	)
Net cash received/(paid) on derivative settlements		(2,315	)		409
Amortization of assumed debt premium		(64	)		(16	)
Equity-based compensation		2,638			320
Casualty gain		(281	)		(22	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets		(1,319	)		(2,565	)
Operating liabilities		9,304			4,213

Net cash provided by operating activities		30,365			16,806


Cash flows from investing activities
Net proceeds from sales of real estate		7,160			791
Prepaid acquisition deposits		(16,484	)		(182	)
Insurance proceeds received		846			1,188
Additions to real estate investments		(236,992	)		(187,339	)

Net cash used in investing activities		(245,470	)		(185,542	)


Cash flows from financing activities
Mortgage proceeds received		11,793			—
Mortgage payments		(157	)		(40	)
Warehouse facility proceeds received		20,000			65,000
NREO Note proceeds received		—			1,250
Deferred financing costs paid		(485	)		(1,267	)
Proceeds from issuance of Class A common stock		124,325			91,493
Redemptions of Class A common stock paid		(1,413	)		—
Offering costs paid		(878	)		(450	)
Dividends paid to common stockholders		(8,040	)		(4,124	)
Proceeds from issuance of redeemable Series A preferred stock, net of offering costs		84,940			—
Contributions from redeemable noncontrolling interests in the OP		10,000			3,012
Distributions to redeemable noncontrolling interests in the OP		(3,014	)		(3,005	)
Redemptions by redeemable noncontrolling interests in the OP		(2,700	)		(12,000	)

Net cash provided by financing activities		234,371			139,869

Change in cash and restricted cash		19,266			(28,867	)
Cash and restricted cash, beginning of year		17,830			46,697

Cash and restricted cash, end of year	$	37,096		$	17,830

See Accompanying Notes to Consolidated Financial Statements

F-7



Supplemental Disclosure of Cash Flow Information
Interest paid, net of amount capitalized	$	8,581		$	8,982
Cash paid for income and franchise taxes		281			126

Supplemental Disclosure of Noncash Activities
Accrued dividends payable to common stockholders		361			116
Accrued distributions payable to redeemable noncontrolling interests in the OP		647			—
Accrued dividends payable to preferred stockholders		925			—
Accretion to redemption value of Redeemable Series A preferred stock		127			—
Fair market value adjustment on assumed debt		138			531
Assumed debt on acquisitions		11,654			10,583
Offering costs accrued		105			33
Issuance of Shares to common stockholders related to DRIP dividends		7,219			2,702
DRIP dividends to common stockholders		(7,219	)		(2,702	)
Contributions from redeemable noncontrolling interests in the OP related to DRIP distributions		3,872			3,359
DRIP distributions to redeemable noncontrolling interests in the OP		(3,872	)		(3,359	)

See Accompanying Notes to Consolidated Financial Statements

F-8

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

VineBrook Homes Trust, Inc. (the “Company”, “we”, “our”) was incorporated in Maryland on July 18, 2018 and has elected to be taxed as a real estate investment trust (“REIT”). The Company is focused on acquiring, renovating, leasing, maintaining and otherwise managing single-family rental home investments primarily located in large to medium size cities and suburbs located in the midwestern and southeastern United States. Substantially all of the Company’s business is conducted through VineBrook Homes Operating Partnership, L.P. (the “OP”), the Company’s operating partnership, as the Company owns its properties indirectly through the OP. VineBrook Homes OP GP, LLC (the “OP GP”), is the general partner of the OP. As of December 31, 2020, there were 11,521,310 Class A units of the OP (“OP Units”) or vested PI Units (defined below) issued under the 2018 LTIP (defined below) that are convertible into OP Units outstanding, of which 8,045,094, or 69.8%, were owned by the Company, 1,953,967, or 17.0%, were owned by NexPoint Real Estate Opportunities, LLC (“NREO”), 75,586, or 0.7%, were owned by NexPoint Real Estate Strategies Fund (“NRESF”), 737,362, or 6.4%, were owned by NexPoint Real Estate Capital, LLC (“NREC”), 129,840, or 1.1% were owned by GAF REIT, LLC (“GAF REIT”) and 579,461, or 5.0%, were owned by limited partners that were sellers in the Formation Transaction (defined below) (and in certain instances affiliated with the equity holders of the Manager (defined below)) (the “VineBrook Contributors”) or other Company insiders. NREO, NRESF, NREC and GAF REIT are noncontrolling limited partners unaffiliated with the Company but are affiliates of the Adviser (defined below).

The Company began operations on November 1, 2018 (the “Commencement of Operations”) as a result of the acquisition of various partnerships and limited liability companies owned and operated by the VineBrook Contributors and other third parties, which owned 4,129 single-family rental assets located in Ohio, Kentucky and Indiana (the “Initial Portfolio”) for a total purchase price of approximately $330.2 million, including closing and financing costs of $6.0 million (the “Formation Transaction”). On November 1, 2018, the Company accepted subscriptions for 1,097,367 shares of its Class A common stock, par value $0.01 (“Shares”), for gross proceeds of approximately $27.4 million in connection with the Formation Transaction. The proceeds from the issuance of Shares were used to acquire OP Units. The OP used the capital contribution from the Company to fund a portion of the purchase price for the Initial Portfolio. The remaining purchase price and closing costs were funded by a capital contribution totaling $70.7 million from NREO, $8.6 million of equity rolled over from VineBrook Contributors, and $241.4 million from a Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage provided by KeyBank N.A (“KeyBank”). On May 1, 2019 (the “Release Date”), approximately $1.4 million worth of OP Units were released to various VineBrook Contributors from an indemnity reserve escrow that was established at the time the Initial Portfolio was acquired. From the time the escrow reserve was established until the Release Date, no indemnity claims were made against said escrow.

Between November 1, 2018 and December 31, 2020, the Company, through the SPEs (as defined in Note 3) owned by the OP, purchased 5,234 additional homes and sold 81 homes. Together with the Initial Portfolio, the Company, through the OP’s SPEs, indirectly owned an interest in 9,282 homes (the “Portfolio”) in 10 states as of December 31, 2020. The acquisition of the additional homes was funded by loans (see Note 5), proceeds from the sale of Shares and excess cash generated from operations.

The Company is externally managed by NexPoint Real Estate Advisors V, L.P. (the “Adviser”), through an agreement dated November 1, 2018 and subsequently amended and restated on May 4, 2020, for an initial term ending November 1, 2021 (the “Advisory Agreement”) and will automatically renew for one-year terms thereafter, unless otherwise terminated. The Adviser provides asset management services to the Company. The OP caused the SPEs to retain VineBrook Homes, LLC (the “Manager”), an affiliate of certain VineBrook Contributors, to renovate, lease, maintain, and operate the Portfolio under management agreements (as amended, the “Management Agreements”) that generally have an initial three-year term with one-year renewals, unless otherwise terminated. The Management Agreements are supplemented by a side letter (as amended and restated, the “Side Letter”) by and among the Company, the OP, the OP GP, the Manager and certain of its affiliates. Certain SPEs from time to time may have property management agreements with independent third parties that are not the Manager. These are typically the result of maintaining legacy property managers after an acquisition to help transition the properties to the Manager or, in the case of a future sale, to manage the properties until they are sold. All of the Company’s investment decisions are made by employees of the Adviser and the Manager, subject to general oversight by the OP’s investment committee and the Company’s board of directors (the “Board”). Because the principals of the Manager own OP Units, the Manager is considered an affiliate for financial reporting disclosure purposes.

The Company’s investment objectives are to maximize the cash flow and value of properties owned, acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for its stockholders through targeted management and a renovation program on the homes purchased.

F-9

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 28, 2018, the Company authorized the offering of 40,000,000 Shares through a continuous private placement (the “Continuous Offering”), under regulation D of the Securities Act of 1933 (and various state securities law provisions) for a maximum of $1.0 billion of its Shares. The Continuous Offering expires on November 1, 2023 but may be extended for up to two times for one year each. The initial offering price for Shares sold through the Continuous Offering was $25.00 per Share. The Company conducts periodic closings and sells Shares at the prior net asset value (the “NAV”) as determined using the valuation methodology recommended by the Adviser and approved by the pricing committee of the Board (the “Valuation Methodology”). Additionally, an independent third-party valuation firm assesses and evaluates the appropriateness of each NAV; all NAVs have been assessed as reasonable by the third-party. NAV may differ from the values of our real estate assets as calculated in accordance with GAAP.

NexPoint Securities, Inc. (the “Dealer Manager”), an entity under common ownership with the Adviser, serves as the dealer manager for the Continuous Offering and Raymond James and other unaffiliated broker-dealers serve as placement agents through selling agreements between each placement agent and the Company.

The Company has adopted a Long-Term Incentive Plan (the “2018 LTIP”) whereby the Board, or a committee thereof, may grant awards of restricted share units of the Company (“RSUs”) or profits interest units in the OP (“PI Units”) to certain employees of the Adviser and the Manager, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). Under the terms of the 2018 LTIP, 426,307 Shares were initially reserved, subject to automatic increase on January 1st of each year beginning with January 1, 2019 by a number equal to 10% of the total number outstanding on December 31st of the preceding year of OP Units and vested PI Units, provided that the Board may act prior to each such January 1st to determine that there will be no increase for such year or that the increase will be less than the number of shares by which the Share Reserve would otherwise increase (the “Share Reserve”). In addition, the Shares available under the LTIP Plan may not exceed in the aggregate 10% of the number of OP Units and vested PI Units outstanding at the time of measurement (the “Share Maximum”). Grants may be made annually by the Board, or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP will occur over a period of time as determined by the Board and may include the achievement of performance metrics, also as determined by the Board in its sole discretion.

2. Summary of Significant Accounting Policies

Basis of Accounting and Use of Estimates

The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If the Company determines the entity is not a VIE, it evaluates whether the entity should be consolidated under the voting model. The Company consolidates an entity when it controls the entity through ownership of a majority voting interest. As of December 31, 2020, the Company has determined it must consolidate the OP and its subsidiaries under the VIE model as it was determined the Company both controls the direct activities of the OP and the right to receive benefits that could potentially be significant to the OP. The consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. OP Units that are not owned by the Company are presented as noncontrolling interests in the consolidated financial statements, and income or loss generated at the OP is allocated between the Company and the noncontrolling interests based upon their relative ownership percentages.

Real Estate Investments

Upon acquisition, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (“Total Consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.

F-10

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The allocation of Total Consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement (“ASC 820”) (see Note 6), is based on an independent third-party valuation firm’s estimate of the fair value of the tangible and intangible assets and liabilities acquired. The valuation methodology utilizes market comparable information, depreciated replacement cost and other estimates in allocating value to the tangible assets. The allocation of the Total Consideration to intangible lease assets represents the value associated with the in-place leases, as one month’s worth of effective gross income (rental revenue, less credit loss allowance, plus other income) as the average downtime of the assets in the portfolio is approximately one month and the assets in the portfolio are leased on a gross rental structure. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized or accreted as interest expense over the life of the debt assumed.


Land		Not depreciated
Buildings		27.5 years
Improvements (1)		15 years
Fixtures (1) (2)		5 - 7 years
Intangible lease assets		6 months
Capitalized building maintenance		3 - 15 years

(1)

Disclosed in the table is the typical depreciable life used by the Company.

(2)

Fixtures are included in buildings and improvements on the consolidated balance sheet.

As of December 31, 2020, the gross balance and accumulated amortization related to the intangible lease assets was $0.8 million and $0.3 million, respectively. As of December 31, 2019, the gross balance and accumulated amortization related to the intangible lease assets was $1.1 million and $0.6 million, respectively. For the years ended December 31, 2020 and 2019, the Company recognized approximately $1.1 million and $3.1 million, respectively, of amortization expense related to the intangible lease assets.

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. No significant impairments on operating properties were recorded during the years ended December 31, 2020 and 2019.

Cash and restricted cash

The Company maintains cash at multiple financial institutions and, at times, these balances exceed federally insurable limits. As a result, there is a concentration of credit risk related to amounts on deposit. We believe any risks are mitigated through the size of the financial institutions at which our cash balances are held.

Restricted cash represents cash deposited in accounts related to security deposits, property taxes, insurance premiums and deductibles and other lender-required escrows. Amounts deposited in the reserve accounts associated with the loans can only be used as provided for in the respective loan agreements, and security deposits held pursuant to lease agreements are required to be segregated.

F-11

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of cash and restricted cash reported on the consolidated balance sheets that sum to the total of such amount shown in the consolidated statements of cash flows (in thousands):


	December 31, 2020		December 31, 2019
Unrestricted cash	$	31,225	$	11,896
Tax escrow		4,209		3,653
Insurance escrow		311		1,307
Reserve replacement escrow		1,109		823
Security deposits		242		151

Total cash and restricted cash	$	37,096	$	17,830

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically with terms of one year or less. As a result of the adoption of ASC 842 on January 1, 2019, the Company classifies the single-family property leases as operating leases and elects to not separate the lease component, comprised of rents from single-family properties, from the associated non-lease component, comprised of fees from single-family properties and tenant charge-backs. The combined component is accounted for under the new lease accounting standard while certain resident reimbursements are accounted for as variable payments under the revenue accounting guidance. Rental income is recognized when earned. This policy effectively results in income recognition on a straight-line basis over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, resident-caused damages, pets, administrative, application and other fees and are recognized when earned. The Company uses a direct write-off method for uncollectable rents; these uncollectible rents are netted against rental income.

The table below outlines the components of rental income and its other components for the years ended December 31, 2020 and 2019 (in thousands):


	For the Year Ended December 31,
Lease Income Type	2020		2019
Rental income	$	72,226	$	48,962
Utility reimbursements		585		315
Late fees		729		663
Pet fees		735		578
Other fees		590		453

Total rental income		74,865		50,971

Gains or losses on sales of properties are recognized pursuant to the provisions included in ASC 610-20, Other Income. We recognize a full gain or loss on sale, which is presented in loss on sales of real estate on the consolidated statements of operations and comprehensive loss, when the derecognition criteria under ASC 610-20 have been met.

In April 2020, the Financial Accounting Standards Board issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC 842, Leases. The Q&A states that some lease contracts may contain explicit or implicit enforceable rights and obligations that require lease concessions if certain circumstances arise that are beyond the control of the parties to the contract. Therefore, entities would need to perform a lease-by-lease analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease concessions. The FASB determined it would be acceptable for entities to not perform a lease-by-lease analysis regarding rent concessions resulting from COVID-19, and to instead make a policy election regarding rent concessions, which would give entities the option to account or not to account for these rent concessions as lease modifications if the total payments required by the modified contract are substantially the same or less than the total payments required by the original contract. Entities making the election to account for these rent concessions as lease modifications would recognize the effects of rent abatements and rent deferrals on a prospective straight-line basis over the remainder of the modified contract. We have made the election to not perform a lease-by-lease analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to payment plans. By electing the FASB relief, we have also made an accounting policy election to not account for rent deferrals provided to lessees due to the COVID-19 pandemic as lease modifications. Lessees are required to pay the full outstanding balance of the rent deferred over the period of the payment plan.

F-12

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Redeemable Securities

Included in the Company’s consolidated balance sheets are redeemable noncontrolling interests in the OP and 6.50% Series A Cumulative Redeemable Preferred Stock (the “Preferred Shares”). These interests are presented in the “mezzanine” section of the consolidated balance sheets because they do not meet the functional definition of a liability or equity under current accounting literature. The Company accounts for these under the provisions of Accounting Standards Codification (ASC) Topic 480-10-S99-3A, paragraph 15(b).

In accordance with ASC Topic 480-10-S99, since the redeemable noncontrolling interests in the OP have a redemption feature, they are measured at their redemption value if such value exceeds the carrying value of interests. The redemption value is based on the NAV per unit at the measurement date. The offset to the adjustment to the carrying amount of the redeemable noncontrolling interests in the OP is reflected in the Company’s additional paid-in capital on the balance sheet. In accordance with ASC Topic 480-10-S99, the Preferred Shares are measured at their carrying value plus the accretion to their future redemption value on the balance sheet. The accretion is reflected in the Company’s dividends and accretion of issuance costs on Series A redeemable preferred stock on the statement of operations and comprehensive loss.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of the Company’s common stock outstanding, which excludes any unvested restricted stock units issued pursuant to the 2018 LTIP. Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effect of the assumed vesting of restricted stock units. During periods of net loss, the assumed vesting of restricted stock units is anti-dilutive and is not included in the calculation of earnings (loss) per share. The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):


	For the Year Ended December 31,
	2020			2019
Numerator for loss per share:
Net loss	$	(1,665	)	$	(1,642	)
Less:
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		1,052			—
Net loss attributable to redeemable noncontrolling interests in the OP		(570	)		(967	)

Net income (loss) attributable to common stockholders	$	(2,147	)	$	(675	)


Denominator for earnings (loss) per share:
Weighted average common shares outstanding - basic		7,175			3,221
Weighted average unvested restricted stock units		—			—

Weighted average common shares outstanding - diluted		7,175			3,221

Earnings (loss) per weighted average common share:
Basic	$	(0.30	)	$	(0.21	)
Diluted	$	(0.30	)	$	(0.21	)

Segment Reporting

Under the provision of ASC 280, Segment Reporting, the Company has determined that it has one reportable segment with activities related to acquiring, renovating, developing, leasing and operating single-family homes as rental properties. The Company’s management allocates resources and evaluates operating performance on a total portfolio basis. The aggregation of individual homes constitutes the total portfolio.

F-13

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) -Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU 2018–19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarified that receivables arising from operating leases are within the scope of the leasing standard (ASC 842) discussed above. Subsequent to issuing ASU 2016-13, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”) in April 2019 and ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”) in May 2019. ASU 2019-04 clarifies that equity instruments without readily determinable fair values for which an entity has elected the measurement alternative should be remeasured to fair value as of the date that an observable transaction occurred. ASU 2019-05 provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2019. The Company adopted this guidance effective January 1, 2020 with no material impact to the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the impact the adoption of this ASU will have on the Company’s consolidated financial statements.

COVID-19

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term. Since the outbreak, we have provided limited payment plans if certain criteria are met by residents. The duration of a payment plan is determined on a case by case basis, and ultimately the tenant is expected to make rent payments in full over time. The Company had not granted any direct rent reductions to residents in response to the crisis as of December 31, 2020. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of our business.

3. Investments in Subsidiaries

In connection with its indirect investments in real estate assets acquired, the Company, through its ownership of the OP, indirectly holds a proportional ownership interest in the Portfolio, through the OP’s beneficial ownership of all of the issued and outstanding membership interests in the special purpose limited liability companies (“SPEs”) that directly own the Portfolio. All of the properties in the Portfolio are consolidated in the Company’s consolidated financial statements. The assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company, except as discussed below. Under the terms of the notes payable, except as discussed below, the lender has a mortgage interest in each real estate asset in the SPE to which the loan is made.

F-14

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2020, the Company owned the Portfolio, which consisted of 9,282 properties, through nine SPEs. The following table presents the ownership structure of each SPE group that directly owns the title to each real estate asset as of December 31, 2020, the number of assets held, the cost of those assets, the resulting debt allocated to each SPE and whether the debt is a mortgage. The mortgage loan may be settled from the assets of the below entities to which the loan is made. Loans from the Warehouse Facility (as defined in Note 5) can only be settled from the assets owned by VB One, LLC (dollars in thousands):


VIE Name	Homes		Cost Basis		OP Beneficial Ownership %			Encumbered by Mortgage (1)		Debt Allocated
NREA VB I, LLC		66	$	5,999		100	%		Yes	$	5,048
NREA VB II, LLC		172		16,549		100	%		Yes		10,799
NREA VB III, LLC		1,323		119,231		100	%		Yes		71,189
NREA VB IV, LLC		386		37,016		100	%		Yes		24,330
NREA VB V, LLC		1,829		125,041		100	%		Yes		108,384
NREA VB VI, LLC		299		26,804		100	%		Yes		18,661
NREA VB VII, LLC		36		3,028		100	%		Yes		2,989
True FM2017-1, LLC		150		12,246		100	%		Yes		10,570
SMP Homes 3B, LLC		161		16,605		100	%		Yes		9,296
SMP Homes 5B, LLC		45		4,400		100	%		Yes		2,358
VB One, LLC		4,781		384,938		100	%		No		85,000
VB Two, LLC		34		3,285		100	%		No		—

		9,282	$	755,142						$	348,624


The following table shows the detail of the SPEs as of December 31, 2019 (dollars in thousands):

VIE Name	Homes		Cost Basis		OP Beneficial Ownership %			Encumbered by Mortgage (1)		Debt Allocated
NREA VB I, LLC		66	$	5,742		100	%		Yes	$	5,048
NREA VB II, LLC		172		15,814		100	%		Yes		10,799
NREA VB III, LLC		1,323		113,045		100	%		Yes		71,189
NREA VB IV, LLC		386		35,417		100	%		Yes		24,330
NREA VB V, LLC		1,829		118,768		100	%		Yes		108,384
NREA VB VI, LLC		299		25,003		100	%		Yes		18,661
NREA VB VII, LLC		36		2,855		100	%		Yes		2,989
True FM2017-1, LLC		196		16,594		100	%		Yes		10,727
VB One, LLC		2,603		179,618		100	%		No		65,000

		6,910	$	512,856						$	317,127

(1)

Some of the assets in VB One, LLC were acquired utilizing debt provided through the Warehouse Facility (as defined in Note 5) but these assets are not encumbered by a mortgage. Instead, the lender has an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC.

F-15

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. Real Estate Assets

As of December 31, 2020, the Company, through the OP and its SPE subsidiaries, owned 9,282 single-family rental homes. As of December 31, 2019, the Company, through the OP and its SPE subsidiaries, owned 6,910 single-family rental homes. The components of the Company’s real estate investments in single family rental properties were as follows (in thousands):


	Land		Buildings and improvements (1)			Intangible lease assets			Real estate held for sale, net			Total
Gross Real Estate, December 31, 2019	$	128,718	$	391,240		$	1,126		$	7,163		$	528,247
Additions		42,344		191,370			1,111			—			234,825
Write-offs		—		—			(1,442	)		—			(1,442	)
Dispositions		—		—			—			(6,488	)		(6,488	)

Gross Real Estate, December 31, 2020		171,062		582,610			795			675			755,142
Accumulated depreciation and amortization		—		(34,114	)		(282	)		—			(34,396	)

Net Real Estate, December 31, 2020	$	171,062	$	548,496		$	513		$	675		$	720,746


	Land		Buildings and improvements (1)			Intangible lease assets			Real estate held for sale, net			Total
Gross Real Estate, December 31, 2018	$	89,037	$	242,746		$	3,523		$	—		$	335,306
Additions		39,681		148,494			1,320			7,998			197,493
Write-offs		—		—			(3,717	)		—			(3,717	)
Dispositions		—		—			—			(835	)		(835	)

Gross Real Estate, December 31, 2019		128,718		391,240			1,126			7,163			528,247
Accumulated depreciation and amortization		—		(14,825	)		(566	)		—			(15,391	)

Net Real Estate, December 31, 2019	$	128,718	$	376,415		$	560		$	7,163		$	512,856

(1)

Includes capitalized interest, real estate taxes, insurance and other costs incurred during renovation of the properties.

During the years ended December 31, 2020 and 2019, the Company recognized depreciation expense of approximately $19.3 million and $13.0 million, respectively.

Acquisitions and dispositions

During the year ended December 31, 2020, the Company, through the OP, acquired 2,440 homes and disposed of 68 homes. During the year ended December 31, 2019, the Company, through the OP, acquired 2,718 homes and sold 13 homes.

Held for sale properties

The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. Once the Company begins marketing an asset or determines that it will pursue marketing an asset, the asset becomes classified as held for sale. At that time, the Company presents the net real estate assets separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. As of December 31, 2020, there are 8 properties that are classified as held for sale. These held for sale properties are unencumbered and have a carrying amount of approximately $0.7 million.

F-16

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. Debt

On November 1, 2018, the OP (as guarantor) and some of the SPEs (as borrowers) entered into a $241.4 million Freddie Mac mortgage loan (the “Initial Mortgage”) with KeyBank. The Initial Mortgage is secured by certain properties in the Initial Portfolio and equity pledges of the SPEs and bears interest at a variable rate equal to the 30-day London InterBank Offered Rate (“one-month LIBOR”) plus 1.55%. The Initial Mortgage is interest-only for the first 48 months of the term and principal amortizes at a rate of 30 years over the last 36 months of the term. The Initial Mortgage matures and is due in full on December 1, 2025. The balance of the Initial Mortgage, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into a credit facility (the “Warehouse Facility”) with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC and bears interest at a variable rate equal to one-month LIBOR plus 2.25%. The Warehouse Facility is a full-term, interest-only facility with an initial 36-month term, has one 12-month extension option, and the Company has the right to request an increase in the facility amount of up to $250.0 million. As of December 31, 2020, the commitment amount of the Warehouse Facility is $135.0 million. The balance of the Warehouse Facility, net of unamortized deferred financing costs, is included in Warehouse Facility on the consolidated balance sheets.

On September 30, 2019, in relation to the acquisition of a 954-home portfolio, the OP (as guarantor) assumed an approximately $10.8 million Freddie Mac mortgage loan (the “TrueLane Mortgage”) with Berkadia Commercial Mortgage LLC as a result of the OP’s acquisition of True FM 2017-1, LLC. The TrueLane Mortgage is secured by the properties in True FM 2017-1, LLC and an equity pledge in True FM 2017-1, LLC and bears interest at a fixed rate equal to 5.35%. The TrueLane Mortgage matures and is due in full on February 1, 2028 and requires monthly principal and interest payments. The balance of the TrueLane Mortgage, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On December 28, 2020, in relation to the acquisition of a 161-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $9.2 million mortgage loan assumed by a subsidiary of the OP (the “Colony Note”) with Colony American Finance Lender, LLC as a result of the OP’s acquisition of SMP Homes 3B, LLC. The Colony Note is secured by the properties in SMP Homes 3B, LLC and an equity pledge in SMP Homes 3B, LLC and bears interest at a fixed rate equal to 6.06%. The Colony Note matures and is due in full on December 9, 2021 and requires monthly principal and interest payments. The balance of the Colony Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

On December 28, 2020, in relation the acquisition of a 45-home portfolio, the OP provided a non-recourse carveout guaranty related to an approximately $2.4 million mortgage loan assumed by a subsidiary of the OP (the “CoreVest Note”) with CoreVest American Finance Lender LLC as a result of the OP’s acquisition of SMP Homes 5B, LLC. The CoreVest Note is secured by the properties in SMP Homes 5B, LLC and an equity pledge in SMP Homes 5B, LLC and bears interest at a fixed rate equal to 6.12%. The CoreVest Note matures and is due in full on January 9, 2023 and requires monthly principal and interest payments. The balance of the CoreVest Note, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

As of December 31, 2020, the Company is in compliance with all debt covenants in all of its debt agreements.

The weighted average interest rate of the Company’s debt was 2.1227% as of December 31, 2020 and 3.5268% as of December 31, 2019. As of December 31, 2020 and December 31, 2019, the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, was 3.2998% and 3.3227%, respectively. For purposes of calculating the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, the Company has included the weighted average fixed rate of 1.4309% for one-month LIBOR on its combined $320.0 million notional amount of interest rate swap agreements, which effectively fix the interest rate on $320.0 million of the Company’s floating rate indebtedness (see Note 6).

F-17

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table contains summary information concerning the Company’s debt as of December 31, 2020 and 2019 (dollars in thousands):


		Outstanding Principal as of December 31,
	Type	2020			2019			Interest Rate (1)
Initial Mortgage	Floating	$	241,400		$	241,400			1.69	%
Warehouse Facility	Floating		85,000			65,000			2.39	%
TrueLane Mortgage	Fixed		10,570			10,727			5.35	%
Colony Note	Fixed		9,296			—			6.06	%
CoreVest Note	Fixed		2,358			—			6.12	%
NexPoint Real Estate Opportunities, LLC Note(2)	Floating		1,250			1,250			2.39	%

		$	349,874		$	318,377
Debt premium, net(3)			591			515
Deferred financing costs, net of accumulated amortization of $1,235 and $455, respectively			(2,756	)		(3,003	)

		$	347,709		$	315,889

(1)

Except for fixed rate debt, the interest rate is one-month LIBOR plus an applicable margin. One-month LIBOR as of December 31, 2020 was 0.1439%. One-month LIBOR as of December 31, 2019 was 1.7625%.

(2)

This is a related party note which is convertible to equity at the election of the Company or upon its maturity on September 19, 2022 (see Note 11).

(3)

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to December 31, 2020 are as follows (in thousands):


	Total
2021	$	9,496
2022		955
2023		97,305	(1)
2024		8,375
2025		224,110
Thereafter		9,633

Total	$	349,874

(1)

Assumes the Company exercises the 12-month extension option on the Warehouse Facility.

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the term of the related debt using the straight-line method, which approximates the effective interest method. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of, or in conjunction with, a material change in the terms of the underlying debt agreement, any unamortized costs are charged to loss on extinguishment of debt and modification costs and any prepayment penalty resulting from the early repayment of the debt is recorded as interest expense in the period incurred. For the years ended December 31, 2020 and 2019, amortization of deferred financing costs of approximately $0.7 million and $0.4 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive loss.

F-18

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. Fair Value of Derivatives and Financial Instruments

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy):

•

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•

Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.

•

Level 3 inputs are the unobservable inputs for the asset or liability, which are typically based on an entity’s own assumption, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on input from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes independent third parties to perform the allocation of value analysis for each property acquisition and to perform the market valuations on its derivative financial instruments and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and derivative financial instruments are fair and consistent as of the measurement date.

Derivative Financial Instruments and Hedging Activities

The Company manages interest rate risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company has entered into an interest rate cap and interest rate swaps to manage exposures that arise from changes in interest rates. The Company’s derivative financial instruments are used to manage the Company’s risk of increased cash outflows from the floating rate loans that may result from rising interest rates, in particular the reference rate for the loans, or one-month LIBOR. In order to minimize counterparty credit risk, the Company has entered into and expects to enter in the future into hedging arrangements and intends to only transact with major financial institutions that have high credit ratings.

The Company utilizes an independent third party to perform the market valuations on its derivative financial instruments. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair value of the interest rate cap is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of December 31, 2020 and December 31, 2019 were classified as Level 2 of the fair value hierarchy.

F-19

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded in other comprehensive income (loss) and are subsequently reclassified into net income (loss) in the period that the hedged forecasted transaction affects earnings. Amounts reported in other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but either do not meet the strict requirements to apply hedge accounting in accordance with FASB ASC 815, Derivatives and Hedging, or the Company has elected not to designate such derivatives as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income (loss) as interest expense.

In order to fix a portion of, and mitigate the risk associated with, the Company’s floating rate indebtedness, the Company, through the OP, has entered into five interest rate swap transactions with KeyBank with a combined notional amount of $320.0 million. The interest rate swaps the Company has entered into effectively replace the floating interest rate (one-month LIBOR) with respect to that amount with a weighted average fixed rate of 1.4309%. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk.

As of December 31, 2020, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):


Effective Date	Expiration Date		Index (1)	Notional		Fixed Rate
7/1/2019		7/1/2024	One-Month LIBOR	$	100,000		1.6290	%
9/1/2019		12/21/2025	One-Month LIBOR		100,000		1.4180	%
9/1/2019		12/21/2025	One-Month LIBOR		50,000		1.4190	%
2/3/2020		2/1/2025	One-Month LIBOR		50,000		1.2790	%
3/2/2020		3/3/2025	One-Month LIBOR		20,000		0.9140	%

				$	320,000		1.4309	%(2)

(1)

As of December 31, 2020, one-month LIBOR was 0.1439%.

(2)

Represents the weighted average fixed rate of the interest rate swaps.

For the years ended December 31, 2020 and 2019, on the consolidated statements of operations and comprehensive loss, the Company recognized approximately $17.1 million of unrealized loss and $1.6 million of unrealized gain, respectively, related to the change in fair value of the interest rate swaps.

Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The Company, through the OP, has entered into an interest rate cap transaction with SMBC Capital Markets, Inc. (the “Counterparty”) with a notional amount of $241.4 million. The interest rate cap effectively caps the total rate paid by the Company on $241.4 million of mortgage debt at 6.60%. The interest rate cap expires on November 1, 2021.

As of December 31, 2020 and 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):


					Index as of December 31,
Derivative	Notional		Hedged Floating Rate Debt	Index	2020			2019			Strike Rate
Interest Rate Cap	$	241,400	Mortgage payable	One-Month LIBOR		0.1439	%		1.7625	%		6.60	%

For the years ended December 31, 2020 and 2019, on the consolidated statements of operations and comprehensive loss, the Company recognized less than $0.1 million, of interest expense related to the interest rate cap.

F-20

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2020 and December 31, 2019 (in thousands):


		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Derivatives designated as hedging instruments:
Interest rate swaps (1)	Fair market value of interest rate swaps	$	—	$	1,832	$	15,453	$	205

Total		$	—	$	1,832	$	15,453	$	205

(1)

The fair market value of interest rate swaps is presented net on the consolidated balance sheets.

Financial assets and liabilities for which the carrying values approximate their fair values include cash, restricted cash, accounts receivable, accounts payable, and security deposits. Generally, these assets and liabilities are short-term in duration and are recorded at fair value on the consolidated balance sheets. The Company believes the carrying value of each outstanding loan approximates fair value based on the nature, term and interest rate of each loan.

7. Stockholders’ Equity

The following table details all Share issuances under the Continuous Offering and the Company’s dividend reinvestment program (the “DRIP”) from the Commencement of Operations through December 31, 2020 summarized by period end (dollars in thousands):


Period/Year End	Shares issued		Cash Proceeds		DRIP reinvestment
December 31, 2018		1,906,770	$	47,513	$	153
December 31, 2019		3,255,762		91,497		2,702
December 31, 2020		4,142,704		124,958		7,219

		9,305,236	$	263,968	$	10,074

The following table provides detail on cash dividends declared on Shares as well as reinvested dividends as part of the Company’s DRIP for the year ended December 31, 2020 (dollars in thousands):


Quarter Ended	DRIP Shares Issued		DRIP Dividend		Cash Dividend		Cash Dividend Accrued on RSUs(1)		Total Dividend
March 31, 2020		46,813	$	1,388	$	1,758	$	39	$	3,185
June 30, 2020		54,294		1,637		1,890		102		3,629
September 30, 2020		58,911		1,880		2,065		134		4,079
December 31, 2020		69,364		2,314		2,288		125		4,727

Total		229,382	$	7,219	$	8,001	$	400	$	15,620

(1)

Included in accounts payable and other accrued liabilities on the consolidated balance sheets.

During the year ended December 31, 2019, the Company declared dividends of approximately $6.8 million which was comprised of approximately $4.1 million paid in cash and approximately $2.7 million which was reinvested in 95,589 Shares under the DRIP.

Long-Term Incentive Plan

The Company adopted the 2018 LTIP whereby the Board, or a committee thereof, may grant awards based on RSUs or PI Units to certain employees of the Adviser and the Manager, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). The 2018 LTIP provides for the Share Reserve and the Share Maximum for issuance of RSUs or PI Units. Grants may be made annually by the Board or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP will occur ratably over a period of time as determined by the Board and may include the achievement of performance metrics also as determined by the Board in its sole discretion.

F-21

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RSU Grants Under the 2018 LTIP

On December 10, 2019, a total of 73,700 RSUs were granted to certain employees of the Adviser and officers of the Company. On May 11, 2020, a total of 179,858 RSUs were granted to certain employees of the Adviser, officers of the Company and independent board members. RSUs granted to certain employees of the Adviser and officers of the Company generally vest over a four-year period with the May 11, 2020 grants vesting 50% ratably over four years and 50% at the successful completion of an initial public offering. The RSUs granted to independent board members fully vest on the first anniversary of the grant date. Any unvested RSU is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Adviser. RSUs are valued at fair value (which is the NAV per share) on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule that approximates a straight-line basis. Beginning on the date of grant, RSUs accrue dividends that are payable in cash on the vesting date. Once vested, the RSUs convert on a one-for-one basis into Shares.

As of December 31, 2020 and 2019, the number of RSUs granted that are outstanding was as follows (dollars in thousands):


Dates	Number of RSUs			Value(1)
Outstanding December 31, 2018		—		$	—
Granted		73,700			2,200
Vested		—			—
Forfeited		—			—

Outstanding December 31, 2019		73,700		$	2,200
Granted		179,858			5,543
Vested		(18,425	)		(550	)
Forfeited		—			—

Outstanding December 31, 2020		235,133		$	7,193

(1)

Value is based on the number of RSUs granted multiplied by the most recent NAV per share on the date of grant, which was $29.85 for the December 10, 2019 grant and $30.82 for the May 11, 2020 grant.

The vesting schedule for the RSUs is as follows:


Vest Date	RSUs Vesting
May 11, 2021		30,510
December 10, 2021		18,425
May 11, 2022		21,336
December 10, 2022		18,425
May 11, 2023		21,335
December 10, 2023		18,425
May 11, 2024		21,335
Upon successful completion of IPO		85,342

		235,133

For the years ended December 31, 2020 and 2019, the Company recognized approximately $1.1 million and less than $0.1 million, respectively, of non-cash compensation expense related to the RSUs, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive loss.

F-22

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Determination of Net Asset Value

Periodically, the pricing committee of the Board, with the assistance of the Adviser, determines the NAV using the Valuation Methodology. On and before March 31, 2020, NAV was determined at the end of each quarter. Beginning April 30, 2020, the NAV has been determined at the end of each month to account for changes related to the COVID-19 pandemic. Shares and OP Units sold on or after each date below pursuant to the Continuous Offering were generally sold at that NAV until the next NAV calculation. Shares and OP Units issued under the DRIP reflect a 3% discount to the then current NAV set by the pricing committee of the Board. The table below illustrates the changes in NAV since inception:


Date	NAV per share		DRIP price per share
November 1, 2018	$	25.00	$	24.25
December 31, 2018		28.27		27.42
March 31, 2019		28.75		27.89
June 30, 2019		28.88		28.01
September 30, 2019		29.85		28.95
December 31, 2019		30.58		29.66
March 31, 2020		30.59		29.67
April 30, 2020		30.82		29.90
May 31, 2020		31.08		30.15
June 30, 2020		31.24		30.30
July 31, 2020		31.47		30.53
August 31, 2020		32.91		31.92
September 30, 2020		34.00		32.98
October 31, 2020		34.18		33.15
November 30, 2020		34.38		33.35
December 31, 2020		36.56		35.46

Fees paid to placement agents

Subject to certain exceptions, investors that purchase Shares through the Continuous Offering will pay entities which have an agreement with the Company (the “Placement Agents”) to sell its shares in the Continuous Offering (“Selling Agreements”) a placement fee in addition to the NAV sales price and equal to 1% to 5.5% of gross investor equity, subject to certain breakpoints and various terms of each specific Selling Agreement. With the consent of the Placement Agents, some or all of the placement fee may be waived. Under the Selling Agreement with Raymond James, an advisory fee equal to 2% of gross proceeds invested, which is also in addition to the NAV sales price, is paid to Raymond James for all Shares sold by the Company in the Continuous Offering. Other Selling Agreements may have specific fees that differ from the Raymond James fees related to selling Shares to their clients. Placement Agent compensation is subject to a reasonable carve-out for sales of Shares directly by the Company or for sales to employees of our Adviser, Manager and affiliates thereof.

8. Redeemable Noncontrolling Interests in the OP

Other than PI Units and OP Preferred Units (defined below), partnership interests in the OP are represented by OP Units. Net income (loss) is allocated pro rata to holders of OP Units and PI Units based upon net income (loss) attributable to the OP and the respective members’ OP Units and PI Units held during the period. Capital contributions, distributions, and profits and losses are allocated to PI Units and OP Units not held by the Company (the “noncontrolling interests”).

F-23

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the redeemable noncontrolling interests in the OP (in thousands):


	Balances
Redeemable noncontrolling interests in the OP, December 31, 2018	$	79,481
Net loss attributable to redeemable noncontrolling interests in the OP		(967	)
Contributions by redeemable noncontrolling interests in the OP		6,371
Distributions to redeemable noncontrolling interests in the OP		(6,364	)
Redemptions by redeemable noncontrolling interests in the OP		(12,000	)
Equity-based compensation		287
Other comprehensive income		562
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		26,563

Redeemable noncontrolling interests in the OP, December 31, 2019	$	93,933
Net loss attributable to redeemable noncontrolling interests in the OP		(570	)
Contributions by redeemable noncontrolling interests in the OP		13,872
Distributions to redeemable noncontrolling interests in the OP		(7,533	)
Redemptions by redeemable noncontrolling interests in the OP		(2,700	)
Equity-based compensation		1,491
Other comprehensive income attributable to redeemable noncontrolling interests in the OP		(5,865	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		34,462

Redeemable noncontrolling interests in the OP, December 31, 2020	$	127,090

The following table provides detail on distributions to noncontrolling interests in the OP for the year ended December 31, 2020 (dollars in thousands):


Quarter Ended	DRIP OP Units Issued		OP DRIP Distribution		OP Cash Distribution		OP Cash Distribution Accrued on PI Units(1)		Total OP Distribution
March 31, 2020		7,966	$	236	$	1,392	$	64	$	1,692
June 30, 2020		52,557		1,585		48		142		1,775
September 30, 2020		53,624		1,712		48		180		1,940
December 31, 2020		10,192		339		1,526		261		2,126

Total		124,339	$	3,872	$	3,014	$	647	$	7,533

(1)

Included in accounts payable and other accrued liabilities on the consolidated balance sheets.

The following table provides detail on distributions to noncontrolling interests in the OP for the year ended December 31, 2019 (dollars in thousands):


Quarter Ended	DRIP OP Units Issued		DRIP Distribution		OP Cash Distribution		OP Cash Distribution Accrued on PI Units(1)		Total OP Distribution
March 31, 2019		52,779	$	1,463	$	32	$	15	$	1,510
June 30, 2019		53,905		1,524		47		21		1,592
September 30, 2019		6,927		194		1,391		21		1,606
December 31, 2019		7,443		215		1,391		50		1,656

Total		121,054	$	3,396	$	2,861	$	107	$	6,364

As of December 31, 2020, the Company held 8,045,094 OP Units, NREO held 1,953,967 OP Units, NRESF held 75,586 OP Units, NREC held 737,362 OP Units, GAF REIT held 129,840 OP Units and the VineBrook Contributors and other Company insiders held 579,461 OP Units or vested PI Units. As of December 31, 2019, the Company held 5,162,532 OP Units, NREO held 2,535,533 OP Units, NRESF held 70,661 OP Units, and the VineBrook Contributors and other Company insiders held 465,510 OP Units.

F-24

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PI Unit Grants Under the 2018 LTIP

In connection with the 2018 LTIP, PI Units have been issued to key personnel, senior management and executives of the Manager. On April 19, 2019, a total of 40,000 PI Units were granted, on November 21, 2019, a total of 80,399 PI Units were granted and on May 11, 2020, a total of 219,826 PI Units were granted. The PI Units are a special class of partnership interests in the OP with certain restrictions, which are convertible into OP Units, subject to satisfying vesting and other conditions. PI Unit holders are entitled to receive the same distributions as holders of our OP Units (only if we pay such distributions). The PI Units granted in 2019 generally fully vest over a period of two to four years. The PI Units granted on May 11, 2020 vest 50% ratably over four years and 50% at the successful completion of an initial public offering and the PI Units granted on November 30, 2020 vest 100% ratably over four years or alternatively 100% on the successful completion of an initial public offering. Once vested and converted into OP Units in accordance with the limited partnership agreement of the OP, the PI Units will then be fully recognized as OP Units, which are subject to a one year lock up period before they can be converted to Shares. Any unvested PI Unit is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Manager. PI Units are valued at fair value on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule over the periods in which the restrictions lapse, that approximates a straight-line basis. We valued the PI Units at a per-unit value equivalent to the per-share offering price of our OP Units less a discount for lack of marketability and other discounts estimated by a third-party consultant. Beginning on the date of grant, PI Units accrue dividends that are payable in cash quarterly.

As of December 31, 2020, the number of PI Units granted that are outstanding was as follows (dollars in thousands):


	Number of PI Units			Value(1)
Outstanding December 31, 2018		—		$	—
Granted		120,399			3,456
Vested		—			—
Forfeited		—			—

Outstanding December 31, 2019		120,399		$	3,456
Granted		231,590			7,023
Vested		(41,524	)		(1,189	)
Forfeited		—			—

Outstanding December 31, 2020		310,465		$	9,290

(1)

Value is based on the number of PI Units granted multiplied by the estimated per unit fair value on the date of grant, which was $27.88 for the April 19, 2019 grant, $29.12 for the November 21, 2019 grant and $30.16 for the May 11, 2020 grant.

The vesting schedule for the PI Units is as follows:


Vest Date	PI Units Vesting
May 11, 2021		27,478
November 1, 2021		9,200
November 21, 2021		18,425
November 30, 2021		2,941
May 11, 2022		27,479
November 1, 2022		7,200
November 21, 2022		18,425
November 30, 2022		2,941
May 11, 2023		27,478
November 1, 2023		7,200
November 21, 2023		18,425
November 30, 2023		2,941
May 11, 2024		27,478
November 30, 2024		2,941
Upon successful completion of IPO*		109,913

		310,465

*Upon successful completion of an IPO, an additional 11,764 PI Units will vest immediately instead of vesting ratably according to the schedule above on each of November 30, 2021, November 30, 2022, November 30, 2023 and November 30, 2024.

F-25

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2020 and 2019, the OP recognized approximately $1.5 million and $0.3 million, respectively, of non-cash compensation expense related to the PI Units, which is included in corporate general and administrative expenses on the Company’s consolidated statements of operations and comprehensive loss.

9. Redeemable Series A Preferred Stock

On October 7, 2020, the Company issued 2,440,000 shares of its 6.50% Series A Cumulative Redeemable Preferred Stock (the “Preferred Shares”) at a price of $25.00 per share, for gross proceeds of $61.0 million before deducting issuance costs of approximately $2.3 million. These proceeds were in turn used to purchase 2,440,000 6.50% Series A Cumulative Redeemable Preferred Units of the OP (“OP Preferred Units”). The OP used $50.0 million of those net proceeds to partially pay down the Warehouse Facility. On December 30, 2020, the Company issued 1,100,000 Preferred Shares at a price of $24.995 per share, for gross proceeds of approximately $27.5 million before deducting issuance costs of approximately $1.2 million. On October 26, 2020, the Company declared a dividend of $0.3792 per share to the holders of record of Preferred Shares as of December 25, 2020. The preferred dividend was paid on January 11, 2021. The following table presents the redeemable Series A preferred stock (dollars in thousands):


	Preferred Shares		Balances
Redeemable Series A preferred stock, December 31, 2019		—	$	—
Issuance of Redeemable Series A preferred stock		3,540,000		88,495
Issuance costs related to Redeemable Series A preferred stock		—		(3,555	)
Net income attributable to Redeemable Series A preferred stockholders		—		925
Dividends declared to Redeemable Series A preferred stockholders		—		(925	)
Accretion to redemption value		—		127

Redeemable Series A preferred stock, December 31, 2020		3,540,000	$	85,067

10. Income Taxes

The Company has made the election and intends to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and expects to continue to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its stockholders. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT.

If the Company fails to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of December 31, 2020, the Company believes it is in compliance with all applicable REIT requirements. The Company is still subject to state and local income taxes and to federal income and excise tax on its undistributed income, however those taxes are not material to the financial statements.

The Company evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Company has no examinations in progress and none are expected at this time. The tax years subject to examination are 2019 and 2018.

The Company had no material unrecognized federal or state tax benefit or expense, accrued interest or penalties as of December 31, 2020. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive loss.

F-26

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Related Party Transactions

Advisory Fee

Pursuant to the Advisory Agreement, the Company will pay the Adviser, on a monthly basis in arrears, an advisory fee at an annualized rate of 0.75% of the gross asset value of the Company on a consolidated basis (excluding the value of the OP’s assets but inclusive of the Company’s pro rata share of the debt held at the OP and its SPEs). The Adviser will manage the Company’s business including, among other duties, advising the Board to issue distributions, preparing our quarterly and annual consolidated financial statements prepared under GAAP, development and maintenance of internal accounting controls, management and conduct of maintaining our REIT status, calculation of our NAV and recommending the appropriate NAV to be set by the Board, processing of sales of Shares through the Continuous Offering, reporting to holders of Shares, our tax filings, and other responsibilities customary for an external advisor to a business similar to ours. With certain specified exceptions, the advisory fee together with reimbursement of operating and offering expenses may not exceed 1.5% of average total assets of the Company and the OP, as determined in accordance with GAAP on a consolidated basis, at the end of each month (or partial month) (i) for which any advisory fee is calculated or (ii) during the year for which any expense reimbursement is calculated (the “Expense Cap”).

For the years ended December 31, 2020 and 2019, the Company incurred advisory fees of approximately $3.3 million and $1.7 million, respectively, which is included in advisory fees on the consolidated statements of operations and comprehensive loss.

Management Fee

The equity holders of the Manager are holders of noncontrolling interests in the OP and comprise a portion of the VineBrook Contributors. Through this noncontrolling ownership, the Manager is deemed to be a related party. Pursuant to the Management Agreements, the OP will pay the Manager (i) an acquisition fee equal to 1.0% of the purchase price paid for any new property acquired during the month, (ii) a construction fee monthly in arrears that shall not exceed the greater of 10% of construction costs or $1,000, whichever is higher, in connection with the repair, renovation, improvement or development of any newly acquired property, and (iii) a property management fee monthly in arrears equal to a percentage of collected rental revenues for all properties during the month as follows:

•

8.0% of collected rental revenue up to and including $45 million on an annualized basis;

•

7.0% of the incremental collected rental revenue above $45 million but below and including $65 million on an annualized basis;

•

6.0% of the incremental collected rental revenue above $65 million but below and including $85 million on an annualized basis; and

•

5.0% of the incremental collected rental revenue above $85 million on an annualized basis.

Under the Management Agreements and the Side Letter, the aggregate fees that the Manager can earn in any fiscal year are capped such that the Manager’s EBITDA (as defined in the Management Agreements) derived from these fees may not exceed the greater of $1.0 million or 0.5% of the combined equity value of the Company and the OP on a consolidated basis, calculated on the first day of each fiscal year based on the aggregate NAV of the outstanding Shares and OP Units held by other than the Company on the last business day of the prior fiscal year (the “Manager Cap”). The aggregate fees up to the Manager Cap are payable (1) in cash in an amount equal to the tax obligations of the Manager’s equity holders resulting from the aggregate management fees earned in such fiscal year up to a maximum rate of 25% (the “Manager Cash Cap”) and (2) with respect to the remaining portion of the aggregate fees, in OP Units, at a price per OP Unit equal to the Cash Amount (as defined in the OP’s limited partnership agreement). The aggregate fees paid in cash that exceed the Manager Cash Cap are rebated back to the OP. As of December 31, 2020, the OP recorded a receivable of approximately $1.1 million on the consolidated balance sheet related to the Manager Cash Cap rebate. As of December 31, 2019, the OP recorded a receivable of approximately $0.8 million due from the Manager related to the Manager Cash Cap rebate.

The Manager will be responsible for the day-to-day management of the properties, acquisition of new properties, disposition of existing properties (with acquisition and disposition decisions made under the approval of the investment committee and the Board), leasing the properties, managing tenant issues and requests, collecting rents, paying operating expenses, managing maintenance issues, accounting for each property using GAAP, and other responsibilities customary for the management of single family rental properties.

Property management fees are included in property management fees on the consolidated statements of operations and comprehensive loss and acquisition and construction fees are capitalized into each home and is included in buildings and improvements on the consolidated balance sheet and are depreciated over the useful life of each property.

F-27

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table is a summary of fees that the OP incurred to the Manager and its affiliates, as well as reimbursements paid to the Manager and its affiliates for various operating expenses the Manager paid on the OP’s behalf, under the terms of Management Agreements and Side Letter, for the years ended December 31, 2020 and 2019 (dollars in thousands):


		For the Year Ended December 31,
	Location on Financial Statements	2020		2019
Fees Incurred
Property management fees	Statement of Operations	$	4,478	$	3,190
Acquisition fees	Balance Sheet		1,771		1,718
Construction supervision fees	Balance Sheet		4,194		2,081
Reimbursements
Payroll and benefits	Balance Sheet and Statement of Operations		8,501		4,179
Other reimbursements	Balance Sheet and Statement of Operations		414		322

Totals		$	19,358	$	11,490

Internalization of the Adviser or the Manager

The Company may acquire all of the outstanding equity interests of the Adviser, the Manager or both (an “Internalization”) under certain provisions (a “Purchase Provision”) of the Advisory Agreement or the Side Letter to effect an Internalization upon the payment of a certain fee (an “Internalization Fee”). If the Company determines to acquire the equity interests of the Adviser, the applicable Purchase Provision of the Advisory Agreement provides that the Adviser must first agree to such acquisition and that the Company will pay the Adviser an Internalization Fee equal to three times the total of the prior 12 months’ advisory fee, payable only in capital stock of the Company. If the Company determines to acquire the equity interests of Manager, the applicable Purchase Provision of the Side Letter provides the Company has a right to do so and that the Company will pay the Manager an Internalization Fee equal to $6.5 million plus 50% of the subtraction of $6.5 million from three times the total of the prior 12 months’ property management fee, payable in cash, Shares or OP Units. The OP may also acquire the equity interests of the Manager on the same terms under the applicable Purchase Provision. Certain additional conditions and limitations apply to the Internalizations, including but not limited to caps on the Internalization Fees. The Company expects any equity issued in satisfaction of an Internalization Fee to be valued at the NAV in effect on the date the Internalization is consummated.

Termination Fees Payable to the Adviser or Manager

If the Advisory Agreement or any one of the Management Agreements is terminated without cause by the Company or the SPE, as applicable, or is otherwise terminated under certain conditions, the Adviser or the Manager, as applicable, will be entitled to a termination fee (a “Termination Fee”) in the amount of three times the prior 12 months’ advisory fee, in the case of a termination of the Advisory Agreement, or three times the prior 12 months’ property management fee, in the case of the applicable Management Agreement. In addition to termination by the Company without cause, the Adviser will be entitled to the Termination Fee if the Adviser terminates the Advisory Agreement without cause or terminates the agreement due to the occurrence of certain specified breaches of the Advisory Agreement by the Company. The Advisory Agreement may be terminated without cause by the Company or the Adviser with 180 days’ notice prior to the expiration of the then-current term. In addition to termination by the SPE without cause, the Manager will be entitled to the Termination Fee if the SPE sells or otherwise disposes of all or substantially all of the properties subject to the applicable Management Agreement. The Management Agreements may be terminated by the SPE with 90 days’ notice without cause. Termination Fees are payable in cash.

Advance Acquisition and Construction Fee Advances Paid to the Manager

Pursuant to the Side Letter, the Manager may request from the OP from time-to-time an advance on acquisition and construction fees (the “Fee Advances”) to fund the performance of its obligations under the Management Agreements. Each Fee Advance is repaid from future acquisition and construction fees earned by and owed to the Manager. Fee Advances are included in the line item Due from Manager on the consolidated balance sheets. As of December 31, 2020, the Company recorded no receivable for Fee Advances. As of December 31, 2019, the Company recorded a receivable on the consolidated balance sheet due from the Manager for Fee Advances of approximately $0.2 million.

F-28

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Backstop Loans to the Manager

Pursuant to the Side Letter, in the event the Manager does not have sufficient cash flow from operations to meet its budgeted obligations under the Management Agreements, the Manager may from time to time request from the Company a temporary loan (the “Backstop Loan”) to satisfy the shortfall. Backstop Loans are interest free, may be prepaid at any time and may not exceed a principal amount that is in the aggregate equal to the lesser of the Internalization Fee or Termination Fee under the applicable Management Agreement. Unless otherwise repaid, each Backstop Loan is payable upon termination of the applicable Management Agreement. Backstop Loans are included in the line item Due from Manager on the consolidated balance sheets. As of December 31, 2020 and 2019, the Company recorded a receivable for Backstop Loans made to the manager of approximately $0.7 million and approximately $0.7 million, respectively.

Dealer Manager Fees

Investors may be charged a dealer manager fee of between 0.50% and 3.00% of gross investor equity by the Dealer Manager for sell of Shares pursuant to the Continuous Offering, subject to certain breakpoints and various terms of the Dealer Manager Agreements. At the sole discretion of the Dealer Manager, the dealer manager fee may be partially or fully waived. The dealer manager fee is paid to an affiliate of the Adviser.

Organization and Continuous Offering Expenses

Offering and organizational expenses (“O&O Expenses”) may be incurred in connection with sales in the Continuous Offering at the discretion of the Company and are borne in full or in part by investors through a fee of between 0.50% and 1.00% of gross investor equity, depending on the provisions of each Dealer Manager Agreement. O&O Expenses are intended to reimburse the Company for the costs of maintaining the Continuous Offering and selling costs incurred in raising equity under the Continuous Offering. Payments for bona fide expenses are submitted by the Adviser, at which time the O&O Expenses are recorded as a reduction to equity as an offering cost.

See below for detail related to the O&O Expenses as of December 31, 2020 (dollars in thousands):


	Amount
Gross investor equity raised subject to O&O	$	276,070
O&O collected and available for reimbursements	$	1,685

O&O Expenses reimbursed for the period:
Inception through December 31, 2019	$	686
January 1, 2020 through March 31, 2020		188
April 1, 2020 through June 30, 2020		235
July 1, 2020 through September 30, 2020		175
October 1, 2020 through December 31, 2020		385

	$	1,669

O&O available for future reimbursements	$	16

NexBank

The Company and the OP maintain bank accounts with an affiliate of the Adviser, NexBank N.A. (“NexBank”). NexBank charges no recurring maintenance fees on the accounts.

NREO Note

On August 22, 2019, the Company, through the OP, entered into an approximately $1.3 million subordinated convertible note (the “NREO Note”) with NREO, who is an affiliate of the Adviser. The NREO Note bears interest at a variable rate equal to one-month LIBOR plus 2.25% and is full interest-only. The NREO Note is convertible at any time to equity at the election of the Company or upon its maturity on September 19, 2022. For the year ended December 31, 2020, the Company recognized less than $0.1 million of interest expense related to the NREO Note. The balance of the NREO Note is included on the consolidated balance sheets in NREO Note Payable. The NREO Note was repaid in full and extinguished during 2021 (see Note 13).

F-29

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of December 31, 2020, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or consolidated statements of operations and comprehensive loss of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

The Company is not aware of any environmental liability with respect to the properties it owns that could have a material adverse effect on the Company’s business, assets, or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows.

An entity purchased by the OP as a part of the Formation Transaction, the Huber Transaction Sub, LLC (“Huber”), had potential liability exposure to a legacy environmental issue related to a 1988 petroleum release from an underground storage tank located on a property subsequently not purchased by Huber. The owner of the property prior to Huber has assumed the defense of alleged environmental violations and is proceeding with the required regulatory investigation and remediation of the underground storage tank release clean up. Huber received an indemnification, and the Company and the OP in turn received an indemnification, which is evidenced by approximately $2.6 million of proceeds in an escrow account (the “Indemnification Escrow”) that is for the benefit of the Company and the OP in the event the prior owner fails to perform their obligations in regard to any required remediation of the issue. As a result of the Indemnification Escrow, the Company does not expect that it, the OP or any of the SPEs will have any financial liability related to the alleged violation.

13. Subsequent Events

The Company evaluated subsequent events through April 2, 2021, to determine if any significant events occurred subsequent to the balance sheet date that would have a material impact on these consolidated financial statements and determined the following events were material:

Redeemable Series A Preferred Stock Offering

On January 8, 2021, the Company issued 1,460,000 Preferred Shares at a price of $25.032 per share, for gross proceeds of approximately $36.5 million before deducting offering costs of approximately $1.1 million. On January 8, 2021, the net proceeds from the Preferred Shares issued on December 30, 2020 and January 8, 2021 were used to purchase 2,560,000 OP Preferred Units. The OP used these proceeds for acquisitions and other capital expenditures.

Acquisitions

On January 22, 2021, the Company, through the OP, purchased 1,725 homes, net of a simultaneous bulk disposition, located throughout the midwestern and southeastern United States (the “January Portfolio”). The gross purchase price including closing costs and other expenses and net of the simultaneous bulk disposition was approximately $224.4 million.

On March 1, 2021, the Company, through the OP, purchased 2,170 homes, net of a simultaneous bulk disposition, located throughout the midwestern and southeastern United States (the “March Portfolio”). The gross purchase price including closing costs and other expenses and net of the simultaneous bulk disposition was approximately $282.5 million.

Subsequent to December 31, 2020, including the portfolio acquisitions mentioned above, the Company acquired 4,409 homes.

F-30

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MetLife Note

On January 6, 2021, the Company (as guarantor) and VB Two, LLC (as borrower) entered into a $125.0 million note with Metropolitan Life Insurance (the “MetLife Note”). The MetLife Note is secured by equity pledges in VB Two, LLC and its wholly owned subsidiaries and bears interest at a fixed rate of 3.25%. The MetLife Note is interest-only and matures and is due in full on January 31, 2026. The net proceeds received were used to fund a portion of the purchase price of the January Portfolio.

JP Morgan Facility

On March 1, 2021, the Company entered into a non-recourse carveout guaranty and certain wholly owned subsidiaries of VB Three, LLC (as borrowers) entered into a $500.0 million credit agreement with JP Morgan (the “JPM Facility”). The JPM Facility is secured by equity pledges in VB Three, LLC (a new SPE formed by the Company in 2021) and its wholly owned subsidiaries and bears interest at a variable rate equal to one-month LIBOR plus 2.75%. VB Three, LLC is a new special purpose entity formed by the Company. The JPM Facility is interest-only and matures and is due in full on March 1, 2023. To fund the acquisition of the March Portfolio, $320.0 was drawn on the JPM facility on March 1, 2021.

Warehouse Facility

On January 13, 2021, the OP drew $50.0 million under the Warehouse Facility. The proceeds were used to fund a portion of the purchase price of the January Portfolio. On March 8, 2021, the OP paid down $35.0 million under the Warehouse Facility. As of April 2, 2021, the outstanding balance of the Warehouse Facility was $100.0 million.

NREO Note Repayment

On January 26, 2021, the Company, through the OP, paid down the principal of approximately $1.3 million and accrued interest of approximately $0.1 million on the NREO Note. This extinguished the NREO Note.

Indemnification Escrow Release

On January 27, 2021, the Indemnification Escrow was released.

First Quarter 2021 Dividends

On January 15, 2021, the Company declared a dividend of $0.1767 per Share for shareholders of record as of January 15, 2021. On February 15, 2021, the Company declared a dividend of $0.1767 per Share for shareholders of record as of February 16, 2021. On March 15, 2021, the Company declared a dividend of $0.1767 per Share for shareholders of record as of March 15, 2021. The aforementioned dividends were paid on March 31, 2021.

Equity Issuance Pursuant to the Continuous Offering

The table below illustrates equity issuances subsequent to the balance sheet date (dollars in thousands):


Date of Close	Shares issued		Gross proceeds
January 4, 2021		482,310	$	16,582
January 15, 2021		32,863		1,202
January 22, 2021		29,690		1,086
January 29, 2021		48,440		1,770
February 1, 2021		380,104		13,897
February 12, 2021		65,468		2,394
February 19, 2021		27,257		997
February 26, 2021		121,088		4,427
March 1, 2021		482,985		17,658
March 12, 2021		441,787		16,152
March 19, 2021		28,040		1,025
March 26, 2021		32,918		1,207

		2,172,950	$	78,397

F-31

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NAV Determination

Pursuant to the terms of the Continuous Offering and calculated in accordance with the Valuation Methodology, on January 15, 2021, the pricing committee of the Board increased the NAV per Share to $36.56 as of December 31, 2020. In accordance with provisions in the OP’s partnership agreement, the value of the OP Units per OP Unit was also increased to $36.56. Shares issued under the respective DRIP plans will be issued a 3% discount to the NAV in effect.

F-32

Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2020

(dollars in thousands)


					Initial Cost to Company						Gross Cost Basis as of December 31, 2020 (1)						Accumulated
Market	Number of Homes		Gross Cost Basis Encumbered		Land		Buildings and Improvements		Costs Capitalized Subsequent to Acquisition		Land		Buildings and Improvements		Total		Depreciation and Amortization			Net Cost Basis		Dates of Acquisition
Operating homes
Dayton		2,193	$	140,119	$	34,409	$	98,708	$	16,806	$	34,409	$	115,515	$	149,924	$	(9,712	)	$	140,212		2018- 2020
Columbus		1,203		96,354		28,099		65,821		16,822		28,099		82,644		110,743		(6,421	)		104,322		2018- 2020
Cincinnati		2,312		192,516		55,525		132,217		23,575		55,525		155,793		211,318		(11,953	)		199,365		2018- 2020
Indianapolis		536		29,396		8,254		31,588		6,779		8,254		38,368		46,622		(1,852	)		44,770		2018- 2020
St. Louis		1,145		71,191		16,628		60,572		12,253		16,628		72,826		89,454		(1,518	)		87,936		2019- 2020
Memphis		459		8,649		5,002		20,252		9,129		5,002		29,382		34,384		(1,041	)		33,343		2019- 2020
Kansas City		353		11,440		5,168		17,744		4,034		5,168		21,779		26,947		(446	)		26,501		2019- 2020
Milwaukee		273		16,625		3,535		17,973		4,310		3,535		22,283		25,818		(323	)		25,495		2019- 2020
Pittsburgh		285		10,033		5,178		14,845		1,506		5,178		16,353		21,531		(471	)		21,060		2019- 2020
Little Rock		111		6,302		1,499		5,410		624		1,499		6,035		7,534		(98	)		7,436		2019- 2020
Jackson		324		16,198		7,036		14,148		1,805		7,036		15,953		22,989		(349	)		22,640		2019- 2020
Omaha		80		3,091		729		6,185		289		729		6,474		7,203		(212	)		6,991		2019- 2020

Total operating homes		9,274		601,914		171,062		485,463		97,932		171,062		583,405		754,467		(34,396	)		720,071
Homes held for sale		8		—		203		473		—		203		473		675		—			675		2018- 2019

Total homes		9,282	$	601,914	$	171,265	$	485,936	$	97,932	$	171,265	$	583,878	$	755,142	$	(34,396	)	$	720,746

(1)

The unaudited aggregate cost of consolidated real estate in the table above for federal income tax purposes was approximately $755.1 million as of December 31, 2020.

F-31

Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2020

(dollars in thousands)


	For the Year Ended December 31,
	2020			2019
Gross operating real estate:
Balance, beginning of year	$	521,084		$	335,306
Acquisitions and building improvements		234,825			189,495
Write-offs		(1,442	)		(3,717	)

Balance, end of year	$	754,467		$	521,084

Accumulated depreciation and amortization:
Balance, beginning of year	$	15,391		$	3,027
Depreciation expense (1)		19,304			12,999
Amortization expense		1,143			3,082
Write-offs		(1,442	)		(3,717	)

Balance, end of year	$	34,396		$	15,391

(1)

Depreciation of buildings and improvements is computed on a straight-line basis over estimated useful lives ranging from three to 27.5 years.

F-34

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	March 31, 2021			December 31, 2020
	(unaudited)
ASSETS
Operating real estate investments
Land	$	328,982		$	171,062
Buildings and improvements		996,060			582,610
Intangible lease assets		4,941			795

Total gross operating real estate investments		1,329,983			754,467
Accumulated depreciation and amortization		(42,134	)		(34,396	)

Total net operating real estate investments		1,287,849			720,071
Real estate held for sale, net		712			675

Total net real estate investments		1,288,561			720,746
Cash		40,093			31,225
Restricted cash		11,683			5,871
Accounts receivable		2,991			3,983
Due from Manager (see Note 11)		663			663
Prepaid and other assets		3,890			17,480

TOTAL ASSETS	$	1,347,881		$	779,968

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable, net	$	386,469		$	262,522
Credit facilities, net		412,760			83,937
NREO Note Payable, net (see Note 11)		—			1,250
Accounts payable and other accrued liabilities		8,326			8,573
Accrued real estate taxes payable		14,515			12,591
Accrued interest payable		1,803			616
Security deposit liability		12,428			7,292
Prepaid rents		2,062			1,255
Fair market value of interest rate swaps		9,082			15,453

Total Liabilities		847,445			393,489
Redeemable Series A preferred stock, $0.01 par value: 16,000,000 shares authorized; 5,000,000 and 3,540,000 shares issued and outstanding, respectively		120,454			85,067
Redeemable noncontrolling interests in the OP		127,982			127,090
Stockholders’ Equity:
Common stock, $0.01 par value: 300,000,000 shares authorized; 11,499,045 and 9,260,795 shares issued and outstanding, respectively		115			93
Additional paid-in capital		291,305			210,381
Distributions in excess of retained earnings		(34,060	)		(26,002	)
Accumulated other comprehensive income (loss)		(5,360	)		(10,150	)

Total Stockholders’ Equity		252,000			174,322

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,347,881		$	779,968

See Accompanying Notes to Consolidated Financial Statements

F-35

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except for per share amounts)

(Unaudited)


	For the Three Months Ended March 31,
	2021			2020
Revenues
Rental income	$	30,136		$	16,702
Other income		492			401

Total revenues		30,628			17,103

Expenses
Property operating expenses		5,153			3,447
Real estate taxes and insurance		6,294			3,131
Property management fees		1,973			1,362
Advisory fees		1,291			713
Corporate general and administrative expenses		1,481			498
Property general and administrative expenses		1,323			845
Depreciation and amortization		8,044			4,922
Interest expense		5,126			2,714

Total expenses		30,685			17,632
Loss on sales of real estate		(75	)		(26	)

Operating loss		(132	)		(555	)
Casualty loss, net of insurance proceeds		(9	)		—

Net loss		(141	)		(555	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)		(190	)

Net loss attributable to common stockholders	$	(2,312	)	$	(365	)

Other comprehensive income/(loss)
Unrealized gain/(loss) on interest rate swaps		6,371			(17,654	)

Total comprehensive income/(loss)		6,230			(18,209	)
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—
Comprehensive income/(loss) attributable to redeemable noncontrolling interests in the OP		1,546			(6,173	)

Comprehensive income/(loss) attributable to common stockholders	$	2,478		$	(12,036	)

Weighted average common shares outstanding - basic		10,417			5,907

Weighted average common shares outstanding - diluted		10,417			5,907

Loss per share - basic	$	(0.22	)	$	(0.06	)

Loss per share - diluted	$	(0.22	)	$	(0.06	)

See Accompanying Notes to Consolidated Financial Statements

F-36

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(dollars in thousands)

(Unaudited)


	Class A Common Stock
	Number of Shares			Par Value		Additional Paid-in Capital			Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balances, December 31, 2020		9,260,795		$	93	$	210,381		$	(26,002	)	$	(10,150	)	$	174,322
Net loss attributable to common stockholders							—			(2,312	)		—			(2,312	)
Issuance of Class A common stock		2,241,677			22		80,829			—			—			80,851
Redemptions of Class A common stock		(3,427	)		—		(126	)		—			—			(126	)
Offering costs							(296	)		—			—			(296	)
Equity-based compensation		—			—		514			—			—			514
Common stock dividends declared ($0.5301 per share)							—			(5,746	)		—			(5,746	)
Other comprehensive income attributable to common stockholders							—			—			4,790			4,790
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP							3			—			—			3

Balances, March 31, 2021		11,499,045		$	115	$	291,305		$	(34,060	)	$	(5,360	)	$	252,000


	Class A Common Stock
	Number of Shares		Par Value		Additional Paid-in Capital			Distributions in Excess of Retained Earnings			Accumulated Other Comprehensive Income			Total
Balances, December 31, 2019		5,162,532	$	52	$	114,589		$	(8,235	)	$	1,065		$	107,471
Net loss attributable to common stockholders						—			(365	)		—			(365	)
Issuance of Class A common stock		1,457,940		14		44,560			—			—			44,574
Offering costs						(188	)		—			—			(188	)
Equity-based compensation						135			—			—			135
Common stock dividends declared						—			(3,185	)		—			(3,185	)
Other comprehensive income attributable to common stockholders						—			—			(11,671	)		(11,671	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP						(7,656	)		—			—			(7,656	)

Balances, March 31, 2020		6,620,472	$	66	$	151,440		$	(11,785	)	$	(10,606	)	$	129,115

See Accompanying Notes to Consolidated Financial Statements

F-37

VINEBROOK HOMES TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	For the Three Months Ended March 31,
	2021			2020
Cash flows from operating activities
Net loss	$	(141	)	$	(555	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on sales of real estate		75			26
Depreciation and amortization		8,044			4,922
Amortization of deferred financing costs		560			183
Change in fair value on derivative instruments included in interest expense		670			(119	)
Net cash received/(paid) on derivative settlements		(1,032	)		145
Amortization of assumed debt premium		(29	)		(16	)
Equity-based compensation		930			382
Casualty loss, net of insurance proceeds		9			—
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets		(2	)		(1,556	)
Operating liabilities		3,166			2,381

Net cash provided by operating activities		12,250			5,793

Cash flows from investing activities
Net proceeds from sales of real estate		151			809
Prepaid acquisition deposits		(1,890	)		(173	)
Insurance proceeds received		59			—
Acquisitions of real estate investments		(538,725	)		(30,527	)
Additions to real estate investments		(16,400	)		(11,630	)

Net cash used in investing activities		(556,805	)		(41,521	)

Cash flows from financing activities
Notes payable proceeds received		125,000			—
Notes payable payments		(15	)		(38	)
Credit facilities proceeds received		335,000			25,000
NREO Note repayment		(1,250	)		—
Financing costs paid		(7,746	)		(23	)
Proceeds from issuance of Class A common stock		77,973			43,191
Redemptions of Class A common stock paid		(126	)		—
Offering costs paid		(310	)		(108	)
Dividends paid to common stockholders		(2,676	)		(1,764	)
Proceeds from issuance of redeemable Series A preferred stock, net of offering costs		35,212			—
Preferred stock dividends paid		(925	)		—
Contributions from redeemable noncontrolling interests in the OP		595			—
Distributions to redeemable noncontrolling interests in the OP		(1,497	)		(1,392	)

Net cash provided by financing activities		559,235			64,866

Change in cash and restricted cash		14,680			29,138
Cash and restricted cash, beginning of period		37,096			17,830

Cash and restricted cash, end of period	$	51,776		$	46,968

See Accompanying Notes to Consolidated Financial Statements

F-38


Supplemental Disclosure of Cash Flow Information
Interest paid, net of amount capitalized	$	2,738		$	2,681
Supplemental Disclosure of Noncash Activities
Assumed liabilities in asset acquisitions		4,554			—
Accrued dividends payable to common stockholders		192			39
Accrued distributions payable to redeemable noncontrolling interests in the OP		165			64
Accrued dividends payable to preferred stockholders		2,031			—
Accretion to redemption value of Redeemable Series A preferred stock		175			—
Offering costs accrued		91			80
Issuance of Shares to common stockholders related to DRIP dividends		2,878			1,383
DRIP dividends to common stockholders		2,878			(1,383	)
Contributions from redeemable noncontrolling interests in the OP related to DRIP distributions		360			236
DRIP distributions to redeemable noncontrolling interests in the OP		(360	)		(236	)

See Accompanying Notes to Consolidated Financial Statements

F-39

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

1. Organization and Description of Business

VineBrook Homes Trust, Inc. (the “Company”, “we”, “our”) was incorporated in Maryland on July 18, 2018 and has elected to be taxed as a real estate investment trust (“REIT”). The Company is focused on acquiring, renovating, leasing, maintaining and otherwise managing single-family rental home investments primarily located in large to medium size cities and suburbs located in the midwestern and southeastern United States. Substantially all of the Company’s business is conducted through VineBrook Homes Operating Partnership, L.P. (the “OP”), the Company’s operating partnership, as the Company owns its properties indirectly through the OP. VineBrook Homes OP GP, LLC (the “OP GP”), is the general partner of the OP. As of March 31, 2021, there were 12,988,961 Class A units of the OP (“OP Units”), of which 9,513,087, or 73.2%, were owned by the Company, 1,953,967, or 15.0%, were owned by NexPoint Real Estate Opportunities, LLC (“NREO”), 76,712, or 0.6%, were owned by NexPoint Real Estate Strategies Fund (“NRESF”), 737,362, or 5.7%, were owned by NexPoint Real Estate Capital, LLC (“NREC”), 131,775, or 1.0% were owned by GAF REIT, LLC (“GAF REIT”) and 576,058, or 4.4%, were owned by limited partners that were sellers in the Formation Transaction (defined below) (and in certain instances affiliated with the equity holders of the Manager (defined below)) (the “VineBrook Contributors”) or other Company insiders. NREO, NRESF, NREC and GAF REIT are noncontrolling limited partners unaffiliated with the Company but are affiliates of the Adviser (defined below).

Between November 1, 2018 and March 31, 2021, the Company, through the SPEs (as defined in Note 3) owned by the OP, purchased 9,648 additional homes and sold 84 homes. Together with the Initial Portfolio, the Company, through the OP’s SPEs, indirectly owned an interest in 13,693 homes (the “Portfolio”) in 16 states as of March 31, 2021. The acquisition of the additional homes was funded by loans (see Note 5), proceeds from the sale of Shares and Preferred Shares (defined below) and excess cash generated from operations.

On August 28, 2018, the Company authorized the offering of 40,000,000 Shares through a continuous private placement (the “Continuous Offering”), under regulation D of the Securities Act of 1933 (and various state securities law provisions) for a maximum of $1.0 billion of its Shares. The Continuous Offering expires on November 1, 2023 but may be extended for up to two times for one year each extension. The initial offering price for Shares sold through the Continuous Offering was $25.00 per Share. The Company conducts periodic closings and sells Shares at the prior net asset value (the “NAV”) per share as determined using the valuation methodology recommended by the Adviser and as approved by the pricing committee of the Board (the “Valuation Methodology”). The NAV per share is calculated on a fully diluted basis. Additionally, an independent third-party valuation firm assesses and evaluates the appropriateness of each NAV; all NAVs have been assessed as reasonable by the third-party. NAV may differ from the values of our real estate assets as calculated in accordance with GAAP.

F-40

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

NexPoint Securities, Inc. (the “Dealer Manager”), an entity under common ownership with the Adviser, serves as the dealer manager for the Continuous Offering and Raymond James and other unaffiliated broker-dealers serve as placement agents (“Placement Agents”) through selling agreements (“Selling Agreements”) between each Placement Agent and the Company.

The Company has adopted a Long-Term Incentive Plan (the “2018 LTIP”) whereby the Board, or a committee thereof, may grant awards of restricted stock units of the Company (“RSUs”) or profits interest units in the OP (“PI Units”) to certain employees of the Adviser and the Manager, or others at the discretion of the Board (including the directors and officers of the Company or other service providers of the Company or the OP). Under the terms of the 2018 LTIP, 426,307 Shares were initially reserved, subject to automatic increase on January 1st of each year beginning with January 1, 2019 by a number equal to 10% of the total number outstanding on December 31st of the preceding year of OP Units and vested PI Units, provided that the Board may act prior to each such January 1st to determine that there will be no increase for such year or that the increase will be less than the number of shares by which the Share Reserve would otherwise increase (the “Share Reserve”). In addition, the Shares available under the LTIP Plan may not exceed in the aggregate 10% of the number of OP Units and vested PI Units outstanding at the time of measurement (the “Share Maximum”). Grants may be made annually by the Board, or more or less frequently in the Board’s sole discretion. Vesting of grants made under the 2018 LTIP will occur over a period of time as determined by the Board and may include the achievement of performance metrics, also as determined by the Board in its sole discretion.

2. Summary of Significant Accounting Policies

Basis of Accounting and Use of Estimates

The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2021.

The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. References to number of properties is unaudited.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of March 31, 2021 and December 31, 2020 and results of operations for the three months ended March 31, 2021 and 2020 have been included. The unaudited information included in these interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2020 and 2019 included in the Company’s Form 10 initially filed with the SEC on April 30, 2021. The results of operations for the interim period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other future period.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If the Company determines the entity is not a VIE, it evaluates whether the entity should be consolidated under the voting model. The Company consolidates an entity when it controls the entity through ownership of a majority voting interest. As of March 31, 2021, the Company has determined it must consolidate the OP and its subsidiaries under the VIE model as it was determined the Company both controls the direct activities of the OP and the right to receive benefits that could potentially be significant to the OP. The consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. OP Units that are not owned by the Company are presented as noncontrolling interests in the consolidated financial statements, and income or loss generated at the OP is allocated between the Company and the noncontrolling interests based upon their relative ownership percentages.

F-41

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Real Estate Investments

Upon acquisition, we evaluate our acquired single-family residential properties for purposes of determining whether a transaction should be accounted for as an asset acquisition or business combination. Since substantially all of the fair value of our acquired properties is concentrated in a single identifiable asset or group of similar identifiable assets and the acquisitions do not include a substantive process, our purchases of homes or portfolios of homes qualify as asset acquisitions. Accordingly, upon acquisition of a property, the purchase price and related acquisition costs (“Total Consideration”) are allocated to land, buildings, improvements, fixtures, and intangible lease assets based upon their relative fair values.


Land		Not depreciated
Buildings		27.5 years
Improvements (1)		15 years
Fixtures (1) (2)		5 - 7 years
Intangible lease assets		6 months
Capitalized building maintenance		3 - 15 years

(1)

Disclosed in the table is the typical depreciable life used by the Company.

(2)

Fixtures are included in buildings and improvements on the consolidated balance sheet.

As of March 31, 2021, the gross balance and accumulated amortization related to the intangible lease assets was $4.9 million and $1.0 million, respectively. As of December 31, 2020, the gross balance and accumulated amortization related to the intangible lease assets was $0.8 million and $0.3 million, respectively. For the three months ended March 31, 2021 and 2020, the Company recognized approximately $1.0 million and $0.6 million, respectively, of amortization expense related to the intangible lease assets.

Real estate assets are reviewed for impairment quarterly or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Significant indicators of impairment may include, but are not limited to, declines in home values, rental rates or occupancy percentages, as well as significant changes in the economy. In such cases, the Company will evaluate the recoverability of the assets by comparing the estimated future cash flows expected to result from the use and eventual disposition of each asset to its carrying amount and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount. If impaired, the real estate asset will be written down to its estimated fair value. No significant impairments on operating properties were recorded during the three months ended March 31, 2021 and 2020.

Cash and restricted cash

F-42

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS


	March 31,
	2021		2020		December 31, 2020
Cash	$	40,093	$	43,356	$	31,225
Restricted cash		11,683		3,612		5,871

Total cash and restricted cash	$	51,776	$	46,968	$	37,096

Revenue Recognition

Gains or losses on sales of properties are recognized pursuant to the provisions included in ASC 610-20, Other Income. We recognize a full gain or loss on sale, which is presented in loss on sales of real estate on the consolidated statements of operations and comprehensive income (loss), when the derecognition criteria under ASC 610-20 have been met.

Redeemable Securities

In accordance with ASC Topic 480-10-S99, since the redeemable noncontrolling interests in the OP have a redemption feature, they are measured at their redemption value if such value exceeds the carrying value of interests. The redemption value is based on the NAV per unit at the measurement date. The offset to the adjustment to the carrying amount of the redeemable noncontrolling interests in the OP is reflected in the Company’s additional paid-in capital on the balance sheet. In accordance with ASC Topic 480-10-S99, the Preferred Shares are measured at their carrying value plus the accretion to their future redemption value on the balance sheet. The accretion is reflected in the Company’s dividends on and accretion to redemption value of Series A redeemable preferred stock on the statement of operations and comprehensive income (loss).

F-43

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Earnings (Loss) Per Share


	For the Three Months Ended March 31,
	2021			2020
Numerator for loss per share:
Net loss	$	(141	)	$	(555	)
Less:
Dividends on and accretion to redemption value of Redeemable Series A preferred stock		2,206			—
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)		(190	)

Net loss attributable to common stockholders	$	(2,312	)	$	(365	)

Denominator for earnings (loss) per share:
Weighted average common shares outstanding—basic		10,417			5,907
Weighted average unvested restricted stock units		—			—
Weighted average common shares outstanding—diluted		10,417			5,907
Earnings (loss) per weighted average common share:
Basic	$	(0.22	)	$	(0.06	)
Diluted	$	(0.22	)	$	(0.06	)

Segment Reporting

Recent Accounting Pronouncements

COVID-19

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows in the near term. Since the outbreak, we have provided limited payment plans if certain criteria are met by residents. The duration of a payment plan is determined on a case by case basis, and ultimately the tenant is expected to make rent payments in full over time. The Company had not granted any direct rent reductions to residents in response to the crisis as of March 31, 2021. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of our business.

3. Investments in Subsidiaries

F-44

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

As of March 31, 2021, the Company owned the Portfolio, which consisted of 13,693 properties, through thirteen SPEs. The following table presents the ownership structure of each SPE group that directly owns the title to each real estate asset as of March 31, 2021, the number of assets held, the cost of those assets, the resulting debt allocated to each SPE and whether the debt is a mortgage loan. The mortgage loan may be settled from the assets of the below entity or entities to which the loan is made. Loans from the Warehouse Facility (as defined in Note 5) can only be settled from the assets owned by VB One, LLC (dollars in thousands):


VIE Name	Homes		Cost Basis		OP Beneficial Ownership %			Encumbered by Mortgage (1)		Debt Allocated
NREA VB I, LLC		66	$	6,002		100	%		Yes	$	5,048
NREA VB II, LLC		172		16,575		100	%		Yes		10,799
NREA VB III, LLC		1,323		119,631		100	%		Yes		71,189
NREA VB IV, LLC		386		37,082		100	%		Yes		24,330
NREA VB V, LLC		1,829		125,227		100	%		Yes		108,384
NREA VB VI, LLC		303		27,457		100	%		Yes		18,661
NREA VB VII, LLC		36		3,031		100	%		Yes		2,989
True FM2017-1, LLC		213		17,184		100	%		Yes		10,526
SMP Homes 3B, LLC		160		16,494		100	%		Yes		9,318
SMP Homes 5B, LLC		46		4,538		100	%		Yes		2,364
VB One, LLC		3,405		286,351		100	%		No		100,000
VB Two, LLC		1,859		154,438		100	%		No		125,000
VB Three, LLC		3,895		516,685		100	%		No		320,000

		13,693	$	1,330,695						$	808,608

(1)	Assets in VB One, LLC, VB Two, LLC and VB Three, LLC are not encumbered by a mortgage. Instead, the lender has an equity pledge in certain assets of the respective SPEs and an equity pledge in the equity of the respective SPEs.

4. Real Estate Assets

As of March 31, 2021, the Company, through the OP and its SPE subsidiaries, owned 13,693 single-family rental homes. As of December 31, 2020, the Company, through the OP and its SPE subsidiaries, owned 9,282 single-family rental homes. The components of the Company’s real estate investments in single family rental properties were as follows (in thousands):


	Land		Buildings and improvements (1)			Intangible lease assets			Real estate held for sale, net			Total
Gross Real Estate, December 31, 2020	$	171,062	$	582,610		$	795		$	675		$	755,142
Additions		157,920		413,450			4,452			263			582,347
Write-offs		—		—			(306	)		—			(306	)
Dispositions		—		—			—			(226	)		(6,488	)

Gross Real Estate, March 31, 2021		328,982		996,060			4,941			712			1,330,695
Accumulated depreciation and amortization		—		(41,129	)		(1,005	)		—			(42,134	)

Net Real Estate, March 31, 2021	$	328,982	$	954,931		$	3,936		$	712		$	1,288,561

(1)	Includes capitalized interest, real estate taxes, insurance and other costs incurred during renovation of the properties.

During the three months ended March 31, 2021 and 2020, the Company recognized depreciation expense of approximately $7.0 million and $4.4 million, respectively.

Acquisitions and dispositions

During the three months ended March 31, 2021, the Company, through the OP, acquired 4,415 homes and disposed of 4 homes.

On January 22, 2021, the Company, through the OP, purchased 1,725 homes, net of a simultaneous bulk disposition, located throughout the midwestern and southeastern United States (the “Conrex I Portfolio”). The gross purchase price including closing costs and other expenses and net of the simultaneous bulk disposition was approximately $228.0 million.

F-45

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

On March 1, 2021, the Company, through the OP, purchased 2,170 homes, net of a simultaneous bulk disposition, located throughout the midwestern and southeastern United States (the “Conrex II Portfolio”). The gross purchase price including closing costs and other expenses and net of the simultaneous bulk disposition was approximately $282.9 million.

Held for sale properties

The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. Once the Company begins marketing an asset or determines that it will pursue marketing an asset, the asset becomes classified as held for sale. At that time, the Company presents the net real estate assets separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. As of March 31, 2021, there are 6 properties that are classified as held for sale. These held for sale properties are unencumbered and have a carrying amount of approximately $0.7 million.

5. Debt

On September 20, 2019, the OP (as guarantor) and VB One, LLC (as borrower) entered into a credit facility (the “Warehouse Facility”) with KeyBank. The Warehouse Facility is secured by an equity pledge in certain assets of VB One, LLC and an equity pledge in the equity of VB One, LLC and bears interest at a variable rate equal to one-month LIBOR plus 2.25%. The Warehouse Facility is a full-term, interest-only facility with an initial 36-month term, has one 12-month extension option, and the Company has the right to request an increase in the facility amount of up to $250.0 million. As of March 31, 2021, the commitment amount of the Warehouse Facility is $135.0 million. The balance of the Warehouse Facility, net of unamortized deferred financing costs, is included in Warehouse Facility on the consolidated balance sheets.

On September 30, 2019, in relation to the acquisition of a 954-home portfolio, the OP (as guarantor) assumed an approximately $10.8 million Freddie Mac mortgage loan (the “TrueLane Mortgage”) with Berkadia Commercial Mortgage LLC as a result of the OP’s acquisition of True FM 2017-1, LLC. The TrueLane Mortgage is secured by the properties in True FM 2017-1, LLC and an equity pledge in True FM 2017-1, LLC and bears interest at a fixed rate equal to 5.35%. The TrueLane Mortgage matures and is due in full on February 1, 2028 and requires monthly principal and interest payments. The balance of the TrueLane Mortgage, net of unamortized deferred financing costs, is included in notes payable on the consolidated balance sheets.

F-46

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

As of March 31, 2021, the Company is in compliance with all debt covenants in all of its debt agreements.

The weighted average interest rate of the Company’s debt was 2.5800% as of March 31, 2021 and 2.1227% as of December 31, 2020. As of March 31, 2021 and December 31, 2020, the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, was 3.1022% and 3.2998%, respectively. For purposes of calculating the adjusted weighted average interest rate of the Company’s debt, including the effect of derivative financial instruments, the Company has included the weighted average fixed rate of 1.4309% for one-month LIBOR on its combined $320.0 million notional amount of interest rate swap agreements, which effectively fix the interest rate on $320.0 million of the Company’s floating rate indebtedness (see Note 6).

The following table contains summary information concerning the Company’s debt as of March 31, 2021 (dollars in thousands):


					Outstanding Principal as of
			Type		March 31, 2021			December 31, 2020			Interest Rate (1)
Initial Mortgage				Floating	$	241,400		$	241,400			1.66	%
Warehouse Facility				Floating		100,000			85,000			2.36	%
JPM Facility				Floating		320,000			—			2.86	%
MetLife Note				Fixed		125,000			—			3.25	%
TrueLane Mortgage				Fixed		10,526			10,570			5.35	%
Colony Note				Fixed		9,318			9,296			6.06	%
CoreVest Note				Fixed		2,364			2,358			6.12	%
NexPoint Real Estate Opportunities, LLC Note	(2	)		Floating		—			1,250			2.36	%

					$	808,608		$	349,874
Debt premium, net	(3	)				563			591
Deferred financing costs, net of accumulated amortization of $1,794 and $591, respectively						(9,942	)		(2,756	)

					$	799,229		$	347,709

(1)	Represents the interest rate as of March 31, 2021. Except for fixed rate debt, the interest rate is one-month LIBOR plus an applicable margin. One-month LIBOR as of March 31, 2021 was 0.1111%. One-month LIBOR as of December 31, 2020 was 0.1439%.

(2)	This was a related party note which was extinguished during the three months ended March 31, 2021 (see Note 11).

(3)

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to March 31, 2021 are as follows (in thousands):


	Total
2021	$	9,518
2022		955
2023		431,061	(1)
2024		8,375
2025		224,110
Thereafter		134,589
Total	$	808,608

(1)

Assumes the Company exercises the 12-month extension option on the Warehouse Facility.

F-47

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the term of the related debt using the straight-line method, which approximates the effective interest method. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of, or in conjunction with, a material change in the terms of the underlying debt agreement, any unamortized costs are charged to loss on extinguishment of debt and modification costs and any prepayment penalty resulting from the early repayment of the debt is recorded as interest expense in the period incurred. For the three months ended March 31, 2021 and 2020, amortization of deferred financing costs of approximately $0.5 million and $0.2 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income (loss).

6. Fair Value of Derivatives and Financial Instruments

•

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•

Derivative Financial Instruments and Hedging Activities

F-48

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of March 31, 2021 and December 31, 2020 were classified as Level 2 of the fair value hierarchy.

As of March 31, 2021, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):


Effective Date	Expiration Date		Index (1)	Notional		Fixed Rate
7/1/2019		7/1/2024	One-Month LIBOR	$	100,000		1.6290	%
9/1/2019		12/21/2025	One-Month LIBOR		100,000		1.4180	%
9/1/2019		12/21/2025	One-Month LIBOR		50,000		1.4190	%
2/3/2020		2/1/2025	One-Month LIBOR		50,000		1.2790	%
3/2/2020		3/3/2025	One-Month LIBOR		20,000		0.9140	%

				$	320,000		1.4309	%	(2	)

(1)	As of March 31, 2021, one-month LIBOR was 0.1111%.

(2)	Represents the weighted average fixed rate of the interest rate swaps.

For the three months ended March 31, 2021 and 2020, on the consolidated statements of operations and comprehensive income (loss), the Company recognized approximately $6.4 million of unrealized gain and $17.7 million of unrealized loss, respectively, related to the change in fair value of the interest rate swaps.

As of March 31, 2021 and 2020, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):


Derivative	Notional		Hedged Floating Rate Debt		Index		Index as of March 31, 2021			Strike Rate
Interest Rate Cap	$	241,400		Mortgage payable		One-Month LIBOR		0.1111	%		6.60	%

For the three months ended March 31, 2021 and 2020, on the consolidated statements of operations and comprehensive income (loss), the Company recognized less than $0.1 million, of interest expense related to the interest rate cap.

F-49

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):


		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Derivatives designated as hedging instruments:
Interest rate swaps	Fair market value of interest rate swaps	$	—	$	—	$	9,082	$	15,453

Total		$	—	$	—	$	9,082	$	15,453

7. Stockholders’ Equity

The following table details all Share issuances under the Continuous Offering and the Company’s distribution reinvestment plan (the “DRIP”) for the three months ended March 31, 2021 summarized by period end (dollars in thousands):


Period End	Shares issued		Cash proceeds		DRIP reinvestment
March 31, 2021		2,241,677	$	77,966	$	2,878

The following table provides detail on cash dividends declared on Shares as well as reinvested dividends as part of the Company’s DRIP for the three months ended March 31, 2021 (dollars in thousands):


Quarter Ended	DRIP Shares Issued		DRIP Dividend		Cash Dividend		Cash Dividend Accrued on RSUs (1)		Total Dividend
March 31, 2021		80,493	$	2,878	$	2,676	$	192	$	5,746

(1)	Included in accounts payable and other accrued liabilities on the consolidated balance sheets.

During the three months ended March 31, 2020, the Company declared dividends of approximately $3.2 million which was comprised of approximately $1.8 million paid in cash and approximately $1.4 million which was reinvested in 46,813 Shares under the DRIP.

Long-Term Incentive Plan

RSU Grants Under the 2018 LTIP

On December 10, 2019, a total of 73,700 RSUs were granted to certain employees of the Adviser and officers of the Company. On May 11, 2020, a total of 179,858 RSUs were granted to certain employees of the Adviser, officers of the Company and independent board members. On February 15, 2021, a total of 191,503 RSUs were granted to certain employees of the Adviser, officers of the Company and independent board members. RSUs granted to certain employees of the Adviser and officers of the Company generally vest over a four-year period with the February 15, 2021 and May 11, 2020 grants vesting 50% ratably over four years and 50% at the successful completion of an initial public offering. The RSUs granted to independent board members fully vest on the first anniversary of the grant date. Any unvested RSU is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Adviser. RSUs are valued at fair value (which is the NAV per share) on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule that approximates a straight-line basis. Beginning on the date of grant, RSUs accrue dividends that are payable in cash on the vesting date. Once vested, the RSUs convert on a one-for-one basis into Shares.

F-50

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

As of March 31, 2021, the number of RSUs granted that are outstanding was as follows (dollars in thousands):


Dates	Number of RSUs		Value (1)
Outstanding December 31, 2020		235,133	$	7,193
Granted		191,506		6,720
Vested		—		—
Forfeited		—		—

Outstanding March 31, 2021		426,639	$	13,913

(1)	Value is based on the number of RSUs granted multiplied by the most recent NAV per share on the date of grant, which was $36.56 for the February 15, 2021 grant, $30.82 for the May 11, 2020 grant, and $29.85 for the December 10, 2019 grant.

The vesting schedule for the RSUs is as follows:


Vest Date	RSUs Vesting
May 11, 2021		30,510
December 10, 2021		18,425
February 15, 2022		32,483
May 11, 2022		21,336
December 10, 2022		18,425
February 15, 2023		22,717
May 11, 2023		21,335
December 10, 2023		18,426
February 15, 2024		22,717
May 11, 2024		21,335
February 14, 2025		22,717
Upon successful completion of IPO		176,211

		426,639

For the three months ended March 31, 2021 and 2020, the Company recognized approximately $0.5 million and $0.1 million, respectively, of non-cash compensation expense related to the RSUs, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

F-51

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Determination of Net Asset Value


Date	NAV per share		DRIP price per share
November 1, 2018	$	25.00	$	24.25
December 31, 2018		28.27		27.42
March 31, 2019		28.75		27.89
June 30, 2019		28.88		28.01
September 30, 2019		29.85		28.95
December 31, 2019		30.58		29.66
March 31, 2020		30.59		29.67
April 30, 2020		30.82		29.90
May 31, 2020		31.08		30.15
June 30, 2020		31.24		30.30
July 31, 2020		31.47		30.53
August 31, 2020		32.91		31.92
September 30, 2020		34.00		32.98
October 31, 2020		34.18		33.15
November 30, 2020		34.38		33.35
December 31, 2020		36.56		35.46
January 31, 2021		36.56		35.46
February 28, 2021		36.68		35.58
March 31, 2021		36.82		35.72

Fees and Commissions paid to Placement Agents and Dealer Manager

Subject to certain exceptions, investors that purchase Shares through the Continuous Offering will generally pay the Placement Agents in the Continuous Offering placement fees or commissions, in addition to the NAV sales price, equal to 1% to 5.5% of gross investor equity, subject to certain breakpoints and various terms of each specific Selling Agreement. An advisory fee equal to 2% of gross proceeds invested, which is also in addition to the NAV sales price, is paid to Raymond James for all Shares sold by Raymond James on behalf of the Company in the Continuous Offering. With the consent of the applicable Placement Agent, some or all of the applicable fees and commissions may be waived. Other Selling Agreements may have specific fees that differ from the Raymond James fees related to selling Shares to their clients. In addition, the Dealer Manager will generally receive a fee of 0.5% on sales in the Continuous Offering through Raymond James and 3% on sales through other Placement Agents. Placement Agent compensation is subject to a reasonable carve-out for sales of Shares directly by the Company or for sales to employees of our Adviser, Manager and affiliates thereof.

8. Redeemable Noncontrolling Interests in the OP

F-52

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

The following table presents the redeemable noncontrolling interests in the OP (in thousands):


	Balances
Redeemable noncontrolling interests in the OP, December 31, 2020	$	127,090
Net loss attributable to redeemable noncontrolling interests in the OP		(35	)
Contributions by redeemable noncontrolling interests in the OP		955
Distributions to redeemable noncontrolling interests in the OP		(2,022	)
Redemptions by redeemable noncontrolling interests in the OP		—
Equity-based compensation		416
Other comprehensive income attributable to redeemable noncontrolling interests in the OP		1,581
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		(3	)

Redeemable noncontrolling interests in the OP, March 31, 2021	$	127,982

The following table provides detail on distributions to noncontrolling interests in the OP for the three months ended March 31, 2021 (dollars in thousands):


Quarter Ended	DRIP OP Units Issued		OP DRIP Distribution		OP Cash Distribution		OP Cash Distribution Accrued on PI Units (1)		Total OP Distribution
March 31, 2021		10,108	$	360	$	1,497	$	165	$	2,022

(1)

Included in accounts payable and other accrued liabilities on the consolidated balance sheets.

As of March 31, 2021, the Company held 9,513,087 OP Units, NREO held 1,953,967 OP Units, NRESF held 76,712 OP Units, NREC held 737,362 OP Units, GAF REIT held 131,775 OP Units and the VineBrook Contributors and other Company insiders held 576,058 OP Units.

The following table provides detail on distributions to noncontrolling interests in the OP for the three months ended March 31, 2020 (dollars in thousands):


Quarter Ended	DRIP OP Units Issued		OP DRIP Distribution		OP Cash Distribution		OP Cash Distribution Accrued on PI Units (1)		Total OP Distribution
March 31, 2020		7,966	$	236	$	1,392	$	64	$	1,692

(1)	Included in accounts payable and other accrued liabilities on the consolidated balance sheets.

PI Unit Grants Under the 2018 LTIP

In connection with the 2018 LTIP, PI Units have been issued to key personnel, senior management and executives of the Manager. On April 19, 2019, a total of 40,000 PI Units were granted, on November 21, 2019, a total of 80,399 PI Units were granted, on May 11, 2020, a total of 219,826 PI Units were granted and on November 30, 2020, a total of 11,764 PI Units were granted. The PI Units are a special class of partnership interests in the OP with certain restrictions, which are convertible into OP Units, subject to satisfying vesting and other conditions. PI Unit holders are entitled to receive the same distributions as holders of our OP Units (only if we pay such distributions). The PI Units granted in 2019 generally fully vest over a period of two to four years. The PI Units granted on May 11, 2020 vest 50% ratably over four years and 50% at the successful completion of an initial public offering and the PI Units granted on November 30, 2020 vest 100% ratably over four years or alternatively 100% on the successful completion of an initial public offering. Once vested and converted into OP Units in accordance with the limited partnership agreement of the OP, the PI Units will then be fully recognized as OP Units, which are subject to a one year lock up period before they can be converted to Shares. Any unvested PI Unit is forfeited, except in limited circumstances, as determined by the compensation committee of the Board, when the recipient is no longer employed by the Manager. PI Units are valued at fair value on the date of grant, with compensation expense recorded in accordance with the applicable vesting schedule over the periods in which the restrictions lapse, that approximates a straight-line basis. We valued the PI Units at a per-unit value equivalent to the per-share offering price of our OP Units less a discount for lack of marketability and other discounts estimated by a third-party consultant. Beginning on the date of grant, PI Units accrue dividends that are payable in cash quarterly.

F-53

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

As of March 31, 2021, the number of PI Units granted that are outstanding was as follows (dollars in thousands):


	Number of PI Units		Value (1)
Outstanding December 31, 2020		310,465	$	9,290
Granted		—		—
Vested		—		—
Forfeited		—		—

Outstanding March 31, 2021		310,465	$	9,290

(1)

The vesting schedule for the PI Units is as follows:


Vest Date	PI Units Vesting
May 11, 2021		27,478
November 1, 2021		9,200
November 21, 2021		18,425
November 30, 2021		2,941
May 11, 2022		27,479
November 1, 2022		7,200
November 21, 2022		18,425
November 30, 2022		2,941
May 11, 2023		27,478
November 1, 2023		7,200
November 21, 2023		18,425
November 30, 2023		2,941
May 11, 2024		27,478
November 30, 2024		2,941
Upon successful completion of IPO*		109,913

		310,465

^*Upon successful completion of an IPO, an additional 11,764 PI Units will vest immediately instead of vesting ratably according to the schedule above on each of November 30, 2021, November 30, 2022, November 30, 2023 and November 30, 2024.

For the three months ended March 31, 2021 and 2020, the OP recognized approximately $0.4 million and $0.2 million, respectively, of non-cash compensation expense related to the PI Units, which is included in corporate general and administrative expenses on the Company’s consolidated statements of operations and comprehensive income (loss).

The table below presents the consolidated Shares and OP Units outstanding held by the noncontrolling interests (“NCI”), as the OP Units held by the Company are eliminated in consolidation:

Period End

Shares Outstanding

OP Units Held by NCI

Consolidated Shares and OP
Units Outstanding

March 31, 2021

11,499,045

3,475,874

14,974,919

9. Redeemable Series A Preferred Stock

On January 8, 2021, the Company issued 1,460,000 Preferred Shares at a price of $25.032 per share, for gross proceeds of approximately $36.5 million. The net proceeds were in turn used to purchase 1,460,000 6.50% Series A Cumulative Redeemable Preferred Units of the OP (“OP Preferred Units”). The OP used the proceeds for acquisitions and other corporate purposes. The Preferred Shares have a redemption value of $25.00 per share and are mandatorily redeemable on October 7, 2027, subject to certain extensions. On March 15, 2021, the Company declared a dividend of $0.40625 per share to the holders of record of Preferred Shares as of March 25, 2021. The preferred dividend was paid on April 12, 2021. The following table presents the redeemable Series A preferred stock (dollars in thousands):

F-54

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS


	Preferred Shares		Balances
Redeemable Series A preferred stock, December 31, 2020		3,540,000	$	85,067
Issuance of Redeemable Series A preferred stock		1,460,000		36,547
Issuance costs related to Redeemable Series A preferred stock		—		(1,335	)
Net income attributable to Redeemable Series A preferred stockholders		—		2,031
Dividends declared to Redeemable Series A preferred stockholders		—		(2,031	)
Accretion to redemption value		—		175

Redeemable Series A preferred stock, March 31, 2021		5,000,000	$	120,454

10. Income Taxes

If the Company fails to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of March 31, 2021, the Company believes it is in compliance with all applicable REIT requirements. The Company is still subject to state and local income taxes and to federal income and excise tax on its undistributed income, however those taxes are not material to the financial statements.

The Company had no material unrecognized federal or state tax benefit or expense, accrued interest or penalties as of March 31, 2021. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive income (loss).

11. Related Party Transactions

Advisory Fee

For the three months ended March 31, 2021 and 2020, the Company incurred advisory fees of approximately $1.3 million and $0.7 million, respectively, which is included in advisory fees on the consolidated statements of operations and comprehensive income (loss).

F-55

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Management Fee

•

8.0% of collected rental revenue up to and including $45 million on an annualized basis;

•

7.0% of the incremental collected rental revenue above $45 million but below and including $65 million on an annualized basis;

•

6.0% of the incremental collected rental revenue above $65 million but below and including $85 million on an annualized basis; and

•

5.0% of the incremental collected rental revenue above $85 million on an annualized basis.

Under the Management Agreements and the Side Letter, the aggregate fees that the Manager can earn in any fiscal year are capped such that the Manager’s EBITDA (as defined in the Management Agreements) derived from these fees may not exceed the greater of $1.0 million or 0.5% of the combined equity value of the Company and the OP on a consolidated basis, calculated on the first day of each fiscal year based on the aggregate NAV of the outstanding Shares and OP Units held by other than the Company on the last business day of the prior fiscal year (the “Manager Cap”). The aggregate fees up to the Manager Cap are payable (1) in cash in an amount equal to the tax obligations of the Manager’s equity holders resulting from the aggregate management fees earned in such fiscal year up to a maximum rate of 25% (the “Manager Cash Cap”) and (2) with respect to the remaining portion of the aggregate fees, in OP Units, at a price per OP Unit equal to the Cash Amount (as defined in the OP’s limited partnership agreement). The aggregate fees paid in cash that exceed the Manager Cash Cap are rebated back to the OP. As of March 31, 2021, the OP recorded no receivable on the consolidated balance sheet related to the Manager Cash Cap rebate. As of December 31, 2020, the OP recorded a receivable of approximately $1.1 million due from the Manager related to the Manager Cash Cap rebate.

Property management fees are included in property management fees on the consolidated statements of operations and comprehensive income (loss) and acquisition and construction fees are capitalized into each home and is included in buildings and improvements on the consolidated balance sheet and are depreciated over the useful life of each property.

The following table is a summary of fees that the OP incurred to the Manager and its affiliates, as well as reimbursements paid to the Manager and its affiliates for various operating expenses the Manager paid on the OP’s behalf, under the terms of Management Agreements and Side Letter, for the three months ended March 31, 2021 and 2020 (dollars in thousands):


		For the Three Months Ended March 31,
	Location on Financial Statements	2021		2020
Fees Incurred
Property management fees	Statement of Operations	$	1,805	$	1,277
Acquisition fees	Balance Sheet		5,974		314
Construction supervision fees	Balance Sheet		1,322		863
Reimbursements
Payroll and benefits	Balance Sheet and Statement of Operations		3,079		1,827
Other reimbursements	Balance Sheet and Statement of Operations		155		93

Totals		$	12,335	$	4,374

F-56

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Internalization of the Adviser or the Manager

Termination Fees Payable to the Adviser or Manager

Advance Acquisition and Construction Fee Advances Paid to the Manager

Pursuant to the Side Letter, the Manager may request from the OP from time-to-time an advance on acquisition and construction fees (the “Fee Advances”) to fund the performance of its obligations under the Management Agreements. Each Fee Advance is repaid from future acquisition and construction fees earned by and owed to the Manager. Fee Advances are included in the line item Due from Manager on the consolidated balance sheets. As of March 31, 2021 and December 31, 2020, the Company recorded no receivable for Fee Advances.

Backstop Loans to the Manager

Pursuant to the Side Letter, in the event the Manager does not have sufficient cash flow from operations to meet its budgeted obligations under the Management Agreements, the Manager may from time to time request from the Company a temporary loan (the “Backstop Loan”) to satisfy the shortfall. Backstop Loans are interest free, may be prepaid at any time and may not exceed a principal amount that is in the aggregate equal to the lesser of the Internalization Fee or Termination Fee under the applicable Management Agreement. Unless otherwise repaid, each Backstop Loan is payable upon termination of the applicable Management Agreement. Backstop Loans are included in the line item Due from Manager on the consolidated balance sheets. As of March 31, 2021 and December 31, 2020, the Company recorded a receivable for Backstop Loans made to the manager of approximately $0.7 million and approximately $0.7 million, respectively.

Dealer Manager Fees

Organization and Continuous Offering Expenses

Offering and organizational expenses (“O&O Expenses”) may be incurred in connection with sales in the Continuous Offering at the discretion of the Company and are borne by investors through a fee of up to 0.50% of gross investor equity for sales through Raymond James and up to 1.00% of gross investor equity for other sales. O&O Expenses are intended to reimburse the Company, Adviser and Placement Agents for the costs of maintaining the Continuous Offering and selling costs incurred in raising equity under the Continuous Offering. Payments for bona fide expenses and reimbursements are O&O Expenses which are recorded as a reduction to equity.

F-57

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

See below for detail related to the O&O Expenses as of March 31, 2021 (dollars in thousands):


	Amount
Gross investor equity raised subject to O&O	$	355,064
O&O collected and available for reimbursements	$	2,280

O&O Expenses reimbursed for the period:
Inception through December 31, 2019	$	686
January 1, 2020 through March 31, 2020		188
April 1, 2020 through June 30, 2020		235
July 1, 2020 through September 30, 2020		175
October 1, 2020 through December 31, 2020		385
January 1, 2020 through March 31, 2021		296

	$	1,965

O&O available for future reimbursements	$	315

NexBank

The Company and the OP maintain bank accounts with an affiliate of the Adviser, NexBank N.A. (“NexBank”). NexBank charges no recurring maintenance fees on the accounts.

NREO Note

12. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of March 31, 2021, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or consolidated statements of operations and comprehensive income (loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

An entity purchased by the OP as a part of the Formation Transaction, the Huber Transaction Sub, LLC (“Huber”), had potential liability exposure to a legacy environmental issue related to a 1988 petroleum release from an underground storage tank located on a property subsequently not purchased by Huber. The owner of the property prior to Huber has assumed the defense of alleged environmental violations and is proceeding with the required regulatory investigation and remediation of the underground storage tank release clean up. Huber received an indemnification, and the Company and the OP in turn received an indemnification, which is evidenced by approximately $2.6 million of proceeds in an escrow account (the “Indemnification Escrow”) that is for the benefit of the Company and the OP in the event the prior owner fails to perform their obligations in regard to any required remediation of the issue. On January 27, 2021, the Indemnification Escrow was released.

F-58

VINEBROOK HOMES TRUST, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

13. Subsequent Events

The Company evaluated subsequent events to determine if any significant events occurred subsequent to the balance sheet date that would have a material impact on these consolidated financial statements and determined the following events were material:

Acquisitions

Subsequent to March 31, 2021, the Company acquired 828 homes for a purchase price of approximately $82.5 million.

Warehouse Facility

On May 7, 2021, the OP drew $35.0 million under the Warehouse Facility. The proceeds were mostly used to fund acquisitions and other capital expenditures. As of June 9, 2021, the outstanding balance of the Warehouse Facility was $135.0 million.

Second Quarter 2021 Dividends

On April 14, 2021, the Company declared a dividend of $0.1767 per Share for shareholders of record as of April 15, 2021. On May 15, 2021, the Company declared a dividend of $0.1767 per Share for shareholders of record as of May 17, 2021.

Equity Issuance Pursuant to the Continuous Offering

The table below illustrates monthly equity issuances subsequent to March 31, 2021 (dollars in thousands):


Date of Close	Shares issued		Cash proceeds
April 1, 2021		443,574	$	16,270
April 9, 2021		18,797		692
April 16, 2021		21,975		809
April 23, 2021		31,164		1,147
April 30, 2021		80,042		2,947
May 3, 2021		532,431		19,604
May 14, 2021		147,667		5,588
May 21, 2021		101,625		3,846
May 28, 2021		46,442		1,758
June 1, 2021		679,416		25,715

		2,103,133	$	78,376

NAV Determination

Pursuant to the terms of the Continuous Offering and calculated in accordance with the Valuation Methodology, on May 14, 2021, the pricing committee of the Board increased the NAV per Share to $37.85 as of April 30, 2021. In accordance with provisions in the OP’s partnership agreement, the value of the OP Units per OP Unit was also increased to $37.85. Shares and OP Units issued under the respective DRIPs will be issued at a 3% discount to the NAV in effect.

F-59

Exhibit 2.2

Execution Version

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AND AGREEMENT (this “Agreement”) is made and entered into as of August 16, 2019 (the “Effective Date”), by and between (a) VineBrook Operating Partnership, L.P., a Delaware limited partnership (“Purchaser”), and (b) Timber Real Estate Holdings, LLC, a Delaware limited liability company (“Seller”). Seller and Purchaser are sometimes hereinafter referred to as a “Party” and collectively as the “Parties.” Capitalized terms used, but not defined herein shall have the meanings as listed in Exhibit A attached hereto. This Agreement shall also constitute the joint escrow instructions of Seller and Purchaser to Westcor Investor Services (“Escrow Agent”). Each of the Companies (as defined below) is, contemporaneously herewith, executing and delivering a Joinder Agreement pursuant to which such Company agrees to be bound hereby as though it were Seller hereunder for purposes of being jointly and severally liable with each other and Seller for purposes of Articles 9-17.

RECITALS

A. Seller, directly or indirectly through one or more Subsidiaries, owns 100% of the limited liability company interests (as defined in the Delaware Act) in the limited liability companies set forth on Schedule VIII hereto (each, a “Company” and collectively, the “Companies”).

B. As of the date hereof, the Companies directly own fee title to 975 single-family rental homes that the Parties currently contemplate will, directly or indirectly, be sold hereunder (each, a “Property” and collectively, the “Properties”).

C. On the terms and conditions set forth herein, Purchaser desires to acquire the Properties (other than the Excluded Properties), certain of which Properties shall be acquired (i) indirectly by Purchaser as a result of the purchase from Seller or one of its Subsidiaries of the limited liability company interests in the applicable Company that owns one or more of the applicable Properties (the “Assigned Interests”) or (ii) directly by Purchaser as a result of the purchase of one or more of the Properties from an applicable Company (the “Direct Sale Properties”; the Assigned Assets together with the Direct Sale Properties, the “Acquired Assets”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by all parties, the parties agree as follows:

AGREEMENT

1. Purchase and Sale; Consideration; Deposit.

(a) Purchase and Sale. At the Closing, Seller shall, or shall cause one or more of its Subsidiaries (including the Companies, as applicable), to sell, assign and transfer to Purchaser, and Purchaser agrees to purchase, (i) the Assigned Interests and (ii) the Direct Sale Properties, in each case, subject to and in accordance with the terms and conditions of this Agreement and free and clear of all Liens (other than Permitted Liens) and withdraw as a Member of the Company, and (iii) withdraw as the Managing Member of the Companies. Any Person that is directly selling, assigning and/or transferring an Assigned Interest or Direct Sale Property is referred to herein as a “Transferor”. Effective as of the Closing, Purchaser hereby (i) accepts the foregoing transfer of the Assigned Interests from Seller and (ii) assumes all of the duties and obligations of Seller with respect to the Assigned Interests. The Assigned Interests includes all rights, interests, and obligations that may be allocable to the Assigned Interests, including all of Seller’s proportionate right, title, and interest in and to the business, properties, and assets of the Company (other than the Excluded Assets) allocable or attributable to the Assigned Interests, and to the capital, distributions, profits, and losses of the Company or its successors allocable or attributable to the Assigned Interests from and after the Closing.

(b) Consideration. The total price payable for the Acquired Assets shall be seventy five million and eighty thousand four hundred sixty and 00/100 Dollars ($75,080,460.00), as adjusted in accordance with the terms and conditions of this Agreement (the “Purchase Price”).

(c) Payments. In consideration of the sale of the Acquired Assets to Purchaser, Purchaser shall pay to Seller the Purchase Price as follows:

(i) Purchaser shall deposit with the Escrow Agent on the Effective Date a deposit in an amount equal to $2,000,000 (as may be increased by additional deposits, plus any accrued interest, the “Deposit”). A portion of the Deposit in the initial amount of $100,000 shall be referred to as the “Freddie Deposit” and the balance of the initial Deposit shall be referred to as the “Non-Freddie Deposit.” The Parties agree that such portions shall not be reallocated following the Effective Date, notwithstanding that after the Effective Date, the percentages of the Purchase Price that such portions reflect could change as a result of Defective Property Transfers or other applicable consequences set forth in this Agreement. In the event this Agreement is terminated by Purchaser in accordance with the express terms hereof (including but not limited to, Purchaser’s rights in Sections 3(d), 5(e), 5(g), 12(b)(i) and 16(e) hereof), the Deposit shall be immediately returned to Purchaser.

(ii) On the Closing Date, the balance of the Purchase Price, minus the applicable Deposit (i.e. Freddie Deposit or Non-Freddie Deposit) minus the applicable Indemnity Escrow Amount, minus the Assumption Indebtedness, if applicable, and plus or minus the apportionments, reductions, prorations and other credits provided for in this Agreement (including pursuant to Article 4 and as set forth in the Closing Statement), as applicable, shall be paid by Purchaser in “immediately available” funds delivered to (or as directed by) Seller through an escrow to be established by Purchaser and Seller with the Escrow Agent.

(iii) In addition to all other amounts under this Agreement, upon its execution of this Agreement, Purchaser shall pay to Seller an amount equal to $100.00 (the “Independent Consideration”), which amount Seller and Purchaser hereby acknowledge and agree has been bargained for and agreed to as consideration for Seller’s execution and delivery of this Agreement. The Independent Consideration is in addition to and independent of any other consideration or payment provided for in this Agreement and will not be refunded in any event.

2. Excluded Assets and Excluded Liabilities. The parties acknowledge and agree that, at the Closing, in connection with the Direct Asset Sales, Purchaser is not hereby assuming any Excluded Liability and is not hereby acquiring any Excluded Asset, and for avoidance of doubt, Purchaser shall not assume or become liable for the payment or performance of any Liabilities arising out of or relating to the Excluded Assets or Excluded Liabilities.

3. Due Diligence; Exhibits.

(a) Due Diligence Period; Initial Disclosure Schedule. Purchaser shall have a period beginning on the Effective Date and ending at 11:59 P.M. Dallas, Texas time on the date that is 21 days thereafter (the “Due Diligence Period”) to review the books and records, title reports and leases of each Company and the Properties and to perform any other diligence, inspections or testing deemed reasonably necessary or appropriate by Purchaser. All Purchaser’s due diligence costs and expenses, including the cost related to obtaining third party reports, shall be paid by Purchaser. Subject to the terms of Section 3(h), Purchaser acknowledges and agrees that in order to expedite the execution and delivery of this Agreement by the Parties, Purchaser is hereby permitting Seller to, and Seller hereby agrees to, deliver an updated Disclosure Schedule within five (5) days after the Effective Date.

(b) Books and Records; Financing Documents. Seller shall as promptly as reasonably practical deliver to Purchaser true, correct and complete items set forth on Schedule II and true, correct, and complete copies of all other books and records of each Company, and Property in the case of Direct Sale Properties, and all Financing Documents.

(c) Defective Properties. If prior to the end of the Due Diligence Period, Purchaser determines that one or more Properties (other than any Freddie Properties) has a defect in excess of the Materiality Threshold (a “Defective Property”), Purchaser shall deliver notice of the same to Seller, setting forth in reasonable detail the basis for such determination. Seller shall have the right, but not the obligation, to cure any such defect at or prior to Closing to the reasonable satisfaction of Purchaser and the satisfaction of Purchaser’s lender (in its sole and absolute discretion) at or prior to Closing. Subject to Section 3(d) below, if Seller elects not to cure such defect or if Seller fails to cure such defect, Seller shall not be in default of this Agreement but Seller shall, in the case the Defective Property is part of the Direct Sale Properties, remove such Defective Property from this transaction by not conveying such Defective Property to Purchaser at the Closing, or in the case the Defective Property is part of the Assigned Interest, effectuate a Defective Property Transfer for such Defective Property. For avoidance of doubt, in no event may a Freddie Property be designated as or otherwise be deemed a Defective Property.

(d) Termination Rights. If, during the Due Diligence Period, (A) Purchaser determines that for any reason whatsoever Purchaser is not satisfied with the Leases or other information provided by Seller, or the Properties, for any reason (such as non-satisfactory disclosure made in a Seller Disclosure Schedule Supplement delivered pursuant to Section 3(h)) or for no reason, then Purchaser may, in its sole and absolute discretion, terminate this Agreement by written notice delivered to Seller and Escrow Agent prior to the expiration of the Due Diligence Period (or within two (2) business days following the expiration of the Due Diligence Period if Seller provides Purchaser with a Seller Disclosure Schedule Supplement within two (2) business days prior to the expiration of the Due Diligence Period), or (B) Purchaser has provided notice to Seller under Section 3(c) specifying Defective Properties that have an aggregate Allocated Purchase Price (as set forth on Schedule VI) of more than $2,000,000 (“Defective Properties Threshold”) then Seller may, in its sole and absolute discretion, terminate this Agreement by written notice delivered to Purchaser and Escrow Agent within two (2) business days following the expiration of the Due Diligence Period, and in either such event, the Escrow Agent shall promptly thereafter refund the Deposit to the Purchaser, and the parties shall have no further rights or obligations under this Agreement except for those which expressly survive termination. Except as otherwise provided herein, if Purchaser does not elect to terminate this Agreement during the Due Diligence Period, Purchaser shall be deemed to have waived its right to terminate this Agreement pursuant to this Section 3(d)(i), and the Non-Freddie Deposit shall be non-refundable to Purchaser (provided the Non-Freddie Deposit shall be applied against the Purchase Price at Closing), except upon a failure of a condition precedent to Purchaser’s obligations under this Agreement, or any other express provision of this Agreement entitling Purchaser to a return of the Non-Freddie Deposit.

(e) Indemnification. Purchaser shall and does hereby agree to (i) repair any damage to any Property caused by Purchaser’s inspections and (ii) indemnify and hold harmless Seller and its respective Affiliates (including its Subsidiaries, including the Companies, as applicable), and its and their directors, officers, members, managers, partners, and agents, and each of the executors, successors and assigns of any of the foregoing (collectively, the “Seller Pre-Closing Indemnified Parties”) from and against any claims, costs, expenses or damages that any such Seller Pre-Closing Indemnified Party may suffer or incur as a result of such inspection, including, without limitation, (x) injuries to persons, damage to

property, and costs of restoring the Property to its condition existing prior to the inspection and testing, (y) any and all reasonable attorneys’ fees and court costs incurred by such Seller Pre-Closing Indemnified Party in connection with any such claims or activities and (z) mechanic’s liens or claims that may be filed on or asserted against the Property by Purchaser’s Representatives (defined below) performing such work for Purchaser, provided however, the foregoing indemnity does not extend to loss or damage incurred by such Seller Pre-Closing Indemnified Parties as a result of the discovery by Purchaser or any Purchaser’s Representatives of matters or conditions that existed prior to such inspections. The foregoing indemnity will survive Closing or any termination of this Agreement for any reason. Purchaser shall use commercially reasonable efforts not to disturb the activities of tenants of any Property during any such inspections. Each of the Seller Pre-Closing Indemnified Parties that is not a Party is hereby designated as an express third-party beneficiary of the foregoing indemnity.

(f) Scope of Inspections. During the Due Diligence Period and thereafter prior to Closing if Purchaser or Seller has not terminated this Agreement during the Due Diligence Period as provided in Section 3(d), upon advance notice to Seller, Purchaser and Purchaser’s Representatives may inspect all vacant Properties, and in any event, no less than 30% of all Properties to be selected by Purchaser (accompanied by an agent of Seller should Seller so desire), and to the extent feasible without materially interfering with any occupant’s use of any Property, in order to conduct any and all studies or tests, including, but without limitation, obtaining topographical information, conducting environmental, engineering and other studies and for all other similar preliminary work that Purchaser may deem necessary in connection with Purchaser’s due diligence, in each instance conducted subject to the terms of this Agreement and the applicable Lease. Notwithstanding the foregoing, Seller shall have the right to pre-approve (which approval Seller may not unreasonably withhold, condition or delay) and be present during any physically intrusive testing of the Property, including any Phase II environmental site assessment if recommended by a Phase I environmental site assessment obtained by Purchaser.

(g) Exhibits. Each of the Parties hereby agrees to, during the Due Diligence Period, reasonably cooperate with each other to prepare, or to cause to be prepared, the form of each Exhibit hereto that has not been attached hereto as of the Effective Date in order to expedite the Parties’ respective execution and delivery of this Agreement.

(h) Seller Disclosure Schedule Supplement. Seller shall promptly provide notice to Purchaser of any breach of any representation or warranty of Seller or any fact or circumstance that would or would reasonably be likely to cause or constitute a breach of any such representation or warranty had that representation or warranty been made as of the time of the occurrence of such fact or circumstance (such notice, a “Seller Disclosure Schedule Supplement”). Subject to the cure provisions set forth in Section 10(h)(ii), and solely to the extent that such breach would result in a failure of the condition set forth in Section 5(f)(i), Purchaser shall have the termination rights set forth in Section 12(b) with respect to any material breach of which Purchaser receives notice in a Seller Disclosure Schedule Supplement.

(i) Title Exceptions. On or before the expiration of the Due Diligence Period, Purchaser shall notify Seller in writing (“Title Objection Notice”) of any title exceptions identified in the preliminary title reports for the Properties (“Preliminary Title Reports”) that Purchaser disapproves in its sole and absolute discretion (“Title Objections”). Any exception shown on the Preliminary Title Reports that is not listed as a Title Objection in the Purchaser’s Title Objection Notice will be deemed approved by Purchaser and shall constitute a “Permitted Exception” hereunder. Purchaser and Seller hereby agree that all non-delinquent property taxes and assessments as of the Closing shall be deemed a Permitted Exception. If Purchaser fails to timely provide a Title Objection Notice, such failure shall be deemed an election by Purchaser to approve all title exceptions identified in the Preliminary Title Report as Permitted Exceptions. Seller shall have a period of five (5) days following its receipt of the Title Objection Notice within which to notify Purchaser in writing (“Title Objection Response”) of its agreement to remove, alter, modify or

otherwise mitigate to the satisfaction of Purchaser any Title Objection. Seller’s failure to timely provide a Title Objection Response will be deemed an election by Seller not to cure the Title Objections prior to the Closing. In the event that Seller is not willing to remove, alter, modify or otherwise mitigate to the satisfaction of Purchaser any Title Objection, Purchaser shall elect, prior to the expiration of the Due Diligence Period, to either (i) waive its disapproval of such exception, in which case such exception shall then be deemed to be a Permitted Exception, or (ii) terminate its obligation to purchase the Assigned Interests and Direct Sale Properties. Purchaser’s failure to give such notice shall be deemed an election to waive its disapproval of such exception and to accept such disapproved exception as a Permitted Exception. In the event Purchaser elects to terminate its obligation to purchase the Assigned Interests and Direct Sale Properties in accordance with this Section, the Deposit shall be immediately refunded by Escrow Agent to Purchaser without the need for any additional instructions from the parties, and Purchaser’s obligation to purchase, and Seller’s obligation to sell, the Assigned Interests and Direct Sale Properties shall terminate, and neither Party shall have any further obligation to the other except as otherwise provided in this Agreement.

(j) Insurance. Prior to such time as Purchaser or any of Purchaser’s contractors, subcontractors, materialmen, employees, agents or contractors (“Purchaser’s Representatives”) enter any portion of the Properties, Purchaser or Purchaser’s Representatives shall carry (a) worker’s compensation insurance in compliance with applicable law; (b) general liability insurance coverage including premises/operations liability, personal and advertising liability, products/completed operations, with a limit of $1,000,000 for bodily injury and property damage, in any combination of primary and excess insurance, including contractual liability, (c) automobile liability insurance in an amount not less than $1,000,000, in any combination of primary and excess insurance, covering all automobiles, including owned, hired and non-owned liability coverage and related equipment owned and/or operated by Purchaser and Purchaser’s Representatives in connection with entry on any portion of the Real Property; and (d) the general liability policy shall include in the policy form or via endorsement that the insured’s coverage is primary and any other coverage maintained by the additional insureds shall be non-contributing. Purchaser shall and shall direct Purchaser’s Representatives to add Seller, Company, the applicable property manager and any other entities reasonably designated by Seller as an additional insureds under the coverage described above, except workers compensation. All such insurance shall be issued by insurance companies admitted or authorized to do business in the state the applicable Property is located and whose rating is the most recent AM Best’s Rating of A-VII or better and Purchaser shall cause all such insurance policies to contain provisions that the issuing insurance companies waive the rights of recovery or subrogation against Seller. Purchaser shall endeavor to provide 30 days’ notice of cancelation or material change to coverage. Before entering any portion of the Properties, Purchaser shall deliver copies of certificates of insurance issued by the insurance carrier(s) to Seller demonstrating compliance with the terms of this Section.

4. Adjustments and Prorations. The following adjustments and prorations shall be made at the Closing:

(a) Rent; Security Deposits.

(i) All Rents payable under the Leases, Housing Assistance Payments and any other revenues derived from the operation of the Properties, including revenues derived from other miscellaneous income and collected by or on behalf of the applicable Company, directly or indirectly, prior to the Closing Date shall be prorated between Seller and Purchaser as of the applicable Proration Time in the applicable month of close, based upon a thirty (30) day month. Seller shall be entitled to, and shall receive a credit for, all cash or cash equivalents held in the bank account(s) of each Company with respect to which an Assigned Interest is being sold hereunder that is attributable Rents (other than Advance Rents), Housing Assistance Payments and other revenues attributable to any monthly period prior to but not including the applicable month during

which Proration Time occurs. Purchaser shall be entitled to such Rents, Housing Assistance Payments and other revenues attributable to any period on and after the applicable Proration Time. Rents not collected as of the Closing Date shall not be prorated at the time of such Closing. Unpaid and delinquent rent collected by Seller and Purchaser after the date of Closing shall be delivered as follows: (a) if Seller collects any unpaid or delinquent rent for the Properties, Seller shall, within fifteen (15) days after the receipt thereof, deliver to Purchaser any such rent which Purchaser is entitled to hereunder relating to the date of Closing and any period thereafter, and (b) if Purchaser collects any unpaid or delinquent rent from the Properties, Purchaser shall, within fifteen (15) days after the receipt thereof, deliver to Seller any such rent which Seller is entitled to hereunder relating to the period prior to the date of Closing. Seller and Purchaser agree that (i) all rent received by Seller or Purchaser within the first thirty (30) day period after the date of Closing shall be applied first to delinquent rentals, if any, in the order of their maturity, and then to current rentals, and (ii) all rent received by Seller or Purchaser after the first thirty (30) day period after the date of Closing shall be applied first to current rentals and then to delinquent rentals, if any, in inverse order of maturity. This Section shall survive the Closing.

(ii) Any Advance Rents collected under the Leases for the Properties for the period following the Closing Date shall be credited by Seller to Purchaser on the Closing Date to the Purchase Price; provided, however, that there shall be no such credit to Purchaser with respect to any Assigned Interest because, Purchaser, by virtue of acquiring the applicable Assigned Interest, will indirectly acquire the bank account(s) of the applicable Company that holds such Advance Rents therein. Seller shall provide a schedule of the applicable collected Advance Rents at least (2) two business days prior to the Closing Date, which such schedule shall set forth the applicable Advance Rents for the period ending five business days prior to the Closing.

(iii) After the Closing, (A) Purchaser shall have an exclusive right to collect the Rents and any other amounts due under the Leases and Purchaser will make a good faith effort after Closing to collect all rents in the usual course of Purchaser’s operation of the Property, but Purchaser will not be obligated to institute any lawsuit or other collection procedures to collect delinquent rents, and (B) Seller shall have no right to pursue claims against any Tenant in occupancy at or after the Closing or other party for sums due with respect to any period prior to the Closing Date.

(iv) Purchaser shall receive a credit against the Purchase Price at Closing for an amount equal to the full amount of the security and other refundable deposits held by the applicable Company with respect to each Lease as set forth on the Rent Roll for the Properties as of the Closing Date (as may be updated prior to Closing by Seller); provided, however, that there shall be no such credit with respect to any Assigned Interest because, Purchaser, by virtue of acquiring the applicable Assigned Interest, will indirectly acquire the bank account(s) of the applicable Company that holds such security and other refundable deposits.

(b) Real Estate Taxes. The real estate Taxes in respect of the Properties assessed with respect to any Straddle Period (the “Current Year Property Taxes”) shall be allocated between Seller, on one hand, and Purchaser, on the other hand, by proration (based upon the number of days from the beginning of such taxable year until the end of the Pre-Closing Tax Period, with respect to Seller, and from the beginning of the Post-Closing Tax Period until the end of such taxable year, with respect to Purchaser). Any unpaid real estate Taxes in respect of the Properties relating solely to a tax year prior to the then Current Year Property Taxes (to the extent not paid as of the Closing Date), and any Current Year Property Taxes allocated to Seller in accordance with the preceding sentence shall be the responsibility of Seller and shall be treated as a credit to Purchaser against the Purchase Price at the Closing (if not paid prior to Closing). The Current Year Property Taxes may be determined by the actual tax bill or any other reasonable evidence

thereof (including evidence of settlement issued by the applicable governmental authority); however, if the Current Year Property Taxes with respect to any Property cannot be determined at the Closing Date, the present Tax rate and the 2018 assessed valuation shall be used for the purposes of making adjustments to the Purchase Price at the Closing under this Section and the parties shall re-determine the amount of Current Year Property Taxes allocable to Seller in accordance with this Section within 30 days following receipt of the actual final Tax bill. If any real estate Taxes are assessed after the Closing Date for Current Year Property Taxes or real estate Taxes for any Pre-Closing Tax Period due to an increase in the assessed value of the Properties (or otherwise), or if any rebates for Current Year Property Taxes or real estate Taxes for any Pre-Closing Tax Period are received after the Closing Date, such additional real estate Taxes or rebates, as applicable, shall be allocated between Seller, on the one hand, and Purchaser, on the other hand, in accordance with this Section. Any increase in real estate Taxes resulting from a reassessment of any Property as a result of the conveyance of such Property to Purchaser shall be the sole responsibility of Purchaser.

(c) Special Assessments. All unpaid installments of special real estate assessments due and payable in respect of the Properties for any tax year prior to the Current Year Property Taxes shall be allocated to Seller as a credit to Purchaser against the Purchase Price; provided, however, if such special real estate assessment assessed prior to the Closing is payable during the calendar year in which the applicable Closing occurs, then the parties shall agree to prorate such special assessments equitably according to the parties’ respective periods of ownership during the calendar year in which Closing occurs. For avoidance of doubt, any increase in real estate Taxes resulting from a reassessment of any Property as a result of the conveyance of such Property to Purchaser shall be the sole responsibility of Purchaser.

(d) Operating Expenses. Operating expenses for the Properties, including any and all charges of HOAs, municipal utility district charges and the like or any other payables (collectively, “Operating Expenses”), shall be prorated as of the Proration Time, basis based on the terms of this paragraph. On or before the date that is ten days prior to the Closing Date, Seller shall provide Purchaser with a schedule of aggregate Operating Expenses for the Properties for the period of three full calendar months immediately prior to the month in which Closing occurs and a schedule of aggregate Operating Expenses for the Properties incurred for the month in which Closing occurs. The foregoing schedules will form the basis for prorating Operating Expenses at Closing such that Seller shall be responsible for such aggregate costs incurred on a portfolio basis prior to Closing, and Purchaser will be responsible for such aggregate costs incurred from and after Closing. The parties shall reconcile the prorations post-Closing pursuant to subsection (g) below.

(e) Other Customary Prorations. Unless otherwise agreed by the parties in writing, all other items customarily prorated in connection with sales of rental housing properties similar to the Properties in the applicable Markets shall be prorated as of the Proration Time.

(f) Closing Costs. Closing costs shall be allocated between Seller and Purchaser as follows:

(i) All Real Property Settlement Costs, if applicable, shall be paid in accordance with Schedule IV attached hereto.

(ii) With respect to any debt or equity financing of Purchaser for the Transaction other than the Assumption Indebtedness, Purchaser shall be responsible for any and all costs or expenses, including without limitation the costs of forming constituent entities and attorneys’ fees and costs incurred in connection with such financing and formation activities and the cost of any required BPOs.

(iii) With respect to the Assumption Indebtedness, Purchaser and Seller shall split 50/50 any and all initial review and application fees or charges of Lender but Seller shall pay 100% of assumption costs.

(iv) Purchaser and Seller shall split 50/50 all costs and expenses associated with any occupancy inspections or certifications required by applicable law.

(v) Except as otherwise expressly set forth herein, closing costs shall be allocated to the party customarily responsible for such costs in each applicable state, and Purchaser, on the one hand, and Seller, on the other hand, shall each be solely responsible for all of its own fees of any attorneys, consultants or advisers retained or engaged by such party.

(g) Calculation of Adjustments and Prorations.

(i) Closing Statement. No later than ten (10) days prior to the Closing Date, Seller shall deliver to Purchaser a draft of Seller’s good faith estimate of the prorations and adjustments required by this Agreement, together with an updated Rent Roll and any other back up information reasonably requested by Purchaser to review such draft. All prorations and adjustments may be updated on or prior to the Closing Date as mutually agreed between Seller and Purchaser. A copy of such schedule of prorations and adjustments shall be executed by Seller and Purchaser at the Closing (the “Closing Statement”) (it being understood that the Closing Statement shall be subject to adjustment pursuant to Section 4(d)(ii)).

(ii) Final Settlement. A final settlement (the “Final Settlement”) of Closing prorations and adjustments shall take place, subject to the dispute resolution provision below, no later than 120 days following the Closing. Within 90 days after the Closing, Purchaser shall deliver a schedule of the prorations and adjustments (the “Final Statement”) to Seller setting forth Purchaser’s good faith determination of all adjustments to the Closing Statement it believes are necessary to correct the prorations and adjustments as reflected in the Closing Statement, which Final Settlement shall be accompanied with reasonable supporting information. For a period of 30 days after receipt of the Final Statement and supporting information, Seller shall have the right to review the Final Statement and supporting information, and Purchaser shall reasonably cooperate with Seller to make available to Seller all reasonably requested underlying work papers and relevant books and records related to the Properties. Seller shall have the right to notify Purchaser in writing that it seeks an adjustment in the Final Statement (a “Disputed Items Notice”), identifying the items that it seeks to adjust (the “Disputed Items”) and the reasons therefor. Seller and Purchaser shall use good faith efforts to attempt to resolve any Disputed Items promptly. If Seller has not provided Purchaser with a Disputed Items Notice within 30 days after Seller’s receipt of Purchaser’s proposed Final Settlement, the Final Statement shall be conclusive and binding on the parties. If Purchaser and Seller have not resolved all Disputed Items within ten (10) business days after Seller’s timely delivery of a Disputed Items Notice, then Seller and Purchaser shall submit the Disputed Items to KPMG or another mutually agreed nationally recognized accounting firm with experience in purchase price disputes, together with a proposal from each of Purchaser and Seller with a position of the amount in dispute and basis for such position. The determination of such accounting firm, which shall be the selection of one party’s position or the other made within 20 days after submission, shall be final and binding upon Seller and Purchaser. The party whose position was not selected shall pay the cost and expense of any accounting firm engaged in accordance with this Section 4(h)(ii). Within ten (10) business days after the Final Statement is agreed to or otherwise becomes binding, Seller shall pay to Purchaser, or Purchaser shall pay to Seller, as applicable, the amount to which it is entitled under the Final Statement.

(iii) The parties’ obligations under this Section 4 shall survive Closing.

(h) Withholding. Purchaser will be entitled to deduct and withhold from any amount payable pursuant to this Agreement (including payments of the Purchase Price and releases of amounts held pursuant to the Indemnity Escrow Agreement) such amounts as Purchaser shall determine in good faith it is required to deduct and withhold with respect to the making of such payment under the Code or any other provision of applicable Laws. To the extent that amounts are withheld by Purchaser in accordance with this Section 4(h), such withheld amounts will be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding were made. The Parties do not anticipate any such deduction or withholding and, prior to the Purchaser deducting or withholding any amounts payable pursuant to this Agreement, Seller shall have an opportunity provide a Form W-9 or any other documentation or evidence that is customarily relied upon for not withholding, including a Certificate of Non-foreign Status as set forth in Section 5(c).

5. Closing.

(a) Closing Date. The Closing shall occur through an escrow closing coordinated by the Escrow Agent no later than the tenth (10^th) business day following the satisfaction or waiver of the conditions set forth in Sections 5(e), 5(f) and 5(h) (other than those conditions that by their terms cannot be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions), but no earlier than the Target Closing Date, subject to the satisfaction or waiver of all conditions set forth in this Article 5, or at such other date and time as Seller and Purchaser may agree in writing and no later than the Outside Closing Date. The date of the Closing is referred to as the “Closing Date.” Time is of the essence with respect to Closing.

(b) Payment of Purchase Price.

(i) Subject to all other terms and conditions of this Agreement, Purchaser agrees to pay the applicable amount specified in Section 1(c)(ii) by delivery of the same to the Escrow Agent no later than 4:00 P.M. Dallas, Texas time on the Closing Date. In the event the Escrow Agent or the Indemnity Escrow Agent has not received the payment specified in Section 1(b) from Purchaser by said time on the Closing Date, but Purchaser has initiated the wire to the Escrow Agent and the Indemnity Escrow Agent, Seller shall extend the Closing to the next business day following such date, in which event the day that both the Escrow Agent and the Indemnity Escrow Agent receives their respective wires shall be deemed the “Closing Date” and the prorations and adjustments under Section 4 shall be recomputed as of such extended Closing Date.

(ii) On the Closing Date, the Indemnity Escrow Amount will be deposited with the Indemnity Escrow Agent), which shall be held by the Indemnity Escrow Agent in escrow to pay claims with respect to any breach of the applicable Seller’s Warranties under this Agreement (the “Indemnity Escrow Funds”). On the date that is the (6) month anniversary of the Closing Date, Purchaser and Seller shall issue joint written instructions to the Escrow Agent in accordance with the Indemnity Escrow Agreement instructing the Indemnity Escrow Agent to release to Seller the amount, if any, by which (A) 50% times the initial Indemnity Escrow Funds amount exceeds (B) the amount of any pending claims under Claim Notices delivered to Seller and the Indemnity Escrow Agent prior to the six (6) month anniversary of the Closing Date, in accordance with the Indemnity Escrow Agreement. On the date that is the nine (9) month anniversary of the Closing Date, Purchaser and Seller shall issue joint written instructions to the Indemnity Escrow Agent in accordance with the Indemnity Escrow Agreement instructing the Indemnity Escrow Agent to release to Seller the amount, if any, by which (A) the balance of Indemnity Escrow Funds exceeds

(B) the amount of any pending claims under Claim Notices delivered to Seller and the Indemnity Escrow Agent during the Representation Sunset Period in accordance with the Indemnity Escrow Agreement. Upon resolution and satisfaction (if applicable) of any such pending claims under Claim Notices delivered during one of the periods set forth above, Purchaser and Seller shall issue joint written instructions to the Indemnity Escrow Agent in accordance with the Indemnity Escrow Agreement instructing the Indemnity Escrow Agent to release to Seller the balance, if any, of the Indemnity Escrow Funds.

(c) Seller’s Closing Deliveries. Provided all conditions precedent to Seller’s obligations hereunder have been satisfied and subject to all other terms and conditions of this Agreement, Seller shall deliver or cause to be delivered at the Closing the following:

(i) Rent Roll. A Rent Roll with respect to those Leases in effect on the Closing Date, which shall be delivered five business days prior to the Closing Date.

(ii) Non-Foreign Person Affidavit. A non-foreign person affidavit from the applicable Transferors in the form of Exhibit B attached hereto and incorporated herein by this reference, executed and acknowledged by a duly authorized representative of such Transferor.

(iii) Evidence of Authority. Documentation satisfactory to Purchaser and the Title Company to establish the due authorization of Seller and each other Transferor’s sale of the Assigned Interests and Direct Sale Properties, as applicable, and the authority of the signatory to this Agreement and the documents delivered by Seller and each other Transferor pursuant to this Section 5(c) to execute the same on behalf of Seller or such Transferor, as applicable.

(iv) Closing Certificate. A certificate, signed by Seller and dated as of the Closing Date, certifying the matters set forth in Sections 5(f)(i) and 5(f)(ii).

(v) Closing Statement. The Closing Statement executed by a duly authorized officer of Seller.

(vi) Intentionally Omitted.

(vii) Defective Properties. If Seller shall not have exercised its rights to cure any defects that caused any Property to have been designated as a Defective Property, evidence reasonably satisfactory to Purchaser of the consummation of the Defective Property Transfers.

(viii) Indemnity Escrow Agreement. An escrow agreement substantially in the form attached hereto as Exhibit D (the “Indemnity Escrow Agreement”), executed by a duly authorized officer of Seller and the Indemnity Escrow Agent.

(ix) Books and Records. All books, records, data, rental history, and property and Tenant files associated with the Properties that are currently in the possession of Seller, provided that Seller may retain copies consistent with customary document retention policies.

(x) Excluded Asset Transfers. Evidence of the sale or other transfer of the assets set forth on Schedule III from an applicable Company to a Person in which such Company has no interest.

(xi) Intentionally Omitted.

(xii) Intentionally Omitted.

(xiii) Intentionally Omitted.

(xiv) Assignment. An assignment the Assigned Interests, duly executed by applicable Transferor, in substantially the form of Exhibit E attached hereto (each an “Assignment”) effective as of the Closing, in which the applicable Transferor shall (i) grant, assign and transfer unto Purchaser the Assigned Interests free and clear of all Liens (other than Permitted Liens), (ii) withdraw as a Member of each Company, and (iii) withdraw as the Managing Member of each Company.

(xv) Assumption Indebtedness. Subject to Section 5(e), such documents as may be reasonably required in connection with the transfer and the assumption of the Assumption Indebtedness.

(xvi) Direct Sale Properties Transfer Documents. A deed with respect to each of the Direct Sale Properties, in customary form for the jurisdiction where such Direct Sale Property is located, duly executed by the applicable Transferor, in substantially the form of Exhibit K hereto (the “Direct Sale Properties Transfer Documents”).

(xvii) Assignment and Assumption of Leases. An Assignment and Assumption Agreement assigning the Leases with respect to the Direct Sale Properties, duly executed by the applicable Transferor, in substantially the form of Exhibit L hereto (each, a “Lease Assignment and Assumption Agreement”).

(xviii) Other Documents. Such other documents as may be reasonably required by the Title Company, or as may be mutually agreed upon by Purchaser and Seller to consummate the Closing and to allow for the issuance of mortgage title insurance policies to Lender, including an owner’s affidavit in the form attached as Exhibit C, and any state, county or municipal required disclosure, Tax or otherwise.

(xix) Resignations. Resignations by each officer and manager of each Company with respect to which an Assigned Interest is being sold hereunder.

(d) Purchaser’s Closing Deliveries. Provided all conditions precedent to Purchaser’s obligations hereunder have been satisfied and subject to all other terms and conditions of this Agreement, Purchaser shall deliver or cause to be delivered at the Closing the following:

(i) Purchase Price. The Purchase Price, as adjusted for prorations and other adjustments set forth herein.

(ii) Closing Certificate. A certificate, signed by an executive officer of Purchaser and dated as of the Closing Date, certifying the matters set forth in Section 5(h)(i) and 5(h)(ii).

(iii) Evidence of Authority. Documentation satisfactory to Seller to establish the due authorization of Purchaser’s consummation of the Closing and the authority of the signatory to this Agreement and the Closing Documents required to be executed by Purchaser to execute the same on behalf of Purchaser.

(iv) Closing Statement. The Closing Statement executed by a duly authorized officer of Purchaser.

(v) Indemnity Escrow Agreement. The Indemnity Escrow Agreement, executed by a duly authorized officer of Purchaser and the Indemnity Escrow Agent, and Purchaser shall deposit the applicable Indemnity Escrow Amount with the Indemnity Escrow Agent in connection with the Closing.

(vi) Direct Sale Properties Transfer Documents. The Direct Sale Properties Transfer Documents, duly executed by Purchaser, if Purchaser is a signatory thereto.

(vii) Assignment and Assumption of Leases. The Lease Assignment and Assumption Agreements, duly executed by Purchaser.

(viii) Assumption Indebtedness. Subject to Section 5(e), such documents as may be required in connection with the transfer and the assumption of the Assumption Indebtedness.

(ix) Other Documents. Such other documents as may be mutually agreed upon by Seller and Purchaser to consummate the Closing.

(e) Freddie Properties.

(i) Purchaser acknowledges that certain Properties are encumbered by the Assumption Indebtedness (the “Freddie Properties”), which may not be prepaid by Seller or the applicable Transferor prior to Closing. Promptly after Purchaser’s receipt of the Financing Documents, Purchaser shall submit an application for the assumption of the Assumption Indebtedness (the “Loan Assumption Application”) and approval of a Transfer (as defined in the Financing Documents) to Purchaser and shall thereafter diligently pursue the Loan Assumption Application and take such other commercially reasonable actions as may reasonably be required to obtain Lender’s approval of the Transfer to Purchaser and assignment and assumption of the Assumption Indebtedness. Purchaser acknowledges and agrees that Purchaser is solely responsible for the preparation and submittal of the Loan Assumption Application, including the collection of all materials, documents, certificates, financial statements, signatures, and other items required to be submitted to the Lender in connection with the Loan Assumption Application. Notwithstanding the foregoing, Seller agrees to reasonably cooperate with Purchaser to the extent necessary to facilitate Purchaser’s completion of the Loan Assumption Application and receipt of Lender’s approval therefor. Failure of Purchaser to submit the Loan Assumption Application as required by this Section (provided such failure is not due to Seller’s failure to cooperate in the assumption process) shall constitute a default by Purchaser under this Agreement entitling Seller to terminate this Agreement as it relates to the Freddie Properties only by written notice to Purchaser and Seller shall be entitled to retain the Freddie Deposit. Purchaser further acknowledges and agrees that (A) as part of obtaining Lender approval of the Transfer to Purchaser and Purchaser’s assumption of the Assumption Indebtedness, Purchaser shall be required to provide suitable replacement guarantors and indemnitors as more specifically described in the Loan Agreement, and (B) as a condition precedent to the Closing in favor of Seller, Lender must release Seller and its guarantors from the Loan Agreement concurrently with the Closing for all events or conditions occurring subsequent to Closing. Purchaser and Seller shall diligently and in good faith pursue the Lender’s written approval of the Transfer and the assignment and assumption of the Assumption Indebtedness in form and content reasonably acceptable to Purchaser (provided, however, Purchaser may not object to Deemed Acceptable Loan Conditions) (the “Freddie Approval”). “Deemed Acceptable Loan Conditions” shall mean: (i) requiring a suitable replacement guarantors and indemnitors, (ii) the terms and conditions in the existing Financing Documents, and (iii) replenishing any reserves proposed to be released to Seller at Closing and currently maintained by Lender in connection with the Assumption Indebtedness.

(ii) Regardless of whether the Purchaser consummates, on or after the Target Closing Date, the purchase of the Direct Sale Properties and the Assigned Interests (but not the Assigned Interests in the Companies that own the Freddie Properties), Purchaser and Seller shall continue to diligently and in good faith pursue the Freddie Approval until the Outside Closing Date to consummate the acquisition by Purchaser of the Assigned Interests in the Companies that own the Freddie Properties. Purchaser may extend the Outside Closing Date (solely as it relates to the Assigned Interests in the Companies that own the Freddie Properties) by thirty (30) additional days by depositing with the Escrow Agent an amount equal to the initial Freddie Deposit, which amount shall so increase the Freddie Deposit and become part of the Freddie Deposit for the purposes of this Agreement. If the Freddie Approval is approved on or before the Outside Closing Date (or such later date as permitted above by increasing the Freddie Deposit), the closing on the Freddie Properties shall occur within five (5) business days of receipt of the Freddie Approval (the date of such closing shall be referred herein as the “Freddie Closing Date”). After receipt of such Freddie Approval, the Parties shall, as promptly as possible, take any actions contemplated hereunder to effect the purchase and sale of the Assigned Interests in the Companies that own the Freddie Properties, including any actions that would have been taken had such Assigned Interests been included in the transactions consummated on the Closing Date for the Direct Sale Properties and the other Assigned Interests. In such case, all references herein to the Closing Date shall be deemed references to the Freddie Closing Date solely in relation to the purchase and sale of the Assigned Interests in the Companies that own the Freddie Properties. For avoidance of doubt, the Parties shall enter into an Indemnity Escrow Agreement on the same terms to hold the Indemnity Escrow Amount calculated solely in respect of the Assigned Interests in the Companies that own the Freddie Properties (and the time periods therein shall run from the Freddie Closing Date).

(iii) If, despite the Parties complying with their respective obligations under this Section 5(e), the Freddie Approval has not been obtained by the Outside Closing Date (or such later date as permitted above by increasing the Freddie Deposit), either party may terminate the Parties’ respective obligations under this Section 5(e) and the the Freddie Deposit shall be disbursed to Purchaser, unless the Seller is entitled thereto under Section 5(h).

(f) Conditions Precedent to Purchaser’s Obligations. The obligation of Purchaser under this Agreement is subject to satisfaction or written waiver by Purchaser of each of the following conditions or requirements on or before the Closing Date:

(i) Seller’s Warranties shall be true and correct in all material respects when made and at Closing, and Seller shall not be in default hereunder beyond any notice and cure period.

(ii) The obligations of Seller contained in this Agreement shall have been performed in material respects.

(iii) Purchaser’s lender(s) shall receive a title insurance commitment insuring Purchaser’s indirect interest in each Property which shall have been issued and “marked down” through Closing, subject only to Permitted Exceptions.

(iv) The physical and environmental condition of Properties shall not have changed materially in an adverse manner since the end of the Due Diligence Period.

(v) Purchaser shall have received the required documents for Closing as set forth in Section 5(c) in form reasonably satisfactory to Purchaser.

(vi) As it pertains to the Freddie Properties only, receipt of the Freddie Approval.

(vi) Intentionally Omitted.

(vii) No order, statute, rule, regulation, executive order, injunction, stay, decree or restraining order shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or Governmental Authority or regulatory authority or instrumentality that prohibits the consummation of any of the transactions contemplated herein, and no litigation or governmental proceeding seeking such an order shall be pending.

(viii) No action, suit or other proceeding shall be pending which shall have been brought by any person that is not a Purchaser or Affiliate of Purchaser to restrain, prohibit or change in any material respect the transactions contemplated under this Agreement.

(g) Failure of Purchaser’s Conditions. If all of the conditions in Section 5(f) are not satisfied by the Target Closing Date (or waived in writing by Purchaser), then Purchaser shall have the right to terminate this Agreement, unless related to the conditions described in Sections (f)(i), (f)(ii) or (f)(v) or the proviso in Section (f)(iii) above, in which case Purchaser may also pursue any remedies available under Section 12(b) below, as applicable. Notwithstanding the foregoing, there shall not be a failure of a condition as set forth above unless such failed condition affects Assigned Interests and/or Direct Sale Properties, or a combination thereof, which in the aggregate equal or exceed the Defective Properties Threshold. In addition, Seller shall have the right to cure any Defective Properties as set forth in Section 3(c). If such failed condition affects Assigned Interests and/or Direct Sale Properties, or a combination thereof, which in the aggregate are below the Defective Properties Threshold, Seller shall not be in default of this Agreement but Seller shall, in the case any Defective Property is part of the Direct Sale Properties, remove such Defective Property from this transaction by not conveying such Defective Property to Purchaser at the Closing, or in the case the Defective Property is owned by a Company with respect to which an Assigned Interest is being transferred, effectuate a Defective Property Transfer for such Defective Property, and the parties shall proceed with the Closing. For the avoidance of doubt, to the extent that the Freddie Properties are excluded pursuant to Section 5(e), such Freddie Properties shall not be deemed to be Defective Properties or otherwise taken into account for purposes of whether the Defective Properties Threshold has been equaled or exceeded.

(h) Conditions Precedent to Seller’s Obligations. The obligations of Seller under this Agreement to consummate the sale of the Assigned Interests are subject to satisfaction or written waiver by Seller of each of the following conditions or requirements on or before the Closing Date:

(i) Purchaser’s warranties and representations under this Agreement shall be true and correct in all material respects when made and at Closing, and Purchaser shall not be in default hereunder.

(ii) The obligations of Purchaser contained in this Agreement shall have been performed in material respects.

(iii) Seller shall have received the required documents for Closing as set forth in Section 5(d) in form reasonably satisfactory to Seller.

(iv) Seller shall have received the Purchase Price in accordance with Section 1(c)(ii) and all other amounts due to Seller hereunder.

(v) No order, statute, rule, regulation, executive order, injunction, stay, decree or restraining order shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or Governmental Authority or regulatory authority or instrumentality that prohibits the consummation of any of the transactions contemplated herein, and no litigation or governmental proceeding seeking such an order shall be pending.

(vi) No action, suit or other proceeding shall be pending which shall have been brought by any person that is not a Seller or Affiliate of Seller to restrain, prohibit or change in any material respect the transactions contemplated under this Agreement.

(vii) Subject to Section 5(e), Lender shall have approved the Transfer to Purchaser and assignment and assumption of the Assumption Indebtedness.

(i) Failure of Seller’s Conditions. If all of the conditions in Section 5(h) are not satisfied by the Outside Closing Date (or waived in writing by Seller), then Seller shall have the shall have the right to terminate this Agreement and to receive the Deposit, unless the same is due and payable to Purchaser in accordance with an express provision of this Agreement.

6. Purchaser’s Representations and Warranties. Purchaser hereby makes the following representations and warranties to Seller as of the Effective Date and as of the Closing Date:

(a) Authority; Execution and Validity. This Agreement being executed and delivered pursuant to this Agreement (including pursuant to Section 5(d)) has been duly authorized, executed and delivered by Purchaser and constitutes a legal, valid, and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, or reorganization laws or by applicable principles of equity.

(b) Reserved.

(c) Bankruptcy. Purchaser has not filed or been the subject of any filing of a petition under the federal bankruptcy law or any state insolvency laws or laws for the reorganization of debtors. Purchaser is not insolvent (within the meaning of any applicable federal or state law relating to bankruptcy or fraudulent transfers) and will not be rendered insolvent by the transactions contemplated by this Agreement.

(d) Litigation. There is no litigation or proceeding, in law or in equity, and there are no proceedings or governmental investigations before any commission or other administrative authority, pending, or, to Purchaser’s knowledge, overtly threatened, against Purchaser that would have a material adverse effect on Purchaser or materially impair the consummation of the transactions contemplated by this Agreement.

(e) No Violations of Laws or Agreements. Neither the execution and delivery of this Agreement by Purchaser nor the compliance with or fulfillment by Purchaser of the terms, conditions, or provisions of this Agreement being executed and delivered pursuant to this Agreement (including pursuant to Section 5(d)) will: (i) conflict with, result in a breach of, constitute a default (or an event that would, with the passage of time or the giving of notice or both, constitute a default or event of default) under any of the terms of, result in termination of, result in the loss of any right under, or give to any other person the right to cause such a termination of or loss under any material contract, agreement or instrument to which Purchaser is a party; or (ii) violate any order, law, or regulation to which Purchaser is subject.

(f) Embargoed Person. None of Purchaser, its Subsidiaries, nor any of their respective officers, directors or members is a Person (or to Purchaser’s knowledge, controlled by a Person): (i) that is listed on a Government List, (ii) is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001, (iii) has been previously indicted for or convicted of any felony involving a crime of moral turpitude or any Patriot Act Offense (as defined below), or (iv) is currently under investigation by any Governmental Authority for alleged felony involving a crime of moral turpitude.

(g) Brokers. Purchaser represents and warrants that it has not engaged or worked with any brokers, agents or investment bankers in connection with transactions contemplated by this Agreement, other than Raymond James, which will be paid at the close of escrow by Purchaser pursuant to a separate written agreement.

7. Seller’s Representations and Warranties. Except as set forth on the Disclosure Schedule or any Seller Disclosure Schedule Supplement, Seller hereby makes the following representations and warranties to Purchaser as of the Effective Date and as of the Closing Date:

(a) Authority; Execution and Validity. This Agreement being executed and delivered pursuant to this Agreement (including pursuant to Section 5(c)) has been duly authorized, executed and delivered by Seller or the other Transferor, as applicable, and constitutes a legal, valid, and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, or reorganization laws or by applicable principles of equity.

(b) Title and Ownership. Seller, directly or indirectly, through one or more wholly-owned Subsidiaries, owns 100% of the Assigned Interests, as set forth on Schedule VIII. Each Assigned Interest represents all of the membership interests in applicable Company as set forth on Schedule VIII. Seller represents all of the managing members of the Companies. The applicable Transferor of each Assigned Interest has good, valid, and indefeasible title to the Assigned Interests free and clear of any Encumbrance (hereinafter defined), other than Permitted Liens and Permitted Exceptions. For purposes of this Agreement, an “Encumbrance” means any liability, debt, mortgage, deed of trust, pledge, security interest, encumbrance, option, right of first refusal, right of first offer, agreement of sale, adverse claim, easement, lien, assessment, restrictive covenant, encroachment, burden or charge of any kind or nature whatsoever.

(c) No Options, Rights, or Warrants. There are no existing options, rights, warrants, commitments, agreements, or instruments or any type to which the Seller or any Company is bound, or to which the Assigned Interests are subject, under or pursuant to which any Person shall be given, provided or otherwise afforded the right, option, occasion, possibility, or opportunity to purchase any portion of the Assigned Interests.

(d) Financial Statements. Seller, in connection with its delivery of the initial Disclosure Schedules pursuant to Section 3(a), will provide true, complete and correct copies of the unaudited balance sheet of each Company with respect to which an Assigned Interest may be purchased hereunder (the “Company Balance Sheets”) as of June 30, 2019 (the “Company Balance Sheet Date”). Each such Company Balance Sheet (i) was prepared in accordance with the books of account and records of the applicable Company and (ii) fairly presents the financial condition and the results of operations of the applicable Company as of the dates and for the periods indicated.

(e) No Liabilities. Except as set forth in the Company Balance Sheets (in the case of the Companies with respect to which an Assigned Interest may be purchased hereunder), there are no known Liabilities of the Company relating to its business of the type that would be required to be reflected on a

balance sheet prepared using US GAAP (it being understood that no Company Balance Sheet was prepared using US GAAP), other than: (i) those Liabilities reflected on the Company Balance Sheets (in the case of the Companies with respect to which an Assigned Interest may be purchased hereunder) and not previously paid or discharged; and (ii) those Liabilities incurred after the Company Balance Sheets Date for any Company arising in the ordinary course of business and consistent with past practice.

(f) No Indebtedness. Other than the Loan Agreement to which the applicable Company that owns the Freddie Properties is subject, no applicable Company has any Indebtedness.

(g) No Proceedings. There are no actions, suits, or proceedings pending or, to Seller’s knowledge, threatened against Seller that, if adversely determined, would affect the ability of Seller to perform its obligations under this Agreement or would have a material adverse effect on the value or operation of the Acquired Assets.

(h) Subsidiaries. No applicable Company, directly or indirectly, owns or has the right or the obligation to acquire any capital stock or other equity interest in, any other corporation, limited liability company, joint venture or other entity.

(i) Non-Foreign Status. None of the Transferors is a “foreign person” as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and the applicable regulations (the “Code”).

(j) Default under Company Agreement. No Company is in default in any material respect under its limited liability company operating agreement.

(k) Property Representations. The property representations (the “Property Representations”) listed on Exhibit F attached hereto are made with respect to each Property.

(l) Bankruptcy. None of Seller or any of its Subsidiaries have filed or been the subject of any filing of a petition under the federal bankruptcy law or any state insolvency laws or laws for the reorganization of debtors. None of the Transferors is insolvent (within the meaning of any applicable federal or state law relating to bankruptcy or fraudulent transfers) and will not be rendered insolvent by the transactions contemplated by this Agreement.

(m) Litigation. There is no litigation or proceeding, in law or in equity, and there are no proceedings or governmental investigations before any commission or other administrative authority, pending, or, to Seller’s knowledge, overtly threatened, against Seller or any Company that would have a material adverse effect on Seller or the Company or materially impair the consummation of the transactions contemplated by this Agreement.

(n) No Violations of Laws or Agreements. Neither the execution and delivery of this Agreement being executed and delivered pursuant to this Agreement (including pursuant to Section 5(c)) by Seller or the other Transferor party thereto, as applicable, nor the compliance with or fulfillment of the terms, conditions, or provisions hereof, by such Person will: (i) other than with respect to the Financing Documents, conflict with, result in a breach of, constitute a default (or an event that would, with the passage of time or the giving of notice or both, constitute a default or event of default) under any of the terms of, result in termination of, result in the loss of any right under, or give to any other person the right to cause such a termination of or loss under any material contract, agreement or instrument to which any Company is a party or by which the Assigned Interests are bound or affected; or (ii) violate any order, law, or regulation to which any Company is subject and/or by which the Assigned Interests may be bound or affected.

(o) Contracts. No Company is a party to any agreement, other than (i) any Management Agreement that is being terminated on or before the Closing, (ii) in the case of the applicable Company that owns the Freddie Properties, the Loan Agreement, and (iii) Leases.

(p) Embargoed Person. None of Seller, its Subsidiaries, nor any of their respective officers, directors or members is a Person (or to Seller’s knowledge, controlled by a Person): (i) that is listed on a Government List, (ii) is otherwise subject to the provisions of Executive Order 13224 issued on September 24, 2001, (iii) has been previously indicted for or convicted of any felony involving a crime of moral turpitude or any Patriot Act Offense, or (iv) is currently under investigation by any Governmental Authority for alleged felony involving a crime of moral turpitude. For purposes hereof, the term “Patriot Act Offense” means any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense under (A) the criminal laws against terrorism, (B) the criminal laws against money laundering, (C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. “Patriot Act Offense” also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense.

(q) Taxes.

(i) Seller has received no written notice that any Company or Transferor is in violation of applicable Laws related to Taxes, except as would not reasonably be expected to have a material adverse effect on such Company or Transferor. To the Seller’s knowledge, there are no violations of applicable Laws related to Taxes, except as would not reasonably be expected to have a material adverse effect any Company or Transferor.

(ii) Each Company and Transferor has complied with all Laws related to Taxes, except for any failure that would not have a material adverse effect on such Company or Transferor.

(iii) Each Company and Transferor has timely filed (within any applicable extension periods) all material Tax Returns required to be filed in the Pre-Closing Tax Period by such Company or Transferor. All such Tax Returns were true, correct and complete in all material respects, and all material Taxes of each Company and Transferor (whether or not shown as due and payable on any Tax Returns) have been timely paid.

(iv) There are no Encumbrances for material Taxes on any assets of any Company or Transferor, other than Encumbrances for current Taxes not yet due and payable and Taxes being contested in good faith through appropriate proceedings.

(v) All material Taxes of the Company and Transferor not yet due and payable have been properly accrued on the books of the Company or Transferor, as applicable, in accordance with accrual accounting.

(vi) No Company has been granted by any Governmental Authority any extension or waiver of the statute of limitations for any material Tax Returns reflecting income of the Company, which (after giving effect to such extension or waiver) has not yet expired.

(vii) Each Company has timely and properly withheld all material Taxes required to be withheld from payments to its employees, agents, contractors, nonresidents, members, lenders, and other Persons. Each Company has timely remitted all withheld Taxes to the proper Governmental Authority in accordance with all applicable Laws.

(viii) No Company has ever been a member of any Affiliated Group. No Company is liable for any material Taxes of any other Person as a result of successor liability, transferee liability, joint or several liability, or otherwise. No Company is a party to any Tax Sharing Agreements.

(ix) No audits or other legal proceedings are in progress, pending or, to the knowledge of Seller, threatened with regard to any Taxes or Tax Returns of or with respect to, any Company. Neither Seller nor any Company has received a written notice from any Governmental Authority that any Company (or Seller as a result of its direct or indirect ownership of any Company) is required to pay Taxes or file Tax Returns in a jurisdiction in which the any Company (or Seller as a result of its direct or indirect ownership of any Company) does not file Tax Returns or pay Taxes. No Company has commenced a voluntary disclosure proceeding in any state or local jurisdiction that has not been fully resolved or settled.

(x) No Company has engaged in any transaction which is a “listed transaction” (or a substantially similar transaction) within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the effective dates).

(xi) Neither Seller nor any Company has a request for a private letter ruling, a request for administrative relief, a request for technical advice, a request for a change of any method of accounting, or other request pending with any Governmental Authority that relates to the Taxes or Tax Returns of any Company. No power of attorney granted by any Company with respect to any Taxes is currently in force. No Company has executed or filed with any Governmental Authority any agreement or other document extending or having the effect of extending the statute of limitations for assessment, collection or other imposition of any Tax, which extension is still in effect.

(xii) Each Company is (and since its date of formation has been) classified as a disregarded entity for federal income Tax purposes (and any corresponding or similar applicable provision of state, local, foreign or other Law with respect to income Taxes) and no election has been made (or is pending) to change such treatment.

(xiii) Intentionally Omitted

(xiv) Intentionally Omitted

(xv) Intentionally Omitted

(xvi) Except as may be deemed to occur as a result of the receipt of Housing Assistance Payments, no asset of any Company is tax-exempt use property under Code Section 168(h). No portion of the cost of any asset of any Company has been financed directly or indirectly from the proceeds of any tax-exempt state or local government obligation described in Code Section 103(a). None of the assets of any Company is property that is required to be treated as being owned by any other person pursuant to the safe harbor lease provision of former Code Section 168(f)(8).

(r) Brokers. Seller represents and warrants that it has not engaged or worked with any brokers, agent or investment banker in connection with transactions contemplated by this Agreement, other than (i) Nomura, which will be paid at the close of escrow by Seller pursuant to a separate written agreement, and (ii) Berkadia, whose brokerage commissions will be paid by Seller at the close of escrow pursuant to separate written agreement.

(s) Rent Roll. The Rent Roll attached hereto as Exhibit G is true and correct in all material respects, identifies all Properties, and describes the Leases affecting the Properties as of the date thereon. The applicable Company identified opposite each Lease is the lessor or landlord or the successor lessor or landlord under such Lease. The Rent Roll is a copy of the rent roll utilized by Seller with respect to its indirect ownership and operation of the Properties. The rents set forth on the Rent Roll are the actual rents, income, and charges presently being collected by the applicable Companies under the Leases. Except as set forth on the Rent Roll, no tenant under any of the Leases has prepaid any rents or other charges for more than the current month. No security deposits have been paid by any tenants under the Leases which have not heretofore been returned, except as listed on the Rent Roll.

(t) No Employees. No Company has any employees.

8. Covenants of Seller Prior to Closing. From and after the Effective Date until Closing or earlier termination of this Agreement, Seller shall:

(a) Operation. Cause each Company and Transferor to operate and maintain its Properties substantially in accordance with Seller’s and such Company’s past practices with respect to the Properties, including maintaining a minimum occupancy of 85%, in the aggregate, across all Properties.

(b) Contracts. After the expiration of the Due Diligence Period, not permit any Company to execute any new Major Contract or amend or terminate any existing Major Contract without Purchaser’s prior written approval, which shall not be unreasonably withheld.

(c) Leases. After the expiration of the Due Diligence Period, not permit any Company, without Purchaser’s prior written approval, which shall not be unreasonably withheld, to execute any new lease applicable to any Property or amend any Lease unless such lease constitutes an Eligible Lease.

(d) Litigation; Violations; Casualty; Condemnation. Advise Purchaser promptly of any litigation, arbitration proceeding or administrative hearing (including condemnation) before any Governmental Authority or any casualty which might have an Individual Material Adverse Effect on any Property.

(e) Sale of Personal Property. Not transfer or dispose of, or permit to be sold, transferred or otherwise disposed of, any item or group of items constituting personal property associated with any Property, except for the use and consumption of inventory, office and other supplies and spare parts, and the replacement of worn out, obsolete and defective tools, equipment and appliances, in the ordinary course of business.

(f) Distributions. Solely in the case of the Companies with respect to which an Assigned Interest shall be purchased hereunder, not cause or direct the Company to make any distributions to the member of the Company without Purchaser’s prior written approval, which shall not be unreasonably conditioned, delayed or withheld.

(g) Actions. Not waive, release, assign, settle or compromise any material Actions against any Company, any Transferor, or any Property other than evictions and similar legal action against tenants in the normal course of business.

(h) Zoning. Not permit any Company to initiate or consent to any material zoning reclassification of any Property or any material change to any approved site plan, special use permit, planned unit development approval or other land use entitlement affecting any Property.

(i) Taxes. Not (i) incur any material Taxes outside of the ordinary course of business; (ii) enter into any agreement with any Governmental Authority with respect to any Tax or Tax Returns of any Company; (iii) surrender a right of any Company to a Tax refund; (iv) change an accounting period of any Company with respect to any Tax; (v) file an amended Tax Return for the Company or any Subsidiary of the Company; (vi) make a Tax election inconsistent with past practices; (vii) change or revoke any election with respect to Taxes or Tax Return of any Company; (viii) extend the applicable statute of limitations with respect to any Tax of any Company; or (ix) take any action that could result in the Company ceasing to be classified as a “disregarded entity” for income Tax purposes.

(j) Additional Properties. Not acquire through any Company any additional properties. For avoidance of doubt, nothing in this Article 8 shall restrict or prohibit Seller or any Company from transferring any Property to another Company or an Affiliate provided that such Affiliate executes and delivers a Joinder Agreement in the same form by which the other Companies’ became bound hereby.

(k) Required Inspections. During the pendency of this Agreement or prior to Closing, as applicable, (i) complete, in a timely manner (A) any annual property inspection or occupancy inspection which is due to be done and required under applicable Law with respect to any Property, or (B) any property inspection or occupancy inspection required for the transfer of any Property to Purchaser under applicable Law, (ii) correct any defects or other items required to be corrected in connection with any such inspection, and (iii) provide Purchaser with all documentation and information relating to such inspection, including any documentation evidencing the completion of such inspection and the correction of any required defects or other items by such Seller as required pursuant to any such inspection.

(l) HOA Estoppels. After the expiration of the Due Diligence Period and prior to Closing, as applicable, use commercially reasonable efforts to seek to obtain estoppel certificates from HOAs with respect to any Property on the forms customarily used by the applicable HOA.

9. Indemnification.

(a) Indemnification by Seller. Subject to the provisions of Section 10 below, Seller agrees to jointly and severally indemnify and hold harmless Purchaser, its Affiliates and its and their respective Affiliates, directors, officers, members, managers, and agents, and each of the executors, successors and assigns of any of the foregoing (collectively, the “Purchaser Indemnified Parties”) for any liability, claim, lawsuit, damages, cause of action and expenses, including reasonable attorneys’ fees, (collectively, “Losses”) related to such incurred by or asserted against any of Purchaser Indemnified Parties in connection with or arising from (i) any breach by Seller of Seller’s Warranties contained herein, (ii) any breach by Seller of any of its covenants or agreements contained herein that expressly survive Closing, which breach results from facts and circumstances arising after Closing, (iii) any Seller Transaction Expenses, (iv) any Indebtedness not set forth on the Disclosure Schedules, (v) any Excluded Liabilities or other Liabilities arising out of or related to the Excluded Assets, and (vi) facts or circumstances constituting a breach by an applicable Company under the Leases prior to the Closing Date (collectively, the “Seller’s Indemnified Claims”).

(b) Indemnification by Purchaser. Each Purchaser agrees to indemnify and hold harmless Seller, its Affiliates and its and their respective Affiliates, directors, officers, members, managers, partners, and agents, and each of the executors, successors and assigns of any of the foregoing (collectively, the “Seller Indemnified Parties”) for any Losses related to such incurred by or asserted against any of the

Seller Indemnified Parties in connection with or arising from (i) any breach by Purchaser of its representations and warranties contained herein, (ii) any breach by Purchaser of any of its covenants or agreements contained herein that expressly survive Closing, which breach results from facts and circumstances arising after Closing, (iii) any Purchaser Transaction Expenses, or (iv) arising under the Leases from and after the Closing Date.

10. General Provisions.

(a) Survival. The parties’ representations and warranties contained herein shall survive Closing (including, without limitation, the provisions of Section 13), the Closing Documents or made in writing by Seller or Purchaser in connection herewith shall survive Closing.

(b) Time Limitations on Claims; Claim Notices and Responses.

(i) A Party may make a claim for indemnification under Section 9 (each, a “Claim”) until the expiration of the applicable statute of limitations under the Laws of the State of Texas with respect thereto, except as set forth in Section 10(c) and Section 10(e), as applicable, by delivering written notice thereof to the other Party (each such written notice, a “Claim Notice”) in accordance with this Article 10(b).

(ii) Each Claim Notice shall contain the following information: (A) that one or more Parties has directly or indirectly incurred, paid or properly accrued or, in good faith, believes it shall have to directly or indirectly incur, pay or accrue, Losses in an aggregate stated amount arising from such Claim (which amount may be an estimated amount or may be the amount of Losses claimed by a third party); and (B) a brief description, in reasonable detail (to the extent reasonably available to such Person), of the facts, circumstances or events giving rise to the alleged Losses based on such indemnified Party’s good faith belief thereof, including, to the extent reasonably available to such Person: (1) the identity and address of any third party claimant, (2) copies of any formal demand or complaint and (3) the specific nature of the breach to which such item is related; provided, however, that the Claim Notice may be updated and amended from time to time in good faith by delivering an updated or amended Claim Notice to the proposed indemnifying Party, so long as the delivery of the original Claim Notice is made within the applicable claims period and such update or amendment only asserts bases for liability reasonably related to the underlying facts and circumstances specifically set forth in such original Claim Notice; provided, further, that all Claims for Losses properly set forth in the original Claim Notice or any permitted update or amendment thereto shall remain outstanding until such Claims for Losses have been finally resolved or satisfied, notwithstanding the expiration of such Claims period.

(iii) Each Claim Notice given by an Indemnified Party shall be resolved as follows:

(A) If, within ten (10) business days after a Claim Notice is received by the indemnifying Party, the indemnifying Party does not contest such Claim Notice in writing to the indemnified Party (with a copy to the Indemnity Escrow Agent if the claim involves recovery against the Indemnity Escrow Amount) as provided in clause (B) below, the indemnifying Party shall be conclusively deemed to have consented, on behalf of all indemnifying Parties, as applicable, to the recovery by the indemnified Party of the full amount of Losses (subject to the limitations contained in this Article 10) specified in the Claim Notice in accordance with this Article 10, including the forfeiture of all or a portion of the Indemnity Escrow Amount, and, without further notice, to have stipulated to the entry of a final judgment for damages against the indemnifying Parties for such amount in any court having jurisdiction over the matter where venue is proper.

(B) If the indemnifying Party gives the indemnified Party written notice contesting all or any portion of a Claim Notice (a “Contested Claim”) (with a copy to the Indemnity Escrow Agent if the Claim involves recovery against the Indemnity Escrow Amount) within the ten (10) business day period specified in clause (A) above, then such Contested Claim shall be resolved by either (1) a written settlement agreement executed by Purchaser and Seller (a copy of which shall be furnished to the Indemnity Escrow Agent if the Claim involves recovery against the Indemnity Escrow Funds) or (2) in the absence of such a written settlement agreement within thirty (30) days following receipt by the indemnified Party of the written notice from the indemnitor, by binding litigation between Purchaser and the Seller in accordance with the applicable terms and provisions of Article 17, including Sections 17(c) and (d).

(c) Representation Sunset Period. Notwithstanding the foregoing, Seller shall not be liable with respect to any Claim for the breach or inaccuracy of any Seller’s Warranties, unless a Claim Notice is delivered to Seller on or prior to the date that is nine (9) months after the Closing Date (the “Representation Sunset Period”); provided, however, that, notwithstanding the foregoing, any Liabilities resulting from any breach of any of Seller’s Warranties in Section 7(a), 7(b), 7(c), or 7(o) (the “Seller Fundamental Representations”) shall not be subject to the Representation Sunset Period.

(d) Cure Rights. If on or prior to the Representation Sunset Period with respect to a Property a breach of a Property Representation is discovered, Purchaser shall have the right to promptly provide written notice to Seller (but not later than the expiration of the Representation Sunset Period), and within ten (10) days following receipt of such written notice (or such shorter time period as may be required of Purchaser under Purchaser’s loan documents applicable to the Property) Seller shall have the option to take one of the following actions: (i) cure the defect or breach (if, in fact, curable) on the Property or Properties in question, or (ii) purchase (or cause to be purchased) the applicable Property or Properties that are in breach of such Property Representation at the Allocated Purchase Price for such affected Property or Properties together with any out-of-pocket costs incurred by Purchaser in connection with such breach.

(e) Purchaser’s Survival Period. Notwithstanding the foregoing, no Purchaser shall be liable with respect to any Claim for the breach or inaccuracy of any of Purchaser’s representations and warranties contained herein and the Closing Documents unless written notice of a claim thereof is delivered to Purchaser on or prior to the date that is nine (9) months after the Closing Date (the “Purchaser’s Survival Period”). Seller and Purchaser agree that so long as written notice is given on or prior to the expiration of Purchaser’s Survival Period with respect to such claim, the representations and warranties with respect to such breach shall continue to survive until such matter is resolved. Notwithstanding the foregoing, any Liabilities resulting from any breach of any of the any of Purchaser’s representations and warranties in Section 6(a) (the “Purchaser Fundamental Representation”) shall not be subject to Purchaser’s Survival Period.

(f) Maximum Liability; Cap. Neither Party shall only be liable to the other hereunder for breaches of this Agreement or any of the Closing Documents unless the valid claims for all such breaches collectively aggregate more than the Liability Threshold (and once Liability Threshold has been reached the breaching Party shall be liable solely for amounts in excess of the Liability Threshold), not to exceed the Liability Cap in the aggregate. Notwithstanding the foregoing, any Liabilities resulting from any of the following shall not be subject to the Liability Threshold or the Liability Cap: (i) a breach based on fraudulent or willful misrepresentations (as determined by a final, non-appealable judgement by a court of competent jurisdiction), (ii) the indemnity obligations set forth in this Agreement or any of the Closing Documents (iii) a breach by Seller of any of the Seller Fundamental Representations or any of the obligations, covenants and agreements set forth in Sections 10(h)(ii) and 13, (iii) Seller Transaction Expenses, (iv) a breach by Purchaser of the Purchaser Fundamental Representation, (v) any prorations or closing cost adjustments pursuant this Agreement, whether occurring before or after Closing, and (vii) the obligations set forth in Section 17(p).

(g) No Consequential Damages. Notwithstanding anything in this Agreement to the contrary, in connection with its indemnification obligations under this Section 10 or any other indemnification obligations of Purchaser or Seller set forth in this Agreement, neither Purchaser nor Seller shall be liable to each other for consequential, exemplary, punitive, indirect or incidental losses, special damages, lost profits or similar items (including loss of revenue, income or profits or loss of business reputation or opportunity relating to a breach or alleged breach) whether based on contract, tort, strict liability, other Law or otherwise and whether or not arising from the sole, joint or concurrent negligence, strict liability or other fault of the other Party or its Affiliates, unless the same are imposed by a third party that is not an Affiliate of a Purchaser or a Seller.

(h) Additional Limitations and Agreements. Notwithstanding anything to the contrary:

(i) Seller does not represent or warrant that any particular Lease will be in force or effect on the Closing Date or that the Tenants will have performed their obligations thereunder, provided, however, that the foregoing shall not relieve Seller of its obligation to affirm Seller’s Warranties as of the Closing Date pursuant to Section 5(c)(iv).

(ii) If no later than the date that is ten (10) business days prior to Closing, Purchaser obtains actual knowledge (and not imputed or constructive knowledge) that any breach of Seller’s Warranties contained herein that would otherwise give rise to a Claim under Section 9(a)(i) (“Known Pre-Closing Breaches”), then Purchaser shall promptly (but in any event at least three (3) business days prior to the Closing Date) notify Seller of such Known Pre-Closing Breaches (“Pre-Closing Notice”). Seller shall respond to the Pre-Closing Notice within two (2) business days after receipt notifying Purchaser whether Seller will (1) cure the Known Pre-Closing Breaches (“Cure Notice”), which may be cured by the payment of (or credit to Purchaser at Closing) a liquidated sum or other manner reasonably acceptable to Purchaser, or (2) to exclude the applicable Property from the Closing by effectuating a Defective Property Transfer.

(A) If Seller timely delivers a Cure Notice electing the option set forth in Section 10(h)(ii)(1), then Closing shall proceed in accordance with this Agreement; provided, if the Known Pre-Closing Breach is not cured at or prior to Closing and the Known Pre-Closing Breach does cause the designation of a Defective Property, Seller’s obligation to cure such Known Pre-Closing Breach in the manner set forth in the Cure Notice shall survive the Closing and shall not be subject to the Liability Threshold or the Liability Cap. Notwithstanding the foregoing, if the Known Pre-Closing Breach causes a designation of a Defective Property, Seller’ failure to cure shall not be in default of this Agreement and, subject to Section 3(d), Seller shall, in the case any Defective Property is part of the Direct Sale Properties, remove such Defective Property from this transaction by not conveying such Defective Property to Purchaser at the Closing, or in the case the Defective Property is part of the Assigned Interest, effectuate a Defective Property Transfer for such Defective Property, and the parties shall proceed with the Closing.

(B) If Seller timely delivers a Cure Notice electing the option set forth in Section 10(h)(ii)(2), then Closing shall proceed in accordance with this Agreement, Seller shall cause a Defective Property Transfer.

(C) If Seller does not timely deliver a Cure Notice, Closing shall proceed, and Purchaser shall reserve their rights under Section 9(a)(i) and shall not be subject to the Liability Threshold or the Liability Cap with respect thereto.

(D) If Purchaser fails to timely deliver a Pre-Closing Notice, Purchaser shall be deemed to have waived any Known Pre-Closing Breaches.

(iii) A Party will not be liable more than once for indemnifiable amounts arising out of particular circumstances, even if those circumstances give rise to indemnifiable amounts under multiple sections or subsections of this Agreement. To the extent that any amount has been taken into account in the Closing Statement or the Final Statement with certain facts and circumstances, solely the portion of such amount, if any, that exceeds the amount so taken into account with respect such facts and circumstances shall be recoverable under Article 9, subject to all of the other provisions of this Article 10.

(iv) For purposes of calculating or determining any indemnifiable amount under Article 9, there shall be deducted an amount equal to the amount of any proceeds actually received by the indemnified Person, respectively, from any third-party insurer in connection therewith (after giving effect to any deductible or increase in premium associated therewith to the extent paid or payable and net of any costs, Taxes and expenses of recovery or collection thereof).

(v) The Parties will treat any payment pursuant to this Article 10 as an adjustment to the Purchase Price for Tax purposes.

(i) Third Party Claims Procedures.

(i) Notwithstanding anything to the contrary contained in this Article 10, Pre-Closing Tax Contests shall be exclusively governed by the provisions in Article 13.

(ii) Except as set forth in clause (iv) below, if a third party claim is commenced, then the Seller has or the Purchaser has, as the case may be (the “Defense Provider”), a right to provide a defense to the Purchaser Indemnified Parties or the Seller Indemnified Parties, as the case may be (the “Defense Recipient”), concerning the third party claim for which the Defense Recipient has delivered a Claim Notice to the Defense Provider in accordance with this Article 10. The Defense Provider has the right to select counsel that will defend the Defense Recipient, subject to the Defense Recipient’s approval, not to be unreasonably withheld. The Defense Provider has the right to settle or compromise the third party claim, subject to the Defense Recipient’s approval, not to be unreasonably withheld; provided that no such consent shall be required if (A) the sole relief provided is monetary damages that are reimbursed to the Defense Recipient in full as Losses, (B) the settlement does not entail an admission of liability on the part the Defense Recipient, and (C) the settlement includes an unconditional release of the Defense Recipient from all liability or Losses with respect to such third party claim. The Defense Recipient must reasonably cooperate with the Defense Provider and must timely inform and consult with the Defense Provider on all matters relating to the third party claim. If the Defense Provider fails, after exercising its right to provide a defense, to diligently pursue the defense of the Defense Recipient, such as, by failing to select counsel, then the Defense Recipient will have the right to defend itself and select counsel of its own choosing and to take actions in its best interests concerning the third party claim, and the Defense Recipient will not be required to cooperate with the Defense Provider concerning the exchange of information unless otherwise required by the other provisions of this Agreement. The Defense Provider, and not the Defense Recipient, will solely be responsible for payment of the fees and expenses of counsel provided by the Defense Provider, and the Defense Provider must pay that counsel’s fees and expenses when due, except that if the Defense Recipient unreasonably withholds approval from the Defense Provider concerning the

Defense Provider’s right to settle or compromise the third party claim, then after the unreasonable withholding of approval, the Defense Recipient will solely be responsible for payment of the fees and expenses of that counsel incurred after the unreasonable withholding of approval, and the Defense Recipient must pay when due that counsel’s fees and expenses incurred after the unreasonable withholding of approval.

(iii) If the Defense Provider provides a defense under clause (ii), and a conflict of interest arises, the Defense Recipient will have a right to independent counsel to represent the Defense Recipient unless, at the time the Defense Recipient is informed that a possible conflict may arise or does exist, the Defense Recipient expressly waives, in writing, the Defense Recipient’s right to independent counsel. If the Defense Recipient has a right to independent counsel, the Defense Recipient has the right to select the independent counsel, subject to Defense Provider’s approval, not to be unreasonably withheld. Where the Defense Recipient selects independent counsel under the provisions of this Section, both the counsel provided by the Defense Provider and independent counsel selected by the Defense Recipient will be allowed to participate in all aspects of the third party claim. The Defense Recipient or the Defense Provider, as the case may be, will not settle or compromise the third party claim without the other’s consent, not be unreasonably withheld. The Parties agree that counsel must cooperate in the exchange of information in a manner that is consistent with each counsel’s ethical and legal obligation to the Defense Recipient. The Defense Provider, and not the Defense Recipient, will solely be responsible for payment of the independent counsel’s fees and expenses and the Defense Provider must pay the independent counsel’s fees and expenses when due, except that if the Defense Recipient unreasonably withholds approval from the Defense Provider concerning the a proposal by the Defense Provider to settle or compromise the third party claim, then after the unreasonable withholding of approval, the Defense Recipient will solely be responsible for payment of the fees and expenses of the independent counsel incurred after the unreasonable withholding of approval, and the Defense Recipient must pay when due that independents counsel’s fees and expenses incurred after the unreasonable withholding of approval.

(iv) If a Party that (A) would otherwise be a Defense Recipient under clause (ii) above, and (B) delivers a claim notice concerning a third party claim, provides notice of, and tenders the claim to, an insurance provider and the insurance provider agrees to indemnify and defend the Party (regardless of whether or not the indemnification and defense is provided under a reservation of rights), then the defense and indemnity procedures under the applicable insurance policy will control, and the Party that has rights under the insurance policy will have the discretion to make all decisions reserved for the policyholder under the insurance policy, including the right to select independent counsel, if applicable, and to take actions in its own best interests without consideration for the interests of the Person that would otherwise be the Defense Provider but for this clause (iv). The Party that would otherwise be the Defense Provider but for this clause (iv) will reasonably cooperate with the Person that would otherwise be Defense Recipient but for this clause (iv) to enable that Party to comply with any obligations imposed on that Person under the applicable insurance policy, including any obligation to cooperate and provide information and materials to the insurance provider.

(j) Disclaimers. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO THE ASSIGNED RIGHTS AND THE PROPERTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE ASSIGNED RIGHTS AND THE PROPERTIES WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE BOOKS AND RECORDS OR ANY OTHER

INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE ASSIGNED RIGHTS AND THE PROPERTIES. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE ASSIGNED RIGHTS AND THE PROPERTIES “AS IS, WHERE IS, WITH ALL FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE ASSIGNED RIGHTS AND THE PROPERTIES OR RELATING THERETO MADE OR FURNISHED BY SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE ASSIGNED RIGHTS AND THE PROPERTIES, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTIES AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTIES, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE ASSIGNED RIGHTS AND THE PROPERTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTIES BE REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF PURCHASER AND SELLER SHALL NOT BE LIABLE TO PURCHASER FOR SUCH CLEAN-UP, REMOVAL OR REMEDIATION. AS PART OF THE PROVISIONS OF THIS SECTION, BUT NOT AS A LIMITATION THEREON, PURCHASER HEREBY AGREES, REPRESENTS AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED TO MATTERS WHICH ARE KNOWN OR DISCLOSED, AND PURCHASER HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE OR LOCAL LAW, RULES OR REGULATIONS. SELLER AND PURCHASER AGREE THAT THE PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING. NOTWITHSTANDING THE

FOREGOING, THE RELEASE SET FORTH IN SECTION SHALL NOT APPLY TO THE INTENTIONAL FRAUD OF SELLER (AS DETERMINED PURSUANT TO A FINAL JUDGMENT ISSUED BY A COURT OF COMPETENT JURISDICTION) OR A BREACH OF A REPRESENTATION OF SELLER IN THIS AGREEMENT WHICH EXPRESSLY SURVIVES THE CLOSING.

(k) Source of Recovery. Any payments due to Purchaser related to any Seller’s Indemnified Claims shall be payable by Seller as follows: (i) first, to be deducted from the applicable Indemnity Escrow Funds in accordance with the terms and conditions of this Agreement and the applicable Indemnity Escrow Agreement; and (ii) second, after the applicable Indemnity Escrow Funds have been exhausted or otherwise fully reserved for pending Claims, any remaining amounts payable in respect of such Claim shall be paid in cash, by wire transfer of immediately available funds, in each case subject to the limitations set forth in Section 10.

11. Payment. Within five (5) business days following the date on which both a Party’s liability for indemnification is established and the indemnifiable Losses amount is established, the indemnifying Party must pay such amount, as the case may be, by wire transfer of immediately available funds to an account designated in writing by other Party.

12. Breach and Termination.

(a) Breach by Purchaser. If Purchaser breaches this Agreement in any material respect and such failure continues for five (5) days after written notice from Seller to Purchaser regarding the same, then as its sole and exclusive remedy, Seller may terminate this Agreement by written notice to Purchaser and receive the Deposit. The parties acknowledge the difficulty of ascertaining Seller’s damages in such a circumstance and agree that the amount of the Deposit represents a reasonable and mutual attempt by Purchaser and Seller to anticipate the consequence to Seller of Purchaser’s breach. Upon the termination of this Agreement pursuant to this Section 12(a), and except for obligations that expressly survive the expiration or earlier termination of this Agreement, this Agreement shall be deemed void, and Seller shall have no rights hereunder to specific performance or damages. The notice and cure period set forth in this paragraph does not apply to Purchaser’s obligation to deliver the Purchase Price in accordance with this Agreement.

(b) Breach by Seller Prior to the Closing. If Seller breaches this Agreement (other than a breach pursuant to Section 10(h)(ii), which shall be resolved pursuant to the provisions thereof) prior to the Closing in any material respect and such failure continues for five (5) days after written notice from Purchaser to Seller regarding the same, then Purchaser shall have the right, as its sole and exclusive remedies, to either (i) terminate this Agreement and receive a full refund of the Deposit, and Seller shall promptly pay to Purchaser as full liquidated damages for Seller’s failure to close in accordance with the terms of this Agreement all of Purchaser’s third-party costs incurred in connection with this Agreement not to exceed $250,000 (collectively, “Seller’s Default Payment”), or (ii) pursue an action for specific performance; provided, however, specific performance shall only be available if a Purchaser files suit to pursue specific performance within ninety (90) days after Seller’s default, failing which Purchaser shall be deemed to have elected to pursue the remedy set forth in subsection (i) above. Other than Seller’s Default Payment and any attorneys’ fees, costs, and expenses incurred in enforcing this Agreement, Seller shall not be liable to Purchaser for any further actual, punitive, speculative, or consequential damages or any other remedy at law or in equity.

13. Tax Matters.

(a) Tax Indemnity.

(i) Seller shall pay and indemnify Purchaser, the Company and each Subsidiary of the Company and all other Purchaser Indemnified Parties for (A) all Indemnified Taxes, (B) all reasonable out-of-pocket costs and expenses of preparing Tax Returns for a Pre-Closing Tax Period, except to the extent that such costs and expenses are paid by the Company during the Pre-Closing Tax Period, and (C) all reasonable out-of-pocket costs and expenses of contesting any audit or other legal proceeding that would result in the imposition of an Indemnified Tax (the items referred to in clauses (A), (B) or (C) in this Section 13(a) being collectively referred to as “Purchaser Tax Losses”). Seller will not be liable under this Section 13(a) for any liability to the extent attributable to or resulting from (x) a breach by Purchaser, or on or after the Closing, the Company or any Subsidiary of the Company, of any covenant described in Section 13(j) below, or (y) any claim, suit, action, litigation or proceeding with respect to which Seller was not afforded the opportunity to participate, if permitted to so participate.

(ii) Purchaser shall indemnify Seller for (A) all Taxes of the Company or any Subsidiary of the Company solely attributable to a Post-Closing Tax Period or to a portion of any Straddle Period ending after the Closing Date, (B) all Current Year Property Taxes allocated or credited to Purchaser under Section 4(b), (C) all Taxes of Purchaser, and (D) all Taxes resulting from a breach of any covenant in Section 13(j) below or any other similar covenant anywhere else in this Agreement. Purchaser will not be liable under this Section 13(a) for any liability to the extent attributable or resulting from (x) a breach by Seller, or prior to the Closing, the Company or any Subsidiary of the Company, of any of Seller’s Warranties in Section 7(o), or (y) a breach by Seller, or prior to the Closing, the Company or any Subsidiary of the Company, of any covenant or other agreement contained in this Agreement.

(b) Tax Returns.

(i) Seller, at its sole cost and expense, shall (A) prepare and timely file (or cause each Company and its Subsidiaries to prepare and timely file) all Tax Returns of each Company and each Subsidiary of each Company due on or prior to the Closing Date (specifically including, without limitation, all 2018 Tax Returns) (the “Pre-Closing Tax Returns” or the “Seller Prepared Returns”); and (B) timely pay (or cause each Company or its Subsidiaries to timely pay) all Taxes that are shown as payable with respect to any Seller Prepared Returns. Each Seller Prepared Return shall be prepared in accordance with existing procedures and practices and accounting methods of a Company or the applicable Subsidiary of a Company. Each Company Return due after the Closing Date that needs to be filed by a Company or any Subsidiary of a Company shall be submitted to Purchaser for review at least thirty (30) days prior to the due date of the Tax Return. If Purchaser objects to any item on any such Tax Return, it will, within ten (10) days after delivery of such Tax Return, notify Seller in writing that it so objects, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection is duly delivered, Purchaser and Seller will negotiate in good faith and use their best efforts to resolve such items. If Purchaser and Seller are unable to reach such agreement within five (5) days after receipt by Seller of the notice of objection, the disputed items will be submitted to a nationally recognized independent accounting firm (the “Referee”), chosen by and mutually acceptable to both Purchaser and Seller within two (2) days of the date on which the need to choose the Referee arises. The Referee will resolve any disputed item within five (5) days of having the item referred to it pursuant to such procedures as it may require. The parties will promptly act to implement the decision of the Referee. The costs, fees and expenses of the Referee

will be shared equally between Seller, on the one hand, and Purchaser, on the other. If a disputed issue is not resolved by the due date for the Tax Return (taking into account all available extensions), the Tax Return will be filed as prepared, and an amended Tax Return will be filed if necessary to reflect the Referee’s decision. Purchaser shall cause the Company to file all applicable Seller Prepared Returns timely and to be delivered to Purchaser in accordance with this Section 13(b)(i).

(ii) Purchaser, at its sole cost and expense, shall (A) cause each Company and each Subsidiary of each Company to prepare and timely file all Tax Returns other than the Seller Prepared Returns required to be filed by the Company after the Closing Date (excluding any extensions of Pre-Closing Tax Returns) (the “Purchaser Prepared Returns”); and (B) timely pay (or cause each Company or its Subsidiaries to timely pay) all Taxes that are shown as payable with respect to any Seller Prepared Returns. Each Company Return for a Straddle Period shall be submitted to Seller for review at least thirty (30) days prior to the due date of the Tax Return. If Seller object to any item on any such Tax Return, they will, within ten (10) days after delivery of such Tax Return, notify Purchaser in writing that they so object, specifying with particularity any such item and stating the specific factual or legal basis for any such objection. If a notice of objection is duly delivered, Purchaser and Seller will negotiate in good faith and use their best efforts to resolve such items. If Purchaser and Seller are unable to reach such agreement within five (5) days after receipt by Purchaser of the notice of objection, the disputed items will be submitted to the Referee. The Referee will resolve any disputed item within five (5) days of having the item referred to it pursuant to such procedures as it may require. The parties will promptly act to implement the decision of the Referee. The costs, fees and expenses of the Referee will be shared equally between Seller, on the one hand, and Purchaser, on the other. If a disputed issue is not resolved by the due date for the Tax Return (taking into account all available extensions), the Tax Return will be filed as prepared, and an amended Tax Return will be filed if necessary to reflect the Referee’s decision.

(iii) Notwithstanding any other provision of this Section 13(b), Seller, at its sole cost and expense, shall be solely responsible for filing all of the Tax Returns required to be filed by Seller and paying all of the Taxes due and owing by Seller (including to the extent attributable to income of the Company or any of its Subsidiaries that flows up to Seller). Notwithstanding any other provision of this Section 13(b), Purchaser, at its sole cost and expense, shall be solely responsible for filing all of the Tax Returns required to be filed by Purchaser and paying all of the Taxes due and owing by Purchaser (including to the extent attributable to income of the Company or any of its Subsidiaries that flows up to Purchaser).

(iv) Purchaser will not permit a Company or any Subsidiary of a Company to file any amended Tax Return for a Pre-Closing Tax Period without the prior written consent of Seller.

(v) No Tax Return described in this Section 13(b) will be prepared by Purchaser or Seller in a manner not reasonably consistent with past practice, or with a change of any material election or accounting method, if such inconsistency or change would have the effect of benefiting one party and would have a material detrimental effect on the other party, except to the extent otherwise required due to a change in applicable law or regulations.

(c) Tax Refunds. Subject to the provisions of this Section 13(c), all refunds of Taxes of a Company or any Subsidiary of a Company for any Pre-Closing Tax Period or for the portion of a Straddle Period ending before the Closing Date (whether in the form of cash received from the applicable Governmental Authority or a direct credit against Taxes that are not Indemnified Taxes) shall be for the

benefit of Seller. To the extent that Purchaser, a Company, or any Subsidiary of a Company receives a refund that is for the benefit of Seller, Purchaser will pay to Seller the amount of any such refund (without interest other than interest received from the Governmental Authority), net of (i) any Taxes (including any Taxes that would be imposed on a distribution of any portion of such refund to Purchaser); and (ii) any reasonable out-of-pocket expenses that Purchaser, a Company, any Subsidiary of a Company or any of their Affiliates incur (or has or will incur) with respect to such refund (and related interest). The net amount due to Seller shall be payable ten (10) days after receipt of the refund from the applicable Governmental Authority (or, if the refund is in the form of direct credit, ten (10) days after filing the Tax Return claiming such credit). Nothing in this Section 13(c) shall require that Purchaser make any payment with respect to any refund for a Tax (and such refunds shall be for the benefit of Purchaser, the Company, and any Subsidiaries of the Company) that is with respect to (A) any refund of Tax that is the result of the carrying back of any Tax attribute or Tax credit incurred in a Post-Closing Tax Period (or portion of any Straddle Period beginning after the Proration Time); (B) any refund of Tax paid after the Closing Date to the extent Seller have not indemnified Purchaser, the Company, or the applicable Subsidiary of the Company for such Taxes; (C) any refund for any Tax to the extent previously reflected as a positive adjustment to the Purchase Price on the Final Settlement or otherwise; or (D) any refund for Tax that gives rise to a payment obligation by the Company or any Subsidiary of the Company to any Person under applicable Law or pursuant to a provision of a contract or other agreement entered (or assumed) by the Company (or any Subsidiary of the Company) on or prior to the Closing Date.

(d) Apportionment of Taxes. For purposes of determining whether the following Taxes are attributable to a Pre-Closing Tax Period (or the portion of any Straddle Period ending on or prior to the Closing Date), the parties agree as follows:

(i) Except as otherwise provided in Section 4(b), in the case of Taxes imposed on a periodic basis for a Straddle Period, the amounts that are attributable to the portion of the Straddle Period ending on the Closing Date shall be determined by multiplying the Taxes for the entire Straddle Period by a fraction, the numerator of which is the number of calendar days in the portion of the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

(ii) In the case of all other Taxes for a Straddle Period (including income Taxes, employment Taxes, and sales and use Taxes) the amount attributable to the portion of the Straddle Period ending on the Closing Date shall be determined as if the Company or its applicable Subsidiary filed a separate Tax Return with respect to such Taxes for the portion of the Straddle Period ending as of the end of the day on the Closing Date using a “closing of the books methodology.” For purposes of this clause (ii), any item determined on an annual or periodic basis (including amortization and depreciation deductions and the effects of graduated rates) shall be allocated to the portion of the Straddle Period ending on the Closing Date based on the mechanics set forth in clause (i) for periodic Taxes.

(e) Cooperation. Purchaser, any Company and Seller shall (i) assist in the preparation and timely filing of any Tax Return of any Company or any Subsidiary of any Company; (ii) assist in any audit or other legal proceeding with respect to Taxes or Tax Returns of any Company or any Subsidiary of any Company; (iii) make available any information, records, or other documents relating to any Taxes or Tax Returns of any Company or any Subsidiary of any Company; and (iv) provide any information necessary or reasonably requested to allow Purchaser, any Company, or any Subsidiary of any Company to comply with any information reporting or withholding requirements contained in the Code or other applicable Laws or to compute the amount of payroll or other employment Taxes due with respect to any payment made in connection with this Agreement.

(f) Tax Distributions. Notwithstanding anything to the contrary herein, Seller covenants and agrees that Seller shall not retain any right to any distribution for Taxes pursuant to the terms of the Company’s operating agreement.

(g) Tax Treatment of the Transaction. The parties agree that the purchase and sale of the Direct Sale Properties shall be treated for U.S. federal income Tax purposes as the purchase and sale of capital assets for U.S. federal income Tax purposes. The parties further agree that the purchase and sale of the Assigned Interests shall be treated as a purchase sale of capital assets for U.S. federal income Tax purposes. The parties agree for all Tax reporting purposes to report the transactions in accordance with the agreements herein and the Allocation Methodology (as defined in clause (h) below), and to not take any position during the course of any audit or other proceeding, unless required by a final determination of the applicable Governmental Authority.

(h) Allocation of Consideration. Purchaser and Seller agree that the Purchase Price shall be allocated among the Acquired Assets as of the Closing Date in a manner consistent with the allocation methodology set forth on Schedule VII (the “Allocation Methodology”), including in preparing and filing IRS Form 8594 or any comparable form under state or local Tax law, and neither party shall take any position in any forum that is inconsistent therewith. The Allocation Methodology shall be used for purposes of determining the basis of each asset after the Closing Date and for all other applicable U.S. federal income Tax purposes. The parties shall make appropriate adjustments to any IRS Form 8594 or any comparable form under state or local Tax law to reflect changes in the Purchase Price, applying the Allocation Methodology. The parties agree for all Tax reporting purposes to report the transactions in accordance with the agreements herein and the Allocation Methodology, as adjusted pursuant to the preceding sentence, and to not take any position during the course of any audit or other proceeding inconsistent with the agreements as to Tax treatment or Allocation Methodology, as adjusted pursuant to the preceding sentence, unless required by a determination of the applicable Governmental Authority that is final.

(i) Intentionally Omitted.

(j) Post-Closing Tax Period Tax Covenants.

(i) Purchaser covenant that without the prior consent of Seller they will not, and will not cause or permit the Company or any Subsidiary of the Company, to (A) take any action on or after the Closing Date other than in the ordinary course of business that could give rise to any Tax liability of Seller, or any indemnification obligation of Seller under Section 13(a), or (B) except as provided herein, make or change any material Tax election, amend any Tax Return, take any Tax position on any Tax Return, or compromise or settle any Tax liability, in each case if such action could have the effect of increasing the Tax liability or reducing any Tax asset of Seller.

(ii) After the Closing Date, Purchaser, any Company, or any Subsidiary of any Company, will not, without the prior written consent of Seller, agree to the waiver or any extension of the statute of limitations relating to any Taxes of a Company for any Pre-Closing Tax Period or any Straddle Period.

(k) Limitations. For the avoidance of doubt, the obligations, covenants and agreements of Seller pursuant to this Section 13 shall not be subject to the Liability Threshold, Liability Cap, or other limitations set forth in Section 10.

(l) Tax Contests. Purchaser shall promptly (but in no event later than thirty (30) days following receipt) provide Seller with copies of any notice received from any federal or state taxing

authority which notice relates to a Pre-Closing Tax Period or Straddle Period. Seller shall have the right to control and the Purchaser shall have the right to participate in (at its own expense, except as provided in the last sentence of this Section), any audit, litigation or other proceeding with respect to Taxes and Tax Returns of any Company or any of its Subsidiaries for which Seller could be obligated to indemnify Purchaser, or for which Seller directly or indirectly has responsibility under this Agreement (a “Pre-Closing Tax Contest”); provided that Seller shall at all times keep Purchaser reasonably informed of the details and status of such Pre-Closing Tax Contest (including providing Purchaser with copies of all written correspondence regarding such matter), and Seller shall not settle any such proceedings without the prior written consent of Purchaser (not to be unreasonably withheld, conditioned or delayed). To the extent that there are any inconsistencies between this Section 13(l) and Article 10, the provisions of this Section 13(l) shall control. If as a result of a “determination” as defined in Section 1313 of the Code, any Taxes are due and payable and such Taxes are Indemnified Taxes, then Seller shall reimburse Purchaser for reasonable attorneys’ fees incurred by Purchaser in respect of exercising its right to participate under this Section 13(l).

14. Audited Financials. Beginning on the date hereof and continuing for a period of twelve (12) months following the Closing, Seller shall use commercially reasonable efforts to provide Purchaser with such information as Purchaser may reasonably request (including management representation letters, to the extent they exist as of immediately prior to the Closing, required for any audit) in connection with (i) Purchaser’s efforts to prepare audited financial statements in compliance with Regulation S-X or other governmental regulation applicable to Purchaser, (ii) Purchaser’s preparation of pro forma financial information for purposes of its reports or other filings in accordance with the Securities Exchange Act of 1934, as amended, or other governmental regulations applicable to Purchaser, or (iii) the preparation of any similar materials or disclosures required by any law applicable to Purchaser or its Affiliates; provided, however, such efforts shall be at no additional cost to Seller, and any out of pocket costs incurred by Seller shall be promptly reimbursed by Purchaser following presentment of reasonable supporting documentation with respect thereto.

15. Limitation of Liability. No present or future partner, director, officer, member, shareholder, employee, Affiliate, or agent of Seller, Purchaser or any Affiliate of the foregoing will have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made pursuant to the Agreement previously, now, or hereafter. These Section 15 limitations are in addition to and not in limitation of, any other limitation or liability hereunder, by law, in equity, or otherwise.

16. Casualty and Condemnation.

(a) Risk of Loss. The risk of loss, damage or destruction to the Properties by fire or other casualty or the taking of all or part of the Properties by condemnation or eminent domain or by an agreement in lieu thereof until the Closing is assumed by Seller.

(b) Material Casualty.

(i) If, prior to Closing, any portion of a Property is damaged or destroyed by fire or other casualty, and such damage or destruction constitutes a Material Casualty, then Purchaser may elect by written notice to Seller either to (A) exclude the Property affected by such Material Casualty from the Transaction, in which event the Purchase Price shall be reduced by the applicable Allocated Purchase Price, or (B) not exclude such Property and proceed to Closing without reduction of or abatement to the Purchase Price, except that Seller shall credit to Purchaser an amount at Closing equal to any insurance proceeds previously paid to Seller, the Company or any Subsidiary thereof in connection with such damage or destruction plus the deductible under such policy of casualty insurance plus the amount of the cost of any uninsured damage or destruction plus the amount of lost rents as a result thereof. In such an event, Seller shall cause the Company to execute and deliver to Purchaser all required proofs of loss, assignments of claims and other similar items.

(ii) For purposes of this Section 16, damage or destruction to a Property will be considered a “Material Casualty” if (A) the Property is rendered uninhabitable due to such damage or destruction, (B) the time to repair such damage or destruction is reasonably expected to exceed six months, or (C) the cost to repair or restore such damage or destruction would reasonably be expected to exceed the sum of $20,000, or, if such cost is less than $20,000, such damage or destruction is not fully covered by insurance subject to commercially reasonable insurance deductibles (provided that Seller shall have the option of curing such deficiency by paying to Purchaser at Closing the difference between the cost to repair or restore any such damage or destruction and the available insurance proceeds, in which case the applicable damage or destruction shall not constitute a Material Casualty under this clause (C)).

(c) Non-Material Casualty. If, prior to Closing, a Property is damaged or destroyed by fire or other casualty and such damage or destruction does not constitute a Material Casualty, then Purchaser shall proceed to the Closing without a reduction in the Purchase Price, except that, unless such damage has been fully repaired by Seller prior to the Closing, Seller shall credit to Purchaser an amount at Closing equal to any insurance proceeds previously paid to Seller in connection with such damage or destruction plus the deductible under such policy of casualty insurance plus the amount of the cost of any uninsured damage or destruction. In such an event, Seller shall cause the Company to execute and deliver to Purchaser all required proofs of loss, assignments of claims and other similar items.

(d) Condemnation. If all or a material part of any Property is taken by condemnation, eminent domain or by agreement in lieu thereof or any proceeding to acquire, take or condemn all or a part of a Property is threatened or commenced that would cause an Individual Material Adverse Effect (any such event, a “Condemnation”), Purchaser may either (i) elect to exclude the Property from the Transaction, in which event, the Purchase Price shall be reduced by the applicable Allocated Purchase Price, or (ii) not exclude such Property and proceed to Closing without reduction of or abatement to the Purchase Price, except that if Seller, the Company or any Subsidiary thereof has received payments from the condemning authority and if Purchaser elects to close title to such Property, Seller shall credit the amount of said payment against the Purchase Price at the Closing.

(e) Termination Right. Notwithstanding the foregoing or anything herein to the contrary, if Properties under this Agreement having an aggregate value of more than the Defective Properties Threshold suffer from a Material Casualty or a Condemnation, and Purchaser has elected to exclude such Properties from the Transactions under this Agreement, either Seller or Purchaser may terminate this Agreement by written notice to Purchaser or Seller, respectively, and Escrow Agent, in which event Purchaser shall receive a full refund of the Deposit, and Seller and Purchaser shall have no further liability or obligations hereunder except for those that by the express terms of this Agreement survive the termination of this Agreement.

(f) Notice of Casualty or Condemnation. Seller shall promptly notify Purchaser of any material damage to or destruction of the Property or any written notice received by it regarding the threatening or commencement of Condemnation proceedings with respect to the Property.

17. Miscellaneous.

(a) Further Assurances; Books and Records.

(i) From time to time, as and when requested by any Party hereto, any other Party will execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement (but without increasing any such parties’ obligations hereunder), including such documents and instruments to change contact information regarding the Company with the Secretary of State of the state of its formation and state(s) where it is qualified to do business, the Internal Revenue Service, any other necessary Governmental Authorities, and any homeowners’ associations where the Properties are located. The terms of this paragraph shall survive Closing.

(ii) To the extent not delivered prior to the Closing, Seller shall, from time to time, as and when requested by Purchaser, deliver to Purchaser all books, records, data, rental history, and property and Tenant files associated with the Properties, the Companies, or the Acquired Assets that are in the possession of Seller, provided that Seller may retain copies consistent with customary document retention policies.

(b) Notice. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the Party to be notified or upon delivery by confirmed email transmission or nationally recognized overnight courier service or upon three (3) business days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the Party to be notified at the address indicated for such Party below.

Notices to Seller shall be addressed as follows:

Timber Real Estate Holdings, LLC

2260 University Drive

Newport Beach, CA 92660

Attn: Alan True

Taylor Carvajal

Email: alan@truefamilyenterprises.com

Taylor.Carvajal@truefamilyenterprises.com

With a copy to:

Rutan & Tucker, LLP

611 Anton Boulevard, 14th Floor

Costa Mesa, CA 92626

Attn: Bob L. Hagle

Kevan P. Graydon

Facsimile: (714) 546-9035

Email: bhagle@rutan.com

kgraydon@rutan.com

Notices to Purchaser shall be addressed as follows:

NexPoint Real Estate Advisors, L.P.

300 Crescent Court, Suite 700

Dallas, Texas 75201

Attn: Brian Mitts

Email: bmitts@highlandcapital.com

With a copy to:

VineBrook Homes

561 Virginia Road

Concord, Massachusetts 01742

Attn: Dana Spring

Email: dana.sprong@vinebrookhomes.com

And:

Wick Phillips Gould & Martin, LLP

3131 McKinney Ave, Suite 100

Dallas, TX 75204

Attn: D.C. Sauter

Email: dcsauter@wickphillips.com

A Party may change the address or person to whom notices should be sent by notifying the other Party in accordance with this Section 17(b).

(c) Governing Law and Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable conflicts of laws thereof. Purchaser and Seller hereby irrevocably submit to the exclusive jurisdiction of any federal or state court located in State of Delaware over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each Party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto shall be heard and determined in such courts.

(d) Waiver of Jury Trial. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTIES OR THE RELATIONSHIP OF PURCHASER AND SELLER HEREUNDER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING OR THE EARLIER TERMINATION OF THIS AGREEMENT.

(e) No Presumption Regarding Drafting. Each Party hereto acknowledges that it has reviewed this Agreement prior to its execution and that changes were made to this Agreement based upon its comments. If any disputes arise with respect to the interpretation of any provision of this Agreement, the provision shall be deemed to have been drafted by all of the parties and shall not be construed against any Party on the basis that the Party was responsible for drafting that provision.

(f) No Recordation. Seller and Purchaser each agrees that neither this Agreement nor any memorandum or notice shall be recorded except in connection with Purchaser’s pursuit of specific performance or by either Party in any legal proceeding to enforce the terms of this Agreement.

(g) Construction. The parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement, any amendment or modification or any of the Closing Documents. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words expressed in the singular shall be deemed to include the plural and vice versa, unless the context requires otherwise. Each

place in this Agreement in which the term “Property” is used, it shall be understood to mean and refer to each and every Property, both individually and collectively, as the context may require or permit. Each place in this Agreement in which the term “Property” is used, it shall also be deemed to include the phrase, “or any portion thereof” unless the context requires the contrary. Each obligation of Seller hereunder shall be understood to mean the joint and several obligations of Seller and each of the Companies that is signing a Joinder Agreement, as described in the introduction.

(h) Interpretation. The headings preceding the text of Articles and Sections included in this Agreement and the headings to Exhibits and Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of “including” or “include” herein shall in all cases mean “including, without limitation” or “include, without limitation,” respectively. Reference to any Person includes such Person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument shall mean such agreement, document or instrument as amended or modified and in effect from time to time.

(i) Captions Not Binding; Exhibits. The captions in this Agreement are inserted for reference only and in no way define, describe or limit the scope or intent of this Agreement or of any of the provisions. All Exhibits and Schedules attached hereto shall be incorporated by reference as if set out herein in full.

(j) Severability. If any term or provision of this Agreement or the application thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

(k) Time of Essence. Time is of the essence with respect to this Agreement and the obligations of the parties hereunder.

(l) Counterparts; Binding Effect. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. This Agreement shall be binding upon the parties hereto and their respective successors and assigns.

(m) No Third-Party Beneficiaries. Except as provided in Section 3(e), Article 9, and Article 10, as applicable, nothing in this Agreement is intended to or shall confer any rights or remedies under or by reason of this Agreement on any Persons other than the parties and their respective successors and permitted assigns. Nothing in this Agreement is intended to or shall relieve or discharge the obligation or liability of any third Persons to any Party. This Agreement is not intended and shall not give any third Person any right of subrogation or action over or against Seller or Purchaser.

(n) Confidentiality. Purchaser and Seller hereby agrees to keep the terms and conditions of this Agreement and any information obtained with reference to the Assigned Interests, Direct Sale Properties, the Company, or any Property confidential, provided that the parties may reveal such information regarding the terms and provisions of this Agreement as may be necessary in their reasonable discretion to comply with the provisions of this Agreement or in the ordinary course of business. Nothing in this Section 17(n), however, shall prohibit (i) the parties from making disclosures to their respective legal counsel, certified public accountants, professional advisors, internal and third party regulators and auditors,

current and prospective lenders and financial partners and investors, (ii) the parties from making disclosures that are otherwise required as a matter of law, or (iii) the parties from making disclosures in connection with asserting or defending any action relating to the Assigned Interests or this Agreement. This Section 17(n) shall survive the Closing or earlier termination of this Agreement.

(o) Assignment. No Party may assign this Agreement or its rights hereunder to any Person without the prior written consent of the other Party, and any such assignment shall be null and void ab initio. Notwithstanding the foregoing, Purchaser may assign this Agreement to an Affiliate, which may include means an entity that controls, is controlled by or under common control with (i) NexPoint Advisors, L.P., a Delaware limited partnership, (ii) any entity controlled by James D. Dondero, or (iii) any entity that controls, is controlled by or under common control with either of them. In the event of any permitted assignment by a Purchaser, any assignee shall assume any and all obligations and liabilities of such Purchaser under this Agreement accruing from and after the date of such assignment but, notwithstanding such assumption, such Purchaser shall continue to be liable hereunder.

(p) Attorneys’ Fees. In the event either Party commences legal proceedings against the other Party pursuant to any right to do so under this Agreement, then the prevailing Party shall be entitled to recover reasonable attorneys’ fees and costs.

(q) State Specific Provisions. The terms and conditions of this Section 17(p) will supplement the terms and conditions of the remainder of this Agreement. The text of this Section 17(p) of the Agreement, however, governs over all conflicts and inconsistencies between the terms and conditions of this Section 17(p) and the terms and conditions of the remainder of the Agreement.

(i) Disclosure Regarding Lead-Based Paint. Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women.

(ii) Notice Regarding Radon Gas. Seller hereby makes the following disclosure: RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES MAY HAVE BEEN FOUND IN BUILDINGS IN COUNTIES WHERE THE PROJECTS ARE LOCATED. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM THE APPLICABLE COUNTY HEALTH DEPARTMENT.

(iii) Waiver of Statutory Disclosures. Seller and Purchaser hereby irrevocably waive any applicable law requiring delivery of a form of statutory disclosure concerning the sale of residential real property.

(r) Escrow Instructions. When this Agreement or counterparts hereof shall have been executed by Seller and Purchaser and delivered to Escrow Agent, it shall constitute Escrow Agent’s escrow instructions. Any standard form instructions submitted by Escrow Agent or any other clarification or addition to the instructions contained herein shall, when executed by Seller and Purchaser, constitute additional escrow instructions. In the event of any conflict between such additional instructions and this Agreement, the terms of this Agreement shall prevail (except to the extent that such additional instructions, executed and delivered by both Seller and Purchaser, expressly state that such additional instructions shall prevail notwithstanding anything to the contrary in this Agreement).

THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.


SELLER:

Timber Real Estate Holdings, LLC

By:		/s/Alan True
Name:		Alan True
Title:		Manager

Signature Page to Purchase and Sale Agreement


PURCHASER:

VineBrook Operating Partnership, L.P.

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory

Signature Page to Purchase and Sale Agreement

JOINDER AGREEMENT

Each of the undersigned entities hereby agrees to be bound by the Purchase and Sale Agreement, dated as of August 16, 2019, by and between (a) VineBrook Operating Partnership, L.P., a Delaware limited partnership (“Purchaser”), and (b) Timber Real Estate Holdings, LLC, a Delaware limited liability company (“Seller”), to which this joinder agreement is attached (the “Agreement”) as though such undersigned entity were Seller under the Agreement for purposes of being jointly and severally liable with each other and Seller for purposes of, and bound by, Articles 9-17 thereof.


TIMBER HOLDINGS, LLC		TI LONG TERM HOLDINGS I, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

TI KC Bravo LLC		True FM 2017-1, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

TRUE KC2016-1, LLC		TRUE CIN2017-1, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

True CIN2017-2, LLC		TRUE JACK2017-1, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

True JACK2017-2, LLC		TRUE MEM2016-1, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

TRUE OM2016-1, LLC		TI PENNSYLVANIA HOLDINGS LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

TRUE PIT2017-1, LLC		True PIT2017-2, LLC

By:	/s/Alan True	By:	/s/Alan True
Name:	Alan True	Name:	Alan True
Title:	Manager	Title:	Manager

1Joinder Agreement

EXHIBIT A

DEFINITIONS

“Action” means any litigation, claim, action, suit, inquiry, audit, investigation or proceeding (including any condemnation action or proceeding) by or before any Governmental Authority or any other arbitration, mediation or similar proceeding.

“Advance Rent” means any Rent that has been prepaid more than 30 days in advance, as measured from the date of determination.

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. The terms “controls,” “controlled by,” or “under common control with” means the possession, directly or indirectly, through one or more intermediaries, of the power to direct or cause the direction of the management or policies of an entity or person, whether through the ownership of voting securities, by contract or otherwise.

“Affiliated Group” means a group of Persons that elects, is required to, or otherwise files a Tax Return or pays a Tax as an affiliated group, consolidated group, combined group, unitary group, or other group recognized by applicable Tax Law.

“Allocated Purchase Price” means, with respect to any Property, that portion of the Purchase Price allocated to such Property as set forth on Schedule VI attached hereto.

“Assumption Indebtedness” means that certain Indebtedness in the original principal amount of 11,092,000.00 of the Company encumbering the Freddie Properties and evidenced by the Loan Agreement, which shall be assumed, directly or indirectly, by Purchaser as of the Closing.

“Bankruptcy Action” means, with respect to any Person: (i) such Person shall fail generally to pay its debts as they come due, or shall make a general assignment for the benefit of creditors; or any case or other proceeding shall be instituted by such Person seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of it or its debts under the Bankruptcy Code; or such Person shall take any corporate, limited partnership or limited liability company action to authorize any of such actions; or (ii) a case or other proceeding shall be commenced, without the application or consent of such Person in any court seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under the Bankruptcy Code, and (A) such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days or (B) an order for relief in respect of such Person shall be entered in such case or proceeding or a decree or order granting such other requested relief shall be entered.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §101, et seq., as the same may be amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights or any other federal, state, local or foreign bankruptcy or insolvency law.

“business day” means any day other than Saturday, Sunday, any federal holiday, or any holiday in Texas. If any period expires on a day which is not a business day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a business day, such period shall expire on or be extended to, as the case may be, the next succeeding business day.

Exhibit A - 1

“Closing” means the consummation of the purchase and sale of the Assigned Interests and Direct Sale Properties.

“Closing Documents” means all documents and instruments executed and delivered by Purchaser or Seller pursuant to the terms of this Agreement in connection with such Closing, including the documents and instruments required pursuant to the terms of Article 5.

“Condemnation” means a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of any Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting such Property or any part thereof.

“Contracts” means all contracts, leases, equipment leases, agreements, arrangements, understandings, promises, commitments or undertakings, whether written or oral and whether express or implied.

“Defective Property Transfer” means in the case the Defective Property is owned by a Company with respect to which an Assigned Interest is to be sold at the Closing, a transfer by such Company of such Defective Property to a Person in which the Company has no interest.

“Delaware Act” means the Delaware Limited Liability Company Act.

“Disclosure Schedule” means Schedule V attached hereto.

“Due Diligence” means examinations, inspections, investigations, tests, studies, analyses, appraisals, calculations, evaluations and/or investigations with respect to each Property (including examination and review of the title matters, applicable land use, and zoning Laws and other Laws applicable to the Property, the physical condition of the Property and the economic status of the Property) and any Leases or rental history with respect to the Properties, as Purchaser deems adequate.

“Eligible Lease” means, as of any date of determination, a Lease for a Property that satisfies all of the following: (i) the form of Lease reflects customary market standard terms; (ii) the Lease is entered into on an arms-length basis without payment support by the Company or any Affiliates of the Company (provided that any incentives offered to Tenants shall not be deemed to constitute such payment support); (iii) the Lease is to a bona fide third-party Tenant; (iv) the Lease is in compliance with all applicable Laws and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Seller, at any time in force affecting a Property or any part thereof, including any which may (A) require repairs, modifications or alterations in or to a Property or any part thereof, or (B) in any way limit the use and enjoyment thereof in all material respects; and (v) the Lease is consistent with the Property Manager’s internal leasing guidelines.

“Eligible Tenant” means, as of any date of determination, a bona fide third party lessee of a Property who satisfies each of the following criteria: (i) the Tenant is not subject to an ongoing Bankruptcy Action as of the date such Tenant is initially screened by the Property Manager prior to the execution of a Lease by such Tenant; (ii) at the time of such initial screening, the Tenant is not listed on any Government List; and (iii) the Tenant otherwise generally conforms to the Company’s internal tenant leasing criteria in all material respects at the time such Tenant is screened by Property Manager.

Exhibit A - 2

“Escrow Agent” means Westcor Investor Services, having the following address: 600 West Germantown Pike, Ste. 450, Plymouth Meeting, PA 19462.

“Excluded Properties” means, as applicable (i) any Defective Property removed from the Direct Sale Properties, or excluded by virtue of a Defective Property Transfer, and (ii) any Freddie Property with respect to which the Assigned Interest has been excluded pursuant to Section 5(e).

“Financing Documents” means those certain loan documents entered into by and between the Company and Lender in connection with the Assumption Indebtedness.

“Government List” means (i) the Annex to Executive Order 13224, (ii) OFAC’s most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http://www.treasury.gov/ofac/downloads/t11sdn.pdf or any successor website or webpage) and (iii) any other list of terrorists, terrorist organizations or narcotics traffickers maintained by a Governmental Authority that Purchaser at least five business days prior to the Closing Date notifies Seller in writing is now included in “Government List”.

“Governmental Authority” means any court, board, agency, commission, office or other authority of any nature whatsoever of any governmental unit (foreign, federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

“HOA” means a homeowners or condominium association, board, corporation or similar entity with authority to create a Lien on a Property as a result of the non-payment of HOA Fees that are payable with respect to such Property.

“HOA Fees” means all dues, fees, assessments and impositions with respect to a Property, and any other charges levied or assessed or imposed against a Property, or any part thereof, by an HOA.

“Housing Assistance Payments” means any and all Section 8 housing choice voucher payments or other tenant-based rental subsidies benefitting Tenants.

“Indebtedness” means any Liability of any Company as of immediately prior to the Closing for the following: (a) borrowed money, including current and long-term portions of bank overdrafts, bank debt, mortgages, member loans and other loans, unpaid installment obligations, make-whole payments, notes payable and negative cash balances; (b) installment purchases of real or personal property or services, or for the deferred purchase price of real or personal property or services, including earn-outs, that is not evidenced by trade accounts payable; (c) obligations evidenced by a promissory note, bond, debenture, or other similar instrument or debt security; (d) in respect of any letters of credit or bankers’ acceptances (in each case, to the extent drawn); (e) under any interest rate swap, forward contract or other hedging arrangement of the Company; (f) for off-balance sheet financing, including synthetic leases and project financing; (g) all deferred compensation obligations, including (A) all payment obligations under any non-qualified deferred compensation plan of the Company and (B) any underfunded pension or post-retirement liabilities of the Company; (h) the portion of any employee or member bonuses related to performance prior to Closing or earned at Closing, which is payable by the Company, including the employer portion of any related employment, payroll, unemployment, withholding, or similar Taxes; and (i) for guarantees of any liability of a third party of the type described in clauses (a) through (h). “Indebtedness” includes any and all amounts necessary to retire such indebtedness, including principal or scheduled payments, accrued interest or finance charges, and other fees, penalties or payments necessary to retire the indebtedness at Closing.

Exhibit A - 3

“Indemnified Taxes” (and the correlative meaning “Indemnified Tax”) means, without duplication, any of the following Taxes (in each case, whether imposed, assessed, due or otherwise payable directly, as a successor or transferee, jointly and/or severally, pursuant to a Tax Sharing Agreement entered (or assumed) by the Company or any Subsidiary of the Company on or prior to the Closing Date, in connection with the filing of a Tax Return, as a result of an assessment or adjustment by any Governmental Authority, by means of withholding, or for any other reason and whether disputed or not):

(i)

All Taxes of Seller;

(ii)

All Taxes of any Company or any Subsidiary of any Company for any Pre-Closing Tax Period or portion of any Straddle Period ending on the Closing Date, and all Current Year Property Taxes allocated to Seller under Section 4(b);

(iii)

All Taxes resulting from (A) a breach of any of Seller’s Warranties in Section 7(o); (B) a breach of a covenant of the Company to be performed on or prior to the Closing; or (C) a breach of a covenant or other agreement of Seller contained in this Agreement (including Section 8(i) and Section 13), in each case to the extent not previously paid by Seller to any Purchaser Indemnified Party pursuant to Section 9(a); and

(iv)

Omitted.

Indemnified Taxes shall exclude Taxes to the extent previously taken into account as an adjustment to the Purchase Price under Section 4(b).

“Indemnity Escrow Agent” means the Escrow Agent, in its capacity as escrow agent with respect to the Indemnity Escrow Funds and escrow services in connection with the Indemnity Escrow Agreement.

“Indemnity Escrow Amount” means an amount equal to the Liability Cap, calculated with respect to the applicable Properties directly or indirectly being purchased on the Closing Date or Freddie Closing Date, as applicable.

“Individual Material Adverse Effect” means, in respect of a Property, any event or condition that has a material adverse effect on (i) the profitability, value, use, operation, leasing or marketability of such Property or results in any material liability to, claim against or obligation of the Lender under the Financing Documents, or (ii) the enforceability, validity, perfection or priority of the lien of the Financing Documents with respect to such Property.

“Law” or “Laws” means all municipal, county, state or federal statutes, codes, ordinances, laws (including common law), rules or regulations applicable to any Property and/or Seller, including respect to each Property and the Properties as a whole, all zoning and law use laws, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto.

“Leases” means all leases of the Properties in effect on the Closing Date as reflected on the applicable Rent Roll, together with any renewals and amendments thereof and any correspondence with or notices to or from Tenants related thereto. The Leases may each be referred to individually herein as a “Lease”.

“Lender” means Berkadia Commercial Mortgage, LLC.

Exhibit A - 4

“Liabilities” means any and all indebtedness, claims, demands, liabilities, damages, obligations, fines, penalties, Taxes, assessments, losses, deficiencies, interest, awards, judgments, sanctions, costs and expenses of any kind or nature, accrued or fixed, known or unknown, matured or unmatured, due or to become due, asserted or unasserted, including reasonable costs of investigation and defense and reasonable attorneys’ and consultants’ fees, expenses and disbursements.

“Liability Cap” means an amount equal to three and no/100 percent (3.00%) of the aggregate value of the Purchase Price, which term when used shall be exclusive of attorneys’ fees and costs.

“Liability Threshold” means an amount equal to one-half of one percent (0.5%) of the aggregate value of the Purchase Price.

“Liens” means any and all liens (including environmental and Tax liens), restrictions (including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership), charges, claims, mortgages, pledges, security interests, equitable deposits, easements, adverse claims, puts or encumbrances of any nature whatsoever (including any subscriptions, options, preemptive rights, rights of refusal, rights of offer, conversion rights, warrants or other agreements, securities or commitments of any nature whatsoever (whether oral or written, whether firm or conditional, whether contractual or statutory)), and any lien or charge arising by statute or other Laws, which secures the payment of a debt or the performance of an obligation.

“Loan Agreement” means that certain loan agreement by and between the Company and the Lender in connection with Assumption Indebtedness.

“Major Contracts” means (i) any management agreements relating to the Properties, (ii) any brokerage, leasing, cleaning, maintenance, service or other contract or agreement of any kind (other than Leases) relating to the Properties, in each case involving agreements that will survive Closing and include a payment or expense of more than $50,000 during any 12 month period, unless cancelable on 30 days or less notice without requiring payment of termination fees or payments of any kind (other than amounts that accrued prior to the termination date).

“Market” means each city or municipality where a Property is located, together with the metropolitan area surrounding each such city or municipality.

“Materiality Threshold” means a breach of a representation or warranty by the applicable Seller with respect to a Property whereby (i) the presence of hazardous substances or materials which are such that the same will materially and adversely affect Purchaser’s ability, directly or indirectly, to own and operate the Property as it is currently being operated as of the Effective Date or would cause Lender to refuse to provide financing for the acquisition of such Property, or (ii) an encumbrance or title defect that materially and adversely affects Purchaser’s ability, directly or indirectly, to own and operate the Property as it is currently being operated as of the Effective Date or would cause Lender to refuse to provide financing for the acquisition of such Property.

“OFAC” means the Office of Foreign Assets Control of the United States Department of Treasury.

“Outside Closing Date” means September 30, 2019.

“Permitted Exceptions” means for any Property: (a) applicable zoning, building and land use laws, ordinances, rules and regulations, (b) the lien of Taxes and assessments not yet due and payable, (c) the rights of the Tenants, as tenants only, under the Leases, (d) all easements, rights-of-way, restrictions and other similar non-monetary encumbrances recorded against and affecting such Property and that would not

Exhibit A - 5

reasonably be expected to and do not have an Individual Material Adverse Effect on such Property, and (e) any encumbrances and other matters set forth in any of the Title Insurance Owner’s Policies for such Property. Notwithstanding the foregoing definitions, anything that becomes a Permitted Exception under the process set forth in Section 3(i) of this Agreement shall be a Permitted Exception under this Agreement, even if such Permitted Exception has an Individual Material Adverse Effect on such Property.

“Permitted Liens” means (a) the Permitted Exceptions, (b) Encumbrances under the Loan Agreement, and (c) Encumbrances that are being paid off and released pursuant to customary payoff letters at the Closing (payment of which shall reduce amounts ultimately released to Seller from the Closing escrow).

“Person” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority and including any successor, by merger or otherwise of any of the foregoing.

“Post-Closing Tax Period” means any taxable period that begins on or after the Proration Time.

“Pre-Closing Tax Period” means any taxable period that begins and ends before the Proration Time. In determining the Seller’s pre-closing tax liability, liability shall be allocated as of the date such tax originally accrues or becomes due, regardless of any extension.

“Property File” means with respect to each Property: (i) the Title Insurance Owner’s Policy related to such Property and the deed vesting title to such Property in the Company; and (ii) the executed Lease and any renewals, amendments or modification of the Lease for such Property, if applicable.

“Property Manager” means the applicable property manager for the Property.

“Property Taxes” means any real estate and personal property Taxes, assessments, water charges, sewer rents, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto now or hereafter levied or assessed or imposed by a Governmental Authority against any Property or the owner thereof.

“Proration Time” means 12:01 A.M. on the Closing Date.

“Purchaser’s knowledge” or words of similar import (e.g., “known to Purchaser”) shall refer only to the actual knowledge of Brian Mitts and Dana Sprong (each, a “Purchaser Knowledge Party”) after reasonable inquiry. There shall be no personal liability on the part of any Purchaser Knowledge Party arising out of any of Purchaser’s Warranties.

“Purchaser Transaction Expenses” means, subject to Section 4, all of the fees and expenses of incurred by Purchaser or any Subsidiary thereof (other than the Company and its Subsidiaries) in connection with this Agreement or the completion of the transactions contemplated by this Agreement.

“Purchaser’s Warranties” means (a) Seller’s representations and warranties set forth in Section 6 as such representations and warranties may be explicitly waived by Seller pursuant to the terms of this Agreement, and (b) any representations and warranties made by Purchaser in any of the Closing Documents.

“Real Property Settlement Costs” means, collectively, all recording costs, title costs and expenses, documentary stamps, transfer Taxes, sales Taxes, closing and escrow fees, title search and update fees, title company due diligence, HOA fees, document coordination fees, HOA estoppels charges, HOA diligence costs, HOA estoppel costs and fees, HOA transfer fees and other similar real property-related costs,

Exhibit A - 6

expenses, fees, reinsurance coordination fees and Taxes, but, excluding, for avoidance of doubt, any increase in Taxes resulting from a reassessment of any Property, whether as a result of such Property being (a) a Direct Sale Property or (b) owned by a Company that undergoes a change in ownership as a result of the transfer of the Assigned Interest representing ownership interests in such Company.

“Rent Roll” means the rent roll with respect to the Properties in the form attached hereto as Exhibit G and incorporated herein by this reference.

“Rents” means all base rents, percentage rents, additional rent and any Tax and operating expense reimbursements and escalations due from the Tenants of the Property under the Leases.

“Seller Transaction Expenses” means, subject to Section 4, all of the fees and expenses incurred at or prior to Closing by Seller, the Company or any Subsidiary of the Company in connection with this Agreement or the completion of the transactions contemplated by this Agreement.

“Seller’s knowledge” or words of similar import (e.g., “known to Seller”) shall refer only to the actual knowledge of Alan True and Taylor Carvajal (each, a “Seller Knowledge Party”) after reasonable inquiry. There shall be no personal liability on the part of any Seller Knowledge Party arising out of any of Seller’s Warranties.

“Seller’s Warranties” means (a) Seller’s representations and warranties set forth in Section 7 as such representations and warranties may be explicitly waived by Purchaser pursuant to the terms of this Agreement, and (b) any representations and warranties made by Seller in any of the Closing Documents.

“Stabilized Property” means a Property that is not an Unstabilized Property.

“Straddle Period” means any taxable period that begins before the Proration Time and ends after the Proration Time.

“Subsidiary” of a Person means any corporation or other legal entity of which such Person (either alone or through or together with any other Subsidiary or Subsidiaries) is the general partner or managing entity or of which at least a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or others performing similar functions of such corporation or other legal entity is directly or indirectly owned or controlled by such Person (either alone or through or together with any other Subsidiary or Subsidiaries).

“Target Closing Date” means August 31, 2019; provided, however, Purchaser may extend the Target Closing Date by 30 additional days by depositing with the Escrow Agent an amount equal to 1.00% of the aggregate value of the Purchase Price, which amount shall so increase the Deposit and become part of the Deposit for the purposes of this Agreement.

“Tax” or “Taxes” means any federal, state, local or foreign taxes, charges, fees, duties or other assessments of any kind, including all income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, escheat, unclaimed property, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not, and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, by Law, contract or otherwise.

Exhibit A - 7

“Tax Return” means any return (including information returns), report, declaration, statement, extension, form or other documents or information filed with or submitted to, or required to be filed with or submitted to any Tax authority in connection with the determination, assessment, collection or payment of any Tax.

“Tax Sharing Agreement” means any agreement (other than customary provisions of commercial agreements) pursuant to which the Company or any Subsidiary of the Company is obligated to indemnify any Person for, or otherwise pay, any Tax of another Person.

“Tenant” (collectively, the “Tenants”) shall mean the tenants, licensees or other occupants occupying any part of a Property pursuant to and as a party to a Lease.

“Title Company” means Westcor Investor Services, having the following address: 600 West Germantown Pike, Ste. 450, Plymouth Meeting, PA 19462.

“Title Insurance Owner’s Policy” means the existing owner’s title insurance policies and surveys for all of the Properties.

“Unstabilized Property” means a Property set forth on Schedule I.

Exhibit A - 8

Exhibit B

Form of Non-Foreign Person Affidavit

[Omitted]

Exhibit C

Form of Owner’s Affidavit

[Omitted]

Exhibit D

Form of Indemnity Escrow Agreement

[Omitted]

Exhibit E

Form of Assignment

[Omitted]

Exhibit F

Property Representations

[Omitted]

Exhibit G

Rent Roll

[Omitted]

Exhibit H

Major Contracts

[Omitted]

Exhibit I

Form of Lease Assignment and Assumption

[Omitted]

Exhibit J

Company Organizational Chart

[Omitted]

Exhibit K

Form of Direct Sale Properties Transfer Documents

[Omitted]

Exhibit L

Form of Lease Assignment and Assumption Agreement

[Omitted]

Schedule I

Unstabilized Property

[Omitted]

Schedule II

Due Diligence Deliverables

[Omitted]

Schedule III

Excluded Assets

[Omitted]

Schedule IV

Closing Cost Allocation by State

[Omitted]

Schedule V

Disclosure Schedule

[Omitted]

Schedule VI

Allocated Purchase Price

[Omitted]

Schedule VII

Allocation Methodology

[Omitted]

Schedule VIII

Companies

[Omitted]

Exhibit 2.3

FIRST AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 10th day of September, 2019, by and between Timber Real Estate Holdings, LLC, a Delaware limited liability company (“Seller”), and VineBrook Operating Partnership, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A. Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of August 16, 2019 (the “Agreement”) for the purchase and sale of the properties described therein.

B. Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Incorporation of Recitals; Definitions. The foregoing recitals are incorporated herein. Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2. Defective Properties List. Notwithstanding anything to the contrary in the Agreement, Seller hereby waives Purchaser’s obligation to provide in reasonable detail the basis for Purchaser’s determination of a Defective Property under Section 3(c) of the Agreement. Seller and Purchaser hereby agree and acknowledge that Purchaser shall provide a list of such Defective Properties to Seller, setting forth the address of each Defective Property.

3. Defective Properties Concession. Pursuant to Section 3(c) of the Agreement, Seller and Purchaser hereby agree that the Properties listed on Exhibit A attached hereto shall be purchased at a reduced price.

4. Defective Properties Removed. Pursuant to Section(c) of the Agreement, Seller and Purchaser hereby agree that the Properties listed on Exhibit B attached hereto shall, in the case the Defective Property is part of the Direct Sale Properties, be removed from this transaction, or in the case the Defective Property is part of the Assigned Interest, effectuate a Defective Property Transfer for such Defective Property.

5. Purchase Price. The Purchase Price set forth in Section 1(b) of the Agreement is hereby reduced to $73,065.138.00.

6. No Further Amendment. Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect. To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

7. Miscellaneous. This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument. Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart. This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

[Signatures on Next Page]

IN WITNESS WHEREOF, Seller and Purchaser have executed this Amendment as of the date set forth above.

SELLER:



TIMBER REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company

By:		/s/Alan True
Name:		Alan True
Title:		Authorized Signatory

PURCHASER:



VINEBROOK OPERATING PARTERNSHIP, L.P., a Delaware limited partnership

By:		/s/Brian Mitts
Name:		Brian Mitts
Its:		Authorized Signatory

Exhibit A

Defective Properties to be Purchased at Concession Price

[Omitted]

Exhibit B

Defective Properties to be Removed

[Omitted]

Exhibit 2.4

SECOND AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 26th day of September, 2019, by and between Timber Real Estate Holdings, LLC, a Delaware limited liability company (“Seller”), and VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership, previously incorrectly identified as VineBrook Operating Partnership, L.P. (“Purchaser”).

RECITALS:

A. Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of August 16, 2019, as amended by that certain First Amendment to Purchase and Sale Agreement dated as of September 10, 2019 (collectively, the “Agreement”) for the purchase and sale of the properties described therein.

B. Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

1. Incorporation of Recitals; Definitions. The foregoing recitals are incorporated herein. Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2. Name of Purchaser. Due to a scrivener’s error, Purchaser’s name is incorrectly stated in the Agreement as “VineBrook Operating Partnership, L.P.”. All references in the Agreement to Purchaser shall mean “VineBrook Homes Operating Partnership, L.P.”

3. Purchase Price. The Purchase Price set forth in Section 1(b) of the Agreement is hereby reduced to $73,001,984.17.

4. Defective Property Removed. Seller and Purchaser hereby agree that the Property listed on Exhibit B attached hereto shall be removed from this transaction.

5. Properties in Construction. To the extent that any Property listed on Exhibit A attached hereto will not be in “rent-ready condition” as of the Closing, Seller hereby agrees and acknowledges that Seller shall be responsible for any and all costs associated with getting each such Property that is not in “rent-ready condition” as of the Closing in “rent-ready condition” post-Closing. For purposes of this Amendment, “rent-ready condition” shall have the meaning customarily adhered to by Seller in the ordinary course of its business. For the avoidance of doubt, Properties that are rented or occupied as of the Closing will be deemed to be in “rent-ready condition” as of the Closing.

6. Credit at Closing. Purchaser shall receive a credit at Closing in the amount of $11,128.55 for construction on the Properties listed on Exhibit C attached hereto.

7. Third-Party Property Management Agreements. Notwithstanding anything to the contrary in the Agreement, Seller shall not terminate any third-party property management agreements currently in effect prior to Closing.

8. No Further Amendment. Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect. To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

9. Miscellaneous. This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument. Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart. This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

[Signatures on Next Page]

IN WITNESS WHEREOF, Seller and Purchaser have executed this Amendment as of the date set forth above.

SELLER:



TIMBER REAL ESTATE HOLDINGS, LLC, a Delaware limited liability company

By:		/s/Alan True
Name:		Alan True
Title:		Authorized Signatory

PURCHASER:



VINEBROOK HOMES OPERATING PARTERNSHIP, L.P., a Delaware limited partnership

By:		/s/ Brian Mitts
Name:		Brian Mitts
Its:		Authorized Signatory

PURCHASER:



VINEBROOK HOMES OPERATING PARTERNSHIP, L.P., a Delaware limited partnership

By:		/s/Dana Sprong
Name:		Dana Sprong
Its:		Authorized Signatory

Exhibit A

Properties

[Omitted]

Exhibit B

Defective Property Removed

[Omitted]

Exhibit C

Credit at Closing

[Omitted]

Exhibit 2.5

EXECUTION COPY

AGREEMENT FOR PURCHASE AND SALE OF

MEMBERSHIP INTERESTS

BY AND BETWEEN

CONREX RESIDENTIAL

PROPERTY GROUP 2013-1 HOLDING COMPANY, LLC

and other Seller entities

collectively, as Seller

AND

VINEBROOK HOMES TRUST, INC.

as Buyer

TABLE OF CONTENTS


		Page

1.	Purchase and Sale; Membership Interests.		4

2.	Deposit; Purchase Price; Inspection Period.		6

3.	Closing		11

4.	Condition of Title.		11

5.	Right to Exclude Parcels.		14

6.	Interim Operating Covenants		16

7.	Apportionments		20

8.	Closing Costs		23

9.	Municipal Violations/Notices		24

10.	Seller’s Representations		24

11.	Buyer Representations		32

12.	Conditions Precedent to Closing		34

13.	Deliveries at Closing; Mechanics of Closing		36

14.	Default		39

15.	Notices; Computation of Periods		40

16.	Fire or Other Casualty		42

17.	Condemnation		42

18.	Assignability		43

19.	Inspections		43

20.	Brokers		46

21.	Condition of Property		46

22.	Survival of Provisions; Indemnification.		51

23.	Miscellaneous		53

- i -



24.	Sophistication of the Parties	54

25.	Limited Liability	55

26.	Joint and Several Obligations	55

27.	Enforcement	55

28.	Force Majeure	55

29.	Schedules and Exhibits	55

- ii -

LIST OF EXHIBITS


EXHIBIT A		CHART SHOWING ACQUIRED COMPANIES

EXHIBIT B		LIST OF PROPERTIES

EXHIBIT C		LIST OF EXISTING LEASES

EXHIBIT D		LIST OF EXISTING LOANS

EXHIBIT E		ESCROW AGREEMENT

EXHIBIT F		ALLOCATION OF PURCHASE PRICE

EXHIBIT G		CLOSING COST ALLOCATIONS

EXHIBIT H		REQUIRED CONSENTS

EXHIBIT I		LIST OF PENDING LITIGATION

EXHIBIT J		LIST OF TENANT CHARGE ARREARAGES

EXHIBIT K		RENT ROLL

EXHIBIT L-1		LIST OF EXISTING CONTRACTS

EXHIBIT L-2		LIST OF MANAGEMENT AGREEMENTS

EXHIBIT M		CLAIMS AGAINST TITLE POLICY

EXHIBIT N		CONSTRUCTION PROJECTS

EXHIBIT O		LIST OF INSURANCE POLICIES

EXHIBIT P		LIST OF INDEBTEDNESS

EXHIBIT Q		LIST OF OUTSTANDING HOA FEES AND HAP PAYMENTS

EXHIBIT R		LIST OF PARCELS SUBJECT TO AN HOA

EXHIBIT S		FORM OF ASSIGNMENT OF MEMBERSHIP INTERESTS

EXHIBIT T		FORM OF ESCROW HOLDBACK AGREEMENT

EXHIBIT U		FIRPTA CERTIFICATION

EXHIBIT V		ENVIRONMENTAL MATTERS

- iii -

AGREEMENT FOR PURCHASE AND SALE

OF MEMBERSHIP INTERESTS

THIS AGREEMENT FOR PURCHASE AND SALE OF MEMBERSHIP INTERESTS (this “Agreement”), dated as of October 19, 2020 (the “Effective Date”), is entered into by and among each of the sellers set forth on the signature pages attached hereto (collectively, “Seller”), and Vinebrook Homes Trust, Inc., a Delaware corporation (“Buyer”).

Recitals

A. Each applicable Seller owns 100% of the membership interests in the respective subsidiary company depicted as being owned by it on Exhibit A attached hereto (collectively, the “Acquired Companies, and individually, an “Acquired Company”).

B. Each Acquired Company owns a fee interest in the single family residential properties in multiple states as listed after the name of such Acquired Company in Exhibit B attached hereto.

C. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Membership Interests (as defined below) in the Acquired Companies in accordance with and subject to the terms and conditions of this Agreement.

Agreement

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

DEFINITIONS. The following terms shall have the meanings given to them in the referenced Section or other portion of this Agreement:


Definition		Section
Acquired Company		Recitals A
Advanced Rents		Section 1(a)(ii)
Affiliate		Section 6(e)
Agreement		Preamble
Annual Financial Statement		Section 10(a)(xvii)
Approved Lease		Section 6(b)
Assignment and Assumption of Membership Interests		Section 13(a)(i)
Business Day		Section 15(b)
Buyer		Preamble
Buyer CapEx Credit		Section 5(a)(i)
Buyer Parties		Section 19(b)(B)
Cash		Section 2(a)(i)
Claims		Section 21(e)(i)
Closing		Section 3


Definition		Section
Closing Date		Section 3(a)
Closing Outside Date		Section 3
Closing Statement		Section 7(a)(xi)
Code		Section 2(c)(i)
Construction Projects		Section 10(a)(xxii)(C)
Continuation Notice		Section 19(e)
Contract		Section 6(c)(ii)(D)
Control		Section 6(e)
Deductible		Section 22(e)(iii)
Deposit		Section 2(a)(i)
Diligence Materials		Section 2(d)
Diligence Room		Section 2(d)
Disclosed Broker		Section 20
Effective Date		Preamble
Environmental Requirements		Section 10(a)(xx)(E)
ERISA		Section 10(a)(xii)
Escrow Holder		Section 2(a)(i)
Excluded Parcel		Section 5(c)(i)
Excluded Parcel Cap		Section 5(a)
Existing Leases		Section 1(a)(ii)
Existing Loans		Section 1(e)
Existing Title Policies		Section 2(d)(iv)
Exhibit Delivery Date		Section 2(g)
Express Representations		Section 21(d)
Failed Condition Party		Section 12(d)
Financial Statements		Section 10(a)(xvii)
Financing Liens		Section 1(e)
HAP		Section 2(d)(xi)
HAP Payments		Section 2(d)(xi)
Hazardous Materials		Section 10(a)(xx)(E)
HOA		Section 2(d)(xv)
HOA Fees		Section 7(a)(vii)
Holdback Escrow Amount		Section 22(f)
Indebtedness		Section 1(e)
Indemnified Parties		Section 19(a)
Initial Deposit		Section 2(a)(i)
Interim Financial Statements		Section 10(a)(xvii)
IRS		Section 2(a)(i)
Leases		Section 1(a)(ii)
Lender		Section 6(d)
Liabilities		Section 10(a)(xviii)
Liability Cap		Section 22(c)(iii)
Lists		Section 10(a)(xi)(B)a
Litigation		Section 10(a)(x)
Loan Borrower		Section 1(e)


Definition		Section
Losses		Section 22(c)
Management Agreements		Section 10(a)(xvi)
Material Defect		Section 5(a)(i)
Material Defect Notice		Section 5(a)(i)
Membership Interests		Section 1(a)
Monetary Liens		Section 4(f)
Occupancy Condition		Section 5(e)
OFAC		Section 10(a)(xi)(A)
Order		Section 10(a)(xi)(A)
Parcel		Section 1(a)
Permits		Section 1(a)(iii)
Permitted Encumbrances		Section 4(a)
Personal Property		Section 1(c)
Pre-Closing Period		Section 20(g)
Pre-Closing Tax Period		Section 7(a)(v)
Prohibited Country		Section 10(a)(xi)(B)d
Property		Section 1(a)(v)
Purchase Price		Section 2(b)
Real Property		Section 1(a)(i)
Release Claims		Section 6(e)
Released Parties		Section 6(e)
Releasing Parties		Section 6(e)
Rent Rolls		Section 10(a)(xiv)
Reports		Section 19(c)
Representation Notice		Section 10(c)
Second Deposit		Section 2(a)(i)
Security Deposits		Section 1(a)(ii)
Seller		Preamble
Seller Cure Matter		Section 4(c)(iv)(A)
Seller Parties		Section 19(b)(A)
Seller’s Representations		Section 10(b)
Survival Period		Section 22(b)
Taking		Section 17
Tax		Section 10(a)(xx)(D)
Taxable		Section 10(a)(xx)(D)
Tax Authority		Section 10(a)(xx)(D)
Tax Return		Section 10(a)(xx)(D)
Tenant Charges		Section 7(a)(i)
Tenant Inducement Costs		Section 7(a)(iii)
Tenants		Section 1(a)(ii)
Title Company Transfer Taxes		Section 4(c)(iv)(A) Section 8(c)
Treasury Regulations		Section 2(c)(i)
Voluntary Liens		Section 4(f)
Warranties		Section 1(a)(iv)


Definition		Section
Warranty Claim Period		Section 22(e)(iv)
Warranty Notice		Section 22(e)(ii)

1. Purchase and Sale; Membership Interests.

(a) Buyer agrees to purchase, and Seller agrees to sell, upon the terms and conditions hereinafter set forth, 100% of the membership interests in the Acquired Companies, free and clear of all liens and encumbrances, including all rights, interests, and obligations that may be allocable to such membership interests, including all of the respective Seller’s proportionate right, title, and interest in and to the business, properties, and assets of the Acquired Companies, and to the capital, distributions, profits, and losses of the Acquired Companies allocable or attributable to such membership interests from and after the Closing, including all voting rights, rights to distributions, and all other appurtenant rights and privileges appurtenant thereto (collectively, the “Membership Interests”) and by virtue thereof, indirect ownership of the parcels of real property owned by the respective Acquired Companies as listed in Exhibit B attached hereto (each a “Parcel,” or collectively, the “Parcels”), including all right, title and interest of, and obligations with respect to, each of the Acquired Companies in and to the following property (collectively, the “Property”):

(i) The real property constituting each of the Parcels, and all of each Acquired Company’s right, title and interest, if any, in and to the buildings and improvements located thereon, together with any right, title and interest of each Acquired Company (if any) in and to adjacent streets, rights-of-way, development rights, easements and interests appurtenant thereto, including, but not limited to, any streets or other public ways adjacent thereto and any water or mineral rights appurtenant thereto (collectively, the “Real Property”);

(ii) Each Acquired Company’s interest as landlord under any leases, ground leases, licenses or other occupancy agreements affecting or relating to the Real Property existing as of the Effective Date and listed on Exhibit C attached hereto (the “Existing Leases”) (as the same may be amended, modified, renewed, extended or terminated in compliance with the terms of this Agreement, together with all leases, licenses and other occupancy agreements for Parcels entered into by Seller after the Effective Date hereof in compliance with the terms of this Agreement (collectively with the Existing Leases, the “Leases”), to the extent the Leases do not expire by their terms, or are not terminated pursuant to a tenant termination right set forth in an Existing Lease or pursuant to a default by the applicable Tenant, prior to the Closing Date (as hereinafter defined), in accordance with the terms of this Agreement, and each Acquired Company’s interest in all security deposits (“Security Deposits”) and advance payments (“Advanced Rents”) to occupy all or any portion of, or use facilities within, the Real Property made by tenants or licensees (“Tenants”) under the Leases;

(iii) Each Acquired Company’s interest, if any, in any licenses, permits, encroachment maintenance and removal agreements, certificates, approvals, authorizations, variances and consents (but excluding therefrom licenses to the extent included in the definition of Leases) which are transferable without consent (collectively, the “Permits”) issued or granted by governmental and quasi-governmental bodies, officers and authorities in respect of the ownership, occupancy, use and operation of the respective Parcels;

(iv) Each Acquired Company’s interest, if any, in any guaranties and warranties received by such Acquired Company from any contractor, manufacturer or other person in connection with the construction or operation of any portion of the Real Property (the “Warranties”); and

(v) All Included Contracts.

Notwithstanding anything herein to the contrary, to the extent any Parcel described in Exhibit B hereto is or becomes an Excluded Parcel (as hereinafter defined), such Parcel, and all of the above appurtenant rights and any Personal Property solely relating to such Parcel, shall be excluded from the definition of “Property” hereunder.

(b) For U.S. federal income Tax purposes (and any comparable provision of state and local income Tax Law), the parties agree to treat the transactions contemplated by this Agreement as purchases and sales of the assets owned by the Acquired Companies. Each Party shall file all Tax Returns consistent with this treatment.

(c) As used herein, “Personal Property” shall mean the Leases, Security Deposits, Included Contracts, Permits, Warranties, and each Acquired Company’s interest, if any, in any furniture, trade fixtures, equipment and other tangible personal property located on and used in connection with each Parcel, free and clear of any monetary liens other than liens arising out of the acts or omissions of any Tenants or for which any Tenants are responsible pursuant to the Leases (collectively, “Tenant Liens”). To the extent the Personal Property is owned by any third parties that are not Affiliated with the Acquired Companies (including Tenants), then such Personal Property is expressly excluded from this Agreement and is not part of the Property.

(d) Notwithstanding anything in this Agreement to the contrary, the Property shall not include, and Seller shall not be required to sell, transfer or convey to Buyer, any of the following:

(i) Accounts receivable relating to any Parcel with respect to the period prior to the Closing Date.

(ii) Confidential or proprietary information (including attorney-client communications).

(iii) All trademarks, tradenames, brand names, intellectual property, websites, URLs and domain names, and all proprietary and marketing materials and documents of any Seller, and any tradenames and trademarks related to the corporate or limited liability company name of any Seller, including, without limitation, any name containing the word “Conrex.”

(iv) All cash on hand held by any of the Acquired Companies with respect to the period prior to Closing, accounts, deposits (including, without limitation, bank and demand deposit accounts (but excluding any Security Deposits and Advanced Rents), and insurance policies of Seller, except to the extent a credit is received by Seller at Closing in accordance with the terms herein.

(v) Rights to payments, reimbursements or refunds from the United States of America, any State, any insurer, municipality, public utility or other agency, individual or entity, including, without limitation, real estate and Personal Property Tax refunds, payments, reimbursements and deposits with respect to any Parcel relating to any period that precedes the Closing Date.

(vi) All permits, licenses, approvals and authorizations issued, granted or given by or under the authority of any federal, state or local governmental or quasi-governmental agency, authority, official or tribunal which are not assignable, for which consent to assignment is not obtained, or for which an assignment will cause a Seller to incur liability or costs.

(e) Indebtedness. At Closing, Seller shall cause the Acquired Companies to (i) repay in full any existing obligations and indebtedness of the Acquired Companies (a) for borrowed money (other than trade debt and other similar liabilities incurred in the ordinary course of business), (b) evidenced by a note, bond, debenture or similar instrument, (c) created or arising under any capital lease, conditional sale, earn out or other arrangement for the deferral of purchase price of any Property, (d) drawn under letters of credit, banker’s acceptances or similar credit transactions, (e) for any other person’s obligation or indebtedness of the same type as any of the foregoing, whether as obligor, guarantor or otherwise, and/or (f) for interest (including default interest) and penalties on any of the foregoing (“Indebtedness”), other than any expenses to the extent that Buyer receives a credit against the Purchase Price or are adjusted between the parties in accordance with Section 7 hereof, (ii) obtain a payoff letter (which payoff letter shall include a confirmation from the applicable lender that it will release all Financing Liens, guarantees and indemnification obligations after Closing after receipt of the applicable payoff funds) from the applicable lenders with respect to any and all liens on the Parcels or any Property comprising any mortgages, deeds of trust, security agreements, financing statements or other instruments which evidence or secure Indebtedness of Seller or the Acquired Companies, but excluding Tenant Liens (“Financing Liens”), including, without limitation, the Financing Liens on the Parcels as listed in Exhibit D (the “Existing Loans”); and (3) such payoff letter also will include a confirmation from the applicable lender that, upon receipt of the payoff funds in full, it will release any pledge of the Membership Interests that is collateral for any Financing Liens, including filing the applicable UCC termination statements as required to terminate any liens on the Membership Interests.

2. Deposit; Purchase Price; Inspection Period.

(a) Delivery of Deposit.

(i) Not later than two (2) Business Days after the Effective Date, Buyer shall deposit with Chicago Title Insurance Company, 4170 Ashford Dunwoody Road, Suite 460, Atlanta, Georgia 30319 (the “Escrow Holder”) immediately available good funds in United States dollars (“Cash”) in the amount of FIVE MILLION ONE HUNDRED FORTY ONE THOUSAND ONE HUNDRED SIX AND 74/DOLLARS ($5,141,106.74) (the “Initial Deposit”), to be held in an escrow established by Escrow Holder pursuant to this Agreement and the Escrow Agreement

(hereinafter defined). In the event Buyer has delivered a Continuation Notice to Seller as provided in Section 19(e) hereof, then not later than two (2) Business Days after the expiration of the Inspection Period (as such terms are hereinafter defined), Buyer shall deliver to Escrow Holder additional Cash in the amount of FIVE MILLION ONE HUNDRED FORTY ONE THOUSAND ONE HUNDRED SIX AND 74/DOLLARS ($5,141,106.74) (the “Second Deposit”). The Initial Deposit, and if applicable, the Second Deposit, and all earnings thereon, shall be referred to herein collectively as the “Deposit.” The Deposit shall, at Buyer’s election, be invested by Escrow Holder from time to time in an interest bearing money market account or an alternative investment approved by both Buyer and Seller, which approval shall not be unreasonably withheld. Interest on funds within the Deposit shall be for the account of, and shall be reported to the Internal Revenue Service as earned by Buyer, and Buyer shall provide Escrow Holder with Buyer’s taxpayer identification number and an Internal Revenue Service (“IRS”) Form W-9 in connection with the delivery of the Deposit. In the event Buyer fails to deliver the Initial Deposit in accordance with the terms herein, then this Agreement shall automatically be deemed null and void and of no further effect without the necessity of confirmation by either party. In the event Buyer fails to deliver the Second Deposit in accordance with the terms herein, then this Agreement shall terminate and the disposition of the Initial Deposit shall be returned by Buyer subject to the provisions of the Escrow Agreement. As used herein, “Business Day” is defined in Section 15(b). If any period expires on a day which is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, the provisions of Section 15(b) shall apply.

(ii) Concurrently with the execution and delivery of this Agreement, Buyer and Seller shall execute and deliver an Escrow Agreement in the form of Exhibit E attached hereto (the “Escrow Agreement”).

(iii) Buyer and Seller agree to execute such further or supplemental escrow instructions as Escrow Holder reasonably may request in connection with its performance under this Agreement, provided that the same are consistent with the terms and conditions of this Agreement and the Escrow Agreement.

(b) Purchase Price. The purchase price for the Acquired Companies shall be TWO HUNDRED FIFTY SEVEN MILLION FIFTY FIVE THOUSAND THREE HUNDRED THIRTY SEVEN AND NO/DOLLARS ($257,055,337.00) (the “Purchase Price”), subject to adjustment in accordance with the provisions hereof. The Purchase Price shall be paid as follows:

(i) At Closing, the Deposit shall be disbursed to Seller and applied against the Purchase Price;

(ii) At Closing, Buyer shall pay the balance of the Purchase Price, as adjusted in accordance with Section 7 hereof, plus the costs to be paid by Buyer pursuant to Section 8 hereof and any other applicable provision of this Agreement, to Escrow Holder, such amount, less the Holdback Escrow Amount, shall be disbursed to Seller in accordance with separate instructions provided by Seller and Buyer (separately) to Escrow Holder, which instructions shall be consistent with this Agreement; and

(iii) At Closing, the Holdback Escrow Amount shall be retained by the Escrow Holder and, such amount, or portion thereon, shall be released following Closing in accordance with the Escrow Holdback Agreement.

(i) Each of Buyer and the Escrow Holder shall be entitled to deduct and withhold from amounts otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payments under the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury regulations promulgated thereunder (the “Treasury Regulations”), and/or any other applicable state, local or non-U.S. Law. To the extent that amounts are so deducted or withheld by Buyer or the Escrow Holder, as the case may be, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made. In the event that Buyer determines that it or the Escrow Holder is required to so deduct and withhold amounts under the Code, the Treasury Regulations and/or other applicable state, local or non-U.S. law, it shall use best efforts to notify Seller not later than five (5) days prior to Closing, and shall cooperate with Seller with respect to any available means to avoid or mitigate such withholdings. Absent a change in law, each of Buyer and Escrow Holder agrees that no such deduction or withholding of U.S. federal tax shall be made if Seller, including the sole member of Seller, provides a duly completed and executed IRS Form W-9.

(ii) Seller and Buyer hereby agree that for all purposes hereunder, the Purchase Price and any liabilities of the Acquired Companies shall be allocated among the Property as set forth on the allocation schedule attached hereto as Exhibit F (the “Allocation Schedule”). Seller, Buyer, and their respective Affiliates shall not take a position in any Tax Return, examination, or administrative or judicial proceeding relating to any Tax Return inconsistent with the Allocation Schedule. Any subsequent adjustments or additions to the Purchase Price shall be reflected in amendment to the Allocation Schedule made in accordance with the principles set forth in Treasury Regulation Section 1.1060-1. In the event that the Allocation Schedule is disputed by any Tax Authority, the party (including for such purposes a party’s Affiliates) receiving notice of such dispute will promptly notify the other party, and the parties will consult and cooperate in good faith how to resolve such dispute in a manner consistent with the Allocation Schedule. This Section 2(c) shall survive the Closing.

(d) Diligence Materials. Save and except item (d)(viii) listed below, within five (5) days after the Effective Date, Seller shall place, or shall cause to be placed, the following materials into a link at a website or data room (the “Diligence Room”), in each case solely to the extent the same are within the possession or control of Seller (collectively, the “Diligence Materials”):

(i) Monthly rent rolls at and since December 31, 2019 (including a delinquency report of Tenant Charge arrearages for each month beginning January 2020), dated no later than five (5) Business Days prior to the Effective Date;

(ii) a copy of the form of lease utilized by Seller as of the Effective Date;

(iii) copies of all executed leases and any addendums, amendments, supplements, renewals and/or assignments thereto for current tenants, schedule of leases including lease renewal and expiration data, lease concessions, uncollectable/bad debt expense and screening criteria;

(iv) any and all management agreements and service contracts relating to the operations of the Property to which the Acquired Companies are a party, as the same are in existence as of the Effective Date;

(v) copies of existing title insurance policies for each of the Parcels (the “Existing Title Policies”);

(vi) disclosure of any properties located in a flood zone, with, to Seller’s knowledge, the presence of oil tanks, septic, cistern or well water systems, and HOA documentation;

(vii) to the extent in Seller’s possession and readily accessible, certificates of occupancy for each Parcel;

(viii) to the extent in Seller’s possession, two years of audited financial statements, which shall include 2019 and 2020 year-to-date estimated P&Ls for each Parcel; provided Seller shall have until October 30, 2020, to deliver such statements;

(ix) to the extent in Seller’s possession and readily accessible, municipal occupancy certifications, inspection reports, two years of work order history (including current open work orders), open and unresolved violations and two years of notices of violation (also to include any open violations that originated over two years ago), two years of eviction filing reports by unit including current open filings, threatened or pending litigation and insurance claims (notices of claim or filed suits including condemnations);

(x) articles of organization and operating agreements for each of the Acquired Companies, and any other governing documents with respect to the Acquired Companies, if any;

(xi) copies of documentation relating to any outstanding and unresolved Litigation with respect to Seller, any of the Acquired Companies, any Tenant (in connection with the Property) or the Property other than Litigation that is covered by insurance;

(xii) information related to mold at any Parcel and copies of any disclosures, communications, notices or claims thereto;

(xiii) documentation relating to on-going capital expenditure projects in excess of ten percent (10%) of the value for each respective Parcel;

(xiv) to the extent in Seller’s possession and readily accessible, copies of any and all surveys including ALTA surveys, Geotechnical, engineering, environmental, wetland, and all other physical inspections and property condition reports with respect to each of the Parcels, including soil reports;

(xv) tax returns for the past five (5) years for each Acquired Company;

(xvi) to the extent in Seller’s possession, documentation relating to any prior environmental remediation efforts at the Properties within the period that is the shorter of (a) the past five (5) years prior to the Effective Date, or (b) the period of ownership of the applicable Parcel by the applicable Acquired Company; and

(xvii) documentation relating to any open or ongoing environmental remediation efforts at the Properties; and

(xviii) a list of all Parcels for which an Acquired Company is receiving Section 8 housing choice voucher payments or other tenant-based rental subsidies benefitting Tenants (“HAP Payments”) pursuant to any Housing Assistance Program (“HAP”).

Upon Buyer’s request, Seller further shall provide Buyer access, in the Diligence Room, to any other material documents, reports or financial information material to the Property in the possession or control of Seller, which are not proprietary or attorney-client privileged and which is not Seller’s own work product, which materials shall, upon Buyer’s request, be posted to the Diligence Room, or if such posting is not reasonably feasible at nominal cost shall remain subject to access at Seller’s office. Seller makes no representations or warranties with respect to the Diligence Materials except as expressly provided in this Agreement. Buyer shall be responsible for determining the completeness of the materials delivered pursuant to this Section, and Seller shall have no responsibility therefor.

(e) Inspection Period.

(i) Buyer shall have the right, from the Effective Date through 5:00 p.m. Eastern Time on December 3, 2020 (the “Inspection Period”), to assess Buyer’s decision as to whether to proceed to purchase the Membership Interests. Unless Buyer has delivered a notice to Seller and Escrow Holder prior to the expiration of the Inspection Period a Continuation Notice pursuant to Section 19(e), this Agreement shall terminate promptly upon expiration of the Inspection Period without further action by Seller or Buyer, it being understood that Buyer shall have no obligation to deliver a Continuation Notice hereunder. Prior to the termination of this Agreement, Buyer shall have access to the Diligence Room to assess the materials placed into the Diligence Room and Buyer shall have access to inspect certain of the Parcels pursuant to Section 19 hereof on the terms and conditions contained in this Agreement.

(f) At any time prior to the expiration of the Inspection Period, Buyer may deliver written notice to Seller electing to (A) not terminate any Contracts identified in such notice entered into by an Acquired Company and (B) cause the assignment to Buyer or the applicable Acquired Company at Closing of any Contracts identified in such notice entered into by Seller or its Affiliates (other than the Acquired Companies) which benefit any Property or Properties (collectively, the “Included Contracts”). At Closing, Seller shall, or shall cause the Acquired Companies or such other of Seller’s Affiliates to, terminate, at no cost to Buyer, all Contracts other than the Included Contracts, and to cause the assignment at Closing of such Included Contracts to be assigned to Buyer or an Acquired Company as contemplated pursuant to clause (B) above. In the event that Buyer does not send the Contract Notice, Seller shall terminate, or cause the applicable Acquired Company or Affiliate to terminate, all Contracts, at no cost to Buyer.

(g) Delivery of Exhibits. Exhibits E (Escrow Agreement), K (Rent Roll) and T (Form of Escrow Holdback Agreement) shall be agreed to by the parties and delivered to the respective party by October 26, 2020 (the “Exhibit Delivery Date”).

3. Closing . The closing of the conveyances contemplated hereby (the “Closing”) shall be held and completed on January 4, 2021 (the “Scheduled Closing Date”) or such earlier date designated by Buyer in a notice to Seller (the “Closing Notice”), which Closing Notice shall be delivered not later than five (5) days prior to the Scheduled Closing Date designated in such Closing Notice; provided, however, that the Closing shall be subject to extension in accordance with the express provisions of this Agreement or the mutual agreement of Buyer and Seller. In no event shall the Closing Date occur later than January 31, 2021 (the “Closing Outside Date”),

(a) Closing Date. The date that Closing actually occurs shall be referred to herein as the “Closing Date.”

(b) Designation of Reporting Person. In order to assure compliance with the requirements of Section 6045 and any related reporting requirements of the Code, Seller and Buyer agree as follows:

(i) The Escrow Holder is designated as the person to be responsible for all information reporting under Section 6045(e) of the Code.

(ii) Seller and Buyer shall:

(A) provide, or cause to be provided, to the Escrow Holder all information and certifications, as reasonably requested by the Escrow Holder or otherwise required to be provided by Seller, Buyer, or any Affiliate of Seller or Buyer under Section 6045 of the Code; and

(B) provide, or cause to be provided, to the Escrow Holder IRS Form W-9 or an acceptable substitute form, signed under penalties of perjury, stating that the taxpayer identification number supplied by Seller, Buyer, or any Affiliate of Seller or Buyer to the Escrow Holder is correct.

4. Condition of Title.

(a) Title to the Real Property shall subject only to the Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:

(i) rights of Tenants under any Existing Leases and under any Approved Leases (in each case, as the same may be modified prior to the Closing in accordance with the terms of this Agreement);

(ii) taxes and other governmental charges not yet due and payable;

(iii) Utility easements and restrictive covenants (provided that such restrictive covenants do not prohibit the use of the relevant property as a residential dwelling);

(iv) any matters affecting the Property set forth in the Existing Title Policies as to which Buyer does not timely object in accordance with this Section 4;

(v) any matters set forth in the updated Title Commitments obtained by Buyer (if any) as to which Buyer does not timely object in accordance with this Section 4;

(vi) any matters which would be disclosed by an accurate survey of each Real Property;

(vii) any Tenant Liens; and

(viii) any matters pertaining to the organization or authority of Buyer or created by, through, under, at the direction of or with the consent of Buyer.

(b) Title Review. Buyer, at its expense, has or will review the Existing Title Policies, and at Buyer’s option may order updates to the Existing Title Policies (herein, the “Title Commitments”).

(i) Except as otherwise expressly provided in this Section 4, Seller shall have no obligation to cause any exceptions or encumbrances which are not Permitted Encumbrances to be omitted or removed from any title insurance policies to be issued in connection with the sale of the Property.

(ii) Buyer shall be deemed to have waived its right to object to any encumbrance or other title exception or matter pertaining to the Real Property unless Buyer shall have given Seller a specific written notice of its objection in Buyer’s reasonable discretion (based solely on a title or survey matter that would cause the applicable Parcel to not be rentable in the ordinary course of business) to any such matter (a “Title Objection Notice”) not later than five (5) days prior to the expiration of the Inspection Period. Seller shall have no obligation to cure any alleged defect, objection or survey matter raised in any Title Objection Notice (a “Title Objection”), except for Monetary Liens and Voluntary Liens (defined below).

(iii) Upon Buyer’s failure to timely deliver a Title Objection Notice with respect to any encumbrance or other title exception or matter within the timeframe set forth above, such encumbrance or other title exception or matter shall thereafter be deemed a Permitted Encumbrance, except for the Monetary Liens and Voluntary Liens.

(iv) Should Buyer timely deliver a Title Objection Notice to Seller as above provided, Seller shall have the right, at its sole option, upon written notice to Buyer within ten (10) Business Days of receipt of Buyer’s Title Objection Notice (if any) to elect either of the following:

(A) to (1) use commercially reasonable efforts to remove or cure any Title Objection; or (2) provide OS National LLC, 3097 Satellite Blvd., Ste. 600, Duluth, GA 30096, Attn: Jim Duggan, Phone: 678-527-7864, Email: jduggan@osnational.com (the “Title Company”) such assurances as the Title Company requires to insure Buyer against any loss arising from such Title Objection (in either of which events such matter shall be a “Seller Cure Matter”), or

(B) to elect neither of the elections referenced in Section 4(c)(iv)(A). Failure by Seller to deliver the notice described in clause (A) within said ten (10) Business-Day period shall be deemed an election to proceed under this clause (B). If Seller makes the election described in this clause (B), then Buyer shall have the election set forth in Section 4(e).

(v) In the event Seller elects to use commercially reasonable efforts to cure a Title Objection pursuant to Section 4(c)(iv)(A)(1), and Seller is unable to cure such Title Objection on or before the date originally scheduled for Closing, then Seller shall have the right to defer the Closing from time to time (but in no event for more than twenty (20) days after the originally scheduled Closing Date) in order to provide Seller an opportunity to cure such Title Objection or to proceed under Section 4(c)(iv)(A)(2) (provided that the extension(s) of the Closing Date pursuant to this clause (A) shall not cause the Closing Date to extend beyond the Outside Closing Date). In the event Seller is unable to cure any Title Objection to which Seller elected to attempt to cure pursuant to Section 4(c)(iv)(A)(1) or Section 4(c)(iv)(A)(2) on or before the date scheduled for Closing (as such date may be extended as set forth above), then Buyer shall have the election set forth in Section 4(e).

(d) Reliance on Title Policy. Buyer acknowledges that Seller makes no representation or warranty regarding any Acquired Company’s title to any Parcels or any of the Real Property or any Title Company’s willingness to issue a title insurance policy on the Closing Date in any particular form. Buyer, at its sole cost and expense, shall pay at the Closing all premiums, charges and disbursements required by the Title Company in accordance including any endorsements Buyer may request. Notwithstanding anything contained in this Agreement to the contrary, with respect to all matters affecting title to the Real Property and any liens or other encumbrances affecting the Real Property, Buyer acknowledges and agrees it is relying solely upon its title insurance policies and Seller makes no representations or warranties in connection therewith. The provisions of this Section 4(d) shall survive Closing indefinitely.

(e) Failure of Title. If, on or before the Closing Date, title to any particular Parcel is not insurable and Seller does not elect to cure the same as provided in Section 4(c)(iv) above, Buyer may elect, as its sole right and remedy by reason thereof, within five (5) Business Days of Seller’s election (or deemed election) in accordance with Section 4(c)(iv) above, either (i) to retain such affected Parcel as part of the transaction based on the existing title the applicable Acquired Company can convey, with no abatement of the Purchase Price or (ii) to designate the applicable affected Parcel an Excluded Parcel, subject to the provisions of Section 5 below and the Escrow Agreement (in which event such Parcel shall be an Excluded Parcel), and any portion of the Deposit allocable to the applicable Excluded Parcel shall be applied to the other Parcels. Failure by Buyer to timely make the election described in clause (ii) of this Section 4(e) shall be deemed an election by Buyer to proceed under clause (i) of this Section 4(e).

(f) Notwithstanding the foregoing provisions of this Section 4, Seller shall cause the removal, at or prior to the Closing Date, of all (A) “Monetary Liens”, which shall mean liens or encumbrances imposed by Seller or the Acquired Companies that secure the payment of a liquidated sum of money including, without limitation, mortgages, deeds of trust, judgment liens, mechanics’ liens, and tax liens filed against the Real Property prior to Closing (other than (i) non-delinquent Taxes and assessments (i.e., those not yet due and payable), (ii) obligations which are to be performed by the Tenants under the Leases (including Tenant Liens), and (iii) the liens created due to any act or omission of Buyer, or with the consent of Buyer under this Agreement, or any liens referred to in Section 19(d), provided, however, that Seller instead may cause the Title Company to insure title to the Property free of any exception for any such Monetary Lien, and (B) all Voluntary Liens (hereinafter defined). The term “Voluntary Liens” as used herein shall mean liens, covenants and other encumbrances which Seller has knowingly and intentionally placed or knowingly and intentionally allowed to be placed on the Property after the Effective Date without the consent of Buyer.

5. Right to Exclude Parcels.

(a) Buyer Exclusion Rights. Buyer shall have the right to designate any individual Parcel an Excluded Parcel in accordance with the following (provided that, unless otherwise expressly set forth herein, Buyer shall not be permitted to designate in the aggregate, under any provision of this Agreement) together with any Parcels designated by Seller pursuant to Section 5(b) more than seventy-five (75) Properties (the “Excluded Parcel Cap”) as Excluded Parcels:

(i) At any time prior to the expiration of the Inspection Period, without terminating this entire Agreement, Buyer shall have the right to designate any Parcel an Excluded Parcel solely in the event such Parcel has a Material Defect by giving notice of such exclusion (a “Material Defect Notice”). A “Material Defect” shall mean any one of the following: (1) Buyer has made a Title Objection (as defined in Section 4(c)) within the time period set forth in Section 4(c) that (i) has more than an insignificant adverse effect on the value of the particular Parcel as a single family home or the ability to lease the particular Parcel in the ordinary course of business, (ii) is not a Permitted Encumbrance, and (iii) is not a Monetary Lien or Voluntary Lien (as such terms are defined in Section 4, it being understood that Seller shall be required to remove Monetary Liens and Voluntary Liens pursuant to Section 4 hereof), and Seller has not elected to cure or remove such Title Objection pursuant to Section 4(c)(iv)(A); (2) such Parcel is subject to, or subject to a written threat of, a condemnation proceeding, (3) such Parcel has Hazardous Materials in violation of, or is otherwise in violation of, applicable Environmental Requirements (as such terms are hereinafter defined) which would cost over Fifteen Thousand Dollars ($15,000.00) to remediate unless within five (5) Business Days following delivery of the applicable Material Defect Notice to Seller, Seller elects, in its sole discretion, to remediate such Hazardous Materials prior to Closing or give Buyer credit at Closing for the amount of such costs to the extent such costs exceed $15,000 (a “Buyer Hazmat Credit”), (4) such Parcel requires a capital expense infusion of more than Ten Thousand Dollars ($10,000.00) in order to make the Property in rentable condition in the ordinary course of business assuming similar standards as currently being used on the Property by the Acquired Companies prior to Closing, unless (i) such damage is covered by insurance that is available to Buyer following Closing or (ii) within five (5) Business Days following delivery of the applicable Material Defect Notice to Seller, Seller elects, in its sole

discretion, to repair such Property prior to Closing or give Buyer credit at Closing for the amount of such costs to the extent such costs exceed $10,000 (a “Buyer CapEx Credit”), or (5) such Parcel is subject to an HOA or other recorded restriction that imposes limitations on leasing that would not allow the leasing of the Parcel in the ordinary course of business.

(ii) In the event that any Material Defect pursuant to clause (1) of Section 5(a)(i) above first occurs or arises following the expiration of the Inspection Period, then Buyer shall have the right to designate any Parcel subject to such Material Defect to be an Excluded Parcel subject to the limitation set forth above in the preamble to this Section 5(a).

(iii) Buyer shall have the right to designate a Parcel an Excluded Parcel pursuant to Section 4, Section 10(c), Section 12(c), Section 12, or Section 17, subject to the limitation set forth above in the preamble to this Section 5(a).

(b) Seller Exclusion Rights. In the event that Buyer has elected to terminate this Agreement pursuant to any provision of this Agreement and the condition, matter or breach giving rise to such termination relates to one or more specific Parcels or the attributes of the aggregate group or sub-group of Parcels, then, if designating such affected Parcel or Parcels as an Excluded Parcel would cure or eliminate the applicable condition, matter or default that gave rise to such termination, Seller shall have the right, by delivery of written notice to Buyer within five (5) Business Days following receipt of a termination notice from Buyer, to designate such affected Parcel or Parcels as an Excluded Parcel, and in such event, (i) this Agreement shall continue in full force and effect with respect to the other Property than with respect to such Excluded Parcel and any other Excluded Parcels, and (ii) the provisions of Section 5(c) shall apply with respect to such Excluded Parcel. Seller shall not be permitted to designate more than twenty-five (25) Properties as Excluded Parcels (in the aggregate, together with any Parcels designated as Excluded Parcels by Buyer pursuant to Section 5(a) or otherwise pursuant to this Agreement).

(i) In the event that any Parcel is designated an “Excluded Parcel” pursuant to Section 5(a) or Section 5(b) or any other applicable provision of this Agreement or by mutual agreement of the parties, then (i) Buyer shall no longer be obligated to acquire, and Seller shall no longer be obligated to sell, such Excluded Parcel, (ii) other than as set forth in Section 5(c)(ii) below and Section 21(c)(iv), this Agreement shall be terminated with respect to such Excluded Parcels, and Buyer’s and Seller’s obligations hereunder with respect to such Excluded Parcel shall be null and void, (iii) Buyer and Seller shall be obligated to proceed to Closing with respect to all Properties other than the Excluded Parcels (subject to the terms herein), (iv) Seller’s Representations shall be deemed modified to exclude any such Excluded Parcels, and (v) at Closing, the Purchase Price will be reduced by the amount set forth in the Allocation Schedule allocated to such Excluded Parcel.

(ii) In the event that any Parcel is designated an Excluded Parcel hereunder, then immediately prior to Closing, Seller shall cause the applicable Acquired Company to convey by quitclaim deed or other similar deed without representation or warranty, all of such Acquired Company’s right, title and interest in and to the Excluded Parcel, and execute and deliver any and all assignments, bills of sales, transfer Tax Returns and other requirements as may be

required to convey such Excluded Parcel to Seller or an Affiliate of Seller (other than any Acquired Company) prior to Closing. Any and all costs and expenses incurred in connection with such transfer, including any Transfer Taxes, recording Taxes and other charges, shall be borne by Seller and paid at Closing. Such conveyance shall be made without any representation or warranty of any kind from the Acquired Companies or Buyer.

(d) Failure to Exclude Parcels. If, on or before the expiration of the Inspection Period, Buyer is aware that any Parcel has a Material Defect, and even if Buyer has delivered to Seller a Title Objection Notice in accordance with Section 4(c)(ii), but Buyer does not designate such Parcel an Excluded Parcel prior to the expiration of the Inspection Period, Buyer shall have waived the right to subsequently designate such Parcel as an Excluded Parcel or to terminate this Agreement as a result of such Material Defect.

(e) Excluded Parcels Exceed the Excluded Parcel Cap. In the event that any Parcel is designated an “Excluded Parcel” pursuant to Section 5(a) or any other applicable provision of this Agreement or by mutual agreement of the parties, and such Excluded Parcels, in the aggregate, exceed the Excluded Parcel Cap, then Buyer shall have the right to (i) proceed to Closing but shall no longer be obligated to acquire any Excluded Parcels in excess of the Excluded Parcel Cap (which Excluded Parcels shall be determined by Buyer, in its sole discretion), or (ii) terminate this Agreement, in which event, upon the return of the Deposit to Buyer and reimbursement to Buyer of its out of pocket costs, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement). Notwithstanding anything to the contrary contained herein, in the event the pool of Parcels remaining after the Excluded Parcels are removed results in a failure of the condition set forth in Section 12(a)(viii) below (the “Occupancy Condition”), Buyer shall have the right to (x) proceed to Closing and the Occupancy Condition shall no longer be a condition to Closing, provided, in such event, Seller shall provide a credit to Buyer at Closing in the amount of the economic difference between the actual occupancy rate at Closing and the rate set forth in the Occupancy Condition, which credit shall include the month of Closing (prorated accordingly based on the Closing Date) and shall also include an additional credit of three (3) months after Closing to cover future losses, (y) Buyer shall have the right to select additional Excluded Parcels in excess of the Excluded Parcel Cap in order to satisfy the Occupancy Condition, but in no event shall Buyer have the right to terminate this Agreement, or (z) exercise a combination of the remedies set forth in (x) and (y)(items (x) - (z) collectively referred to herein as the “Occupancy Condition Remedies”).

6. Interim Operating Covenants.

(a) Leases.

(i) At Closing, the respective Parcels shall be either subject to the Leases or vacant.

(ii) During the period from the Effective Date to the Closing (or earlier termination of this Agreement), Seller shall not, and shall not cause or permit the Acquired Companies to, enter into new leases for Parcels now vacant or for Parcels which may become

vacant, or enter into any amendments of any Existing Leases or consent to any renewals, extensions, expansions or terminations of any Leases (other than those to which the Tenant is entitled pursuant to the terms of the Existing Lease) unless such actions are in the ordinary course of business and on similar lease forms, rental rates and other terms as is consistent with the past practices of Seller.

(b) Any new lease entered into by Seller after the Effective Date in accordance with Section 6(a), and any lease extended or otherwise amended or modified after the Effective Date in accordance with Section 6(a), shall be referred to herein as an “Approved Lease.” Buyer expressly acknowledges that the termination of any of the Existing Leases or Approved Leases prior to Closing by reason of the expiration of its term or the default of the Tenant thereunder (so long as such termination is in compliance with the provisions of Section 6(a)(ii)), or a failure of a proposed tenant to follow through with the execution thereof, shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price.

(i) Except (1) to the extent compelled or required by applicable law or HOA, (2) as otherwise permitted by this Agreement, or (3) as consented to in writing by Buyer, during the period from Effective Date to the Closing Date, Seller shall cause each of the Acquired Companies to, and each Acquired Company shall: (A) conduct its business and operations and operate, manage and maintain the Parcels in all material respects in the ordinary course, consistent with past practice and applicable law; (B) use commercially reasonable efforts to maintain its assets and properties consistent with past practice and applicable law; (C) perform, in all material respects, all of its obligations under the Leases and other agreements of the Acquired Companies; (D) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice; and (E) maintain in full force and effect the insurance policies currently in effect with respect to the Parcels (or replacements continuing substantially similar coverage).

(ii) Without limiting the generality of the foregoing, except (1) to the extent compelled or required by applicable law or HOA, (2) as otherwise permitted by this Agreement, or (3) as consented to in writing by Buyer, which consent shall be in Buyer’s sole discretion (except if such actions are necessary or are in response to any emergency with respect to any Acquired Company or Parcel, then such consent shall not be unreasonably withheld), during the period from Effective Date to the Closing Date, Seller shall cause each Acquired Company not to, and each Acquired Company shall not:

(A) modify or amend any of the organizational documents of any Acquired Company;

(B) issue, or authorize the issuance of, any membership interest of any Acquired Company, or form a subsidiary of an Acquired Company;

(D) enter into new contracts or agreements relating to the construction, management, service, utility operation, maintenance, repair or improvement of the Property, or otherwise imposing obligations on or affecting the Property or any Acquired Company, including management agreements, easement agreements, brokerage agreements for the leasing of the Property, equipment leases, maintenance agreements, warranties, Management Agreements (hereinafter defined) and other contracts and parking agreements (each, a “Contract”), other than (i) as necessary to conduct its business and operations and operate, manage and maintain the Parcels in all material respects in the ordinary course, consistent with past practice and applicable law, (ii) Contracts that are terminated at Closing at no cost to Buyer, and (iii) Leases;

(E) other than Leases, encumber, sell or transfer all or any portion of the Real Property or any interest therein or otherwise dispose of the Real Property or any part thereof or interest therein, or alter or amend the zoning classification of the Real Property;

(F) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of any of the Acquired Companies;

(G) hire any employees;

(H) enter into, modify, amend, or terminate any collective bargaining or similar Contract with any union, works council, or labor organization;

(I) file or cause to be filed any Tax Return with respect to the Acquired Companies other than in accordance with past practice, amend any Tax Return, enter into any closing agreement, make or change any Tax election, change any Tax method of accounting, or agree to extend the statute of limitations in respect of any Taxes;

(J) settle or compromise any pending or threatened Litigation which is not paid by insurance and which settlement is in excess of $20,000;

(K) amend, supplement, or modify (other than paying off any Indebtedness and causing such Indebtedness and any liens relating thereto to be terminated) any documents, agreements or instruments evidencing, securing, guaranteeing or otherwise pertaining to any Indebtedness or any provision thereof or take any action which would cause a breach or default thereof; or

(L) authorize, agree, resolve or consent to any of the foregoing.

(d) Efforts. Upon the terms and conditions set forth herein, each of the parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things, necessary, proper or advisable to make effective as promptly as practicable, but in no event later than the Closing Date, the transactions contemplated herein. If requested by Buyer, Seller shall reasonably cooperate with Buyer (at no material cost to Seller) with respect to any financing to be obtained by Buyer at Closing by any lender (a “Lender”), including providing owner’s affidavits to the extent required by a Lender if Buyer obtains mortgage financing, provided that (i) Seller shall not be required to waive or reduce any rights or increase its obligations or liabilities under this Agreement and in no event shall any Seller Parties (other than Seller) be required to incur any obligations or liabilities, and (ii) any such owner’s affidavits shall be subject to Seller’s review and reasonable approval.

(e) Release of Acquired Companies. Solely if and when the Closing occurs, and effective as of the Closing Date, Seller, on behalf of itself and its Affiliates and each of its and their respective officers, directors, employees, agents, successors and assigns (the “Releasing Parties”), hereby releases, acquits and forever discharges the Acquired Companies and their respective successors and assigns, together with their present and former directors and officers (solely in their capacity as such but not in any other capacities) (collectively, the “Released Parties”), from any and all manner of claims, actions, suits, damages, demands and liabilities whatsoever in law or equity, whether known or unknown, liquidated or unliquidated, fixed, contingent, direct or indirect (collectively, “Release Claims”), which the Releasing Party ever had, has or may have against any of the Released Parties for, upon, or by reason of any matter, transaction, act, omission or thing whatsoever arising under or in connection with any of the Released Parties, from the beginning of time up to, but not including, the Closing Date, other than (i) obligations arising under this Agreement and any documents executed and delivered by the parties at Closing, and (ii) Release Claims solely among Seller. This release shall become effective only upon completion of the Closing and prior to such date shall have no force or effect and shall not be legally binding on the parties. For purposes of this Agreement, “Affiliate” shall mean, with respect to any entity, any other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first entity, as the case may be. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise. This Section 6(e) shall survive the Closing.

(f) No-Shop. Between the Effective Date and ending on the earlier of (i) the Closing Date or (ii) the termination of this Agreement, none of Seller, the Acquired Companies or any of their Affiliates shall solicit, encourage or facilitate (including by way of providing information regarding the Acquired Companies or their businesses or the Property to any person or providing access to any person) any inquiries, discussions or proposals regarding, continue or enter into discussions or negotiations with respect to, or enter into or consummate any agreement or understanding in connection with any proposal regarding, any purchase or other acquisition of all or any portion of the assets or properties (including the Property) of any of the Acquired Companies (other than the sale of products or services in the ordinary course of business consistent with past practices) or any membership interest (whether newly issued or currently outstanding) of any of the Acquired Companies, any merger, business combination or recapitalization involving any of the Acquired Companies, the liquidation, dissolution or reorganization of any Acquired Company, or any similar transaction, and Seller and the Acquired Companies shall cause each Acquired Company’s and each of their Affiliates’ directors, officers, employees, agents, representatives to refrain from any of the foregoing; provided, that Seller and the Acquired Companies shall not be required to initiate litigation against any such directors, officers, employees, agents or representatives (but Seller and the Acquired Companies shall remain liable for any actual out of pocket monetary damages incurred by Buyer (excluding consequential, speculative, or punitive damages) caused by a breach of this Section 6(f) by such directors, officers, employees, agents or representatives).

7. Apportionments.

(a) Generally. Apportionments under this Section 7 shall be made as of 12:01 a.m. on the Closing Date, as if Buyer was vested with title to the Property during the entire day upon which the Closing occurs. Seller shall be entitled to all income produced from the operation of the Property which is allocable to the period prior to the Closing Date and shall be responsible for all expenses allocable to that period.

(i) Rent. Rent, including, without limitation, fixed rent, prepaid rent, and additional rent, if applicable (collectively, “Tenant Charges”), shall be apportioned as of the Closing Date in accordance with the provisions of this Section 7.

(A) To the extent that Tenant Charges under a Lease with respect to the month of the Closing have been paid prior to the Closing, the same shall be prorated as of the Closing Date between Buyer and Seller based on the number of days during the month in which the Closing Date occurs and Buyer shall be entitled to a credit at Closing for the portion of such payments attributable to the period beginning on the Closing Date. Seller shall retain the right to receive all payments for unpaid Tenant Charges attributable to the period prior to the Closing Date.

(B) All amounts collected by Buyer from Tenants under the Leases after Closing shall be applied (a) first, to the Tenant Charges owed by such tenant with respect to the month in which the Closing Date occurs (subject to apportionment pursuant to Section 7(a)(i)(A) above, (b) second, to any unpaid Tenant Charges accruing under such Leases for the month after the month in which the Closing Date occurs until all such amounts then due have been paid, (c) third, to arrearages of Tenant Charges with respect to the month prior to the month in which the Closing Date occurs, (b) fourth, to any unpaid Tenant Charges accruing under such Leases for the period after the Closing Date until all such amounts then due have been paid through the current month as of the date such Tenant Charges were paid, (c) fifth, to any remaining arrearages of Tenant Charges with respect to the period prior to the month in which the Closing Date occurs, and (d) sixth, all other Tenant Charges collected shall belong to Buyer. If applicable, any Tenant Charges received directly or indirectly by Seller or Buyer following the Closing Date which are the property of the other party hereto shall be paid to the other party hereto within ten (10) Business Days following receipt thereof. During the twelve (12) month period following Closing, Buyer shall use good faith commercially reasonable efforts (as described below) to recover any Tenant Charges arrearages in respect of the period prior to the Closing Date, provided that Buyer shall not be required to incur any material cost or commence any legal proceeding in connection therewith and Buyer shall not compromise or settle any such arrearages for Tenant Charges applicable to the period prior to Closing without Seller’s prior written consent. Seller (upon notification to Buyer) shall be entitled to sue a Tenant, before and/or after Closing, for any delinquent rent (or other Tenant Charges) due to Seller (and not previously paid to Seller) under a Lease, so long as such suit does not seek a termination of such Lease or eviction of such Tenant; (ii) Seller does not bring any such action or claim more than twelve (12) months following the Closing Date (unless any stay has been in effect preventing Seller from bringing such action within such twelve (12) month period); and (iii) such suit solely pertains to Tenant Charges that accrued or claim at any time prior to the Closing Date and which Seller is entitled to hereunder.

(C) Any Tenant Charges prepaid and applicable to the period following the Closing Date shall be credited by Seller to the Buyer on the Closing Date.

(ii) Leasing Commissions. Seller agrees that it shall be responsible for payment of, and Seller shall pay the same on or prior to Closing or give Buyer a credit at Closing for, any unpaid installments of any leasing or brokerage commissions due on account of the existing term and the existing leased premises of the Existing Leases, whether such installments of leasing or brokerage commissions are payable before or after the Effective Date or before or after the Closing Date. Except as provided below in this Section 7(a)(ii), if Seller enters into any Approved Lease or amends an Existing Lease prior to Closing in accordance with Section 6 of this Agreement, then any commission payable with respect thereto shall be apportioned between Seller and Buyer as of the Closing Date based on the period of the initial lease term or amended lease term, as applicable.

(iii) Tenant Inducement Costs; Free Rent Periods. Because there are no Tenant Inducement Costs associated with the Leases, there shall be no apportionment of any Tenant Inducement Costs. For purposes of this Agreement, the term “Tenant Inducement Costs” means tenant improvement costs, moving costs, improvement allowances and similar tenant inducement costs which are to be borne by the landlord per the terms of the Lease, but the term “Tenant Inducement Costs” shall not include any reduced Tenant Charges on account of free or reduced rent periods. Buyer acknowledges that some Leases may have a free rent period (no more than one month rent) and there shall be no apportionment between the parties as a result of such free rent periods.

(iv) Prorations Under Included Contracts. Except as otherwise provided herein (e.g., in Section 7(a)(ii) with respect to leasing commissions), amounts payable under any Included Contracts and other operating and maintenance expenses and other recurring costs relating to the Property shall be apportioned as of the Closing Date.

(v) Taxes and Assessments. Taxes shall be apportioned on the Closing Date: (A) Seller shall be allocated and bear all liability for Taxes relating to the period ending prior to the Closing Date and (B) Buyer shall be allocated and bear all liability for Taxes relating to the periods on and after the Closing Date. For purposes of the foregoing, Taxes based on income, sales, gross receipts or similar items shall be allocated on a “closing of the books” method, with Seller’s portion ending on the date immediately prior to the Closing Date, and real estate, property and similar Taxes that are imposed on a periodic basis prorated over such period based on the number of days prior to the Closing Date. If the real property Tax bill for the Tax year in which the Closing occurs has not been issued on or before the Closing Date, the apportionment of real property Taxes shall be computed based upon the most recent Tax bill available. If, on the Closing Date, bills for the real property Taxes imposed upon the Real Property for the Tax year in which Closing occurs have been issued and are due but shall not have been paid, such real property Taxes shall be paid at the time of Closing pursuant to the apportionment provided by this Section 7(a)(v). For the avoidance of doubt, any refunds of real property Taxes (including in the form of a direct credit or estimated Tax payments) with respect to the period up to the Closing Date (any such

refund, a “Pre-Closing Tax Refund”), shall be for the account of Seller, and Buyer shall pay over to Seller any such Pre-Closing Tax Refund (including any interest received with respect thereto) within ten (10) Business Days after receipt, or if the Pre-Closing Tax Refund is in the form of a direct credit, within ten (10) Business Days after the date on which the Tax Return claiming such credit is filed. Buyer shall cooperate with Seller in obtaining such Pre-Closing Tax Refunds, including through the filing of amended Tax Returns or refund claims, provided Seller shall reimburse Buyer for all reasonable and actual third party associated costs and expenses incurred in connection therewith.

(vi) HAP Payments. HAP Payments and all dues, fees, assessments and impositions with respect to a Parcel shall be apportioned as of the Closing Date.

(vii) HOA FEES. Charges levied or assessed or imposed against a Parcel, by an HOA (“HOA Fees”) shall be apportioned as of the Closing Date.

(viii) Credits. Buyer shall receive a credit at Closing in the amount of all HazMat Credits and Buyer CapEx Credits in the aggregate, if any.

(ix) Other Income and Expenses. All other income or revenue of the Property, and all other operating expenses of the Property, shall be prorated as of 12:01 a.m. on the Closing Date to the extent received prior to Closing.

(x) Accounting. Upon the request of Seller (which request may be made from time to time but shall not be made more than once in any calendar quarter), Buyer shall provide Seller an accounting of all sums received and/or paid by Buyer under any of the Leases.

(xi) Preliminary Closing Adjustment. Seller and Buyer shall jointly prepare a preliminary closing statement (the “Closing Statement”), and shall deliver such preliminary Closing Statement to the Escrow Holder on or prior to the Closing Date. The preliminary Closing Statement and the apportionments and/or proration allocations reflected therein shall be based upon actual figures to the extent available. If any of the apportionments and/or prorations cannot be calculated accurately based on actual figures on the Closing Date, they shall be calculated based on Seller’s and Buyer’s good faith estimates thereof, subject to reconciliation as hereinafter provided.

(xii) Post-Closing Reconciliation. If there is an error on the preliminary Closing Statement or, if after the actual figures are available as to any items that were estimated on the preliminary Closing Statement, it is determined that any actual proration or apportionment varies from the amount thereof reflected on the preliminary Closing Statement, the pro ration or apportionment shall be adjusted based on the actual figures as soon as feasible. Either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party, which payment shall be treated as an adjustment to the Purchase Price, including for Tax purposes. The parties shall seek to complete all such reconciliations within 180 days after the Closing Date, after which time such reconciliations shall be deemed final (and neither party shall have any further right to dispute the same), except for (i) Taxes, which shall be reconciled within sixty (60) after the date the actual Taxes are finalized, and (ii) any specific matters for which either party has given notice of dispute to the other party and is actively pursuing resolution of such dispute. Seller and Buyer and Buyer’s property manager, shall maintain and make available to each other any books or records necessary for the adjustment of any items hereunder.

(b) Tenant Security Deposits. At Closing, Seller shall turn over to Buyer (or give Buyer a credit for), all Security Deposits then held by Seller as of the Closing Date by or for Seller under the Leases, to the extent not previously applied in accordance with the Leases, including any accrued interest. Buyer will cause all Security Deposits to be maintained after Closing in accordance with the requirements of applicable law and shall indemnify and defend Seller and the other Indemnified Parties from all claims of Tenants with respect to the Security Deposits actually delivered to Buyer or for which Buyer received a credit at Closing, which indemnity shall survive Closing indefinitely.

(c) Utilities. Because the Tenants under the Leases are responsible for paying utilities, there shall be no apportionment at Closing for utility expenses.

8. Closing Costs.

(b) Seller’s Costs. Seller shall pay: (i) the costs of its counsel and other professionals and consultants; and (ii) one-half of the escrow fee and closing fees charged by the Escrow Holder.

(c) Other Taxes and Charges. With respect to (i) the costs associated with the provision of a standard owner’s title insurance policy and any endorsements standard owner’s title insurance policy requested by Buyer to be issued at Closing and any coinsurance or reinsurance costs, if any; (ii) any and all transfer, sales (including bulk sales), use, documentary, stamp and other similar Taxes, and all conveyance fees, recording charges and other similar fees and charges (including interest, penalties and/or additional amounts with respect thereto) incurred in connection with the consummation of the Transactions (item (ii) hereinafter referred to as “Transfer Taxes”); and (iii) all other closing costs not specifically set forth herein shall be paid in accordance with the general custom (i.e., as between the Buyer and Seller) in the jurisdiction in which such costs, charges, and Transfer Taxes are imposed, which the parties agree are set forth in Exhibit G. Any Tax Returns that must be filed in connection with Transfer Taxes shall be prepared and filed by the party primarily or customarily responsible under applicable local law for filing such Tax Returns, and such party shall use its reasonable best efforts to provide a draft of such Tax Returns to the other party at least five (5) Business Days prior to the date such Tax Returns are due to be filed for such other party’s review and consent (not to be unreasonably withheld, delayed or conditioned). Buyer and Seller shall cooperate in the timely completion and filing of all such Tax Returns. To the extent that a party makes a payment of a Transfer Tax (or portion thereof) for which the other party should have paid, such other party shall promptly reimburse the party that paid the Transfer Taxes in the amount of such payment.

9. Municipal Violations/Notices. To the extent the Tenants under their respective Leases are to comply with laws, ordinances, public regulations or statutes applicable to their respective leased premises, Buyer shall look solely to the Tenants under the Leases to comply with any notices concerning the existence of an uncorrected violation issued by any public authority (including any fines, interest or penalties thereon due to non-compliance therewith) in respect of the Real Property, and Seller shall not be responsible to comply with any such notices or the conditions referred to therein, nor shall the issuance or existence of any such notices relieve Buyer of its obligations to consummate the transactions contemplated herein. The provisions of this Section 9 shall survive Closing indefinitely.

10. Seller’s Representations.

(a) Seller hereby represents to Buyer, as of the Effective Date and as of Closing, except for such representations and warranties that are expressly provided as of the Effective Date, as follows:

(i) Organization. Each Seller is a limited liability company, duly organized and validly existing under the laws of the State of Delaware, and has all requisite limited liability company power and authority to carry on its business as now conducted.

(ii) Authorization. Seller has the limited liability company power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and Seller has duly authorized the execution of this Agreement. Seller has obtained any consents from partners, members, and/or shareholders required to permit the transactions contemplated by this Agreement.

(iii) Organization, Authority and Qualification of the Acquired Companies. Each Acquired Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted, and to perform this Agreement and the transactions contemplated hereby. Each Acquired Company is duly qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary.

(iv) Capitalization. The capitalization and record owners of all of the limited liability company interests of each Acquired Company is as set forth on Exhibit A. All of the Membership Interests are duly authorized, have been validly issued and are fully paid and non-assessable, are owned beneficially and of record by Seller, free and clear of any lien (except any liens that will be released as part of Closing), and were issued in compliance with applicable securities laws or exemptions therefrom. Except as set forth on Exhibit A, no limited liability company interests or other interests of any Acquired Company were issued, reserved for issuance or outstanding. No person has preemptive rights with respect to securities of any Acquired Company. No Acquired Company has any outstanding securities convertible into or exchangeable or exercisable for its limited liability company interests or any rights to subscribe for or to purchase, or any agreements providing for the issuance (contingent or otherwise) of, or any calls

against, commitments by or claims against it of any character relating to, any of its limited liability company interests. Other than the limited liability company agreement for each Acquired Company (a true and correct copy of which has been provided by Seller to Buyer), no Acquired Company is a party to and there is not, and immediately after the Closing there will not be, any Contract, right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement or shareholders or members agreement, whether or not any Acquired Company is a party thereto, with respect to the purchase, sale or voting of any limited liability company interests of any Acquired Company or any securities convertible into or exchangeable or exercisable for any limited liability company interests of any Acquired Company. None of the Acquired Companies owns any equity interest in any other entity.

(v) No Conflicts; Consents. Except as set forth on Exhibit H, the execution, delivery and performance by Seller and each Acquired Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of Seller or the Acquired Companies; (b) conflict with or result in a violation or breach of any provision of any law or governmental order applicable to Seller or the Acquired Companies (subject to the second sentence of Section 10(a)(vi) below; or (c) require the consent, notice or other action by any person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Acquired Companies or Seller is a party or by which the Acquired Companies or Seller is bound or to which any of their respective properties and assets are subject. Notwithstanding anything to the contrary contained herein, in the event the consent set forth in Exhibit H is not obtained on or before October 28, 2020, Buyer shall have the right to terminate this Agreement and shall also be entitled to the reimbursement of Pursuit Costs.

(vi) Governmental Authorizations and Consents No consents, licenses, approvals or authorizations of, any governmental authority are required to be obtained or made by Seller or any Acquired Company in connection with the execution, delivery, performance, validity and enforceability of this Agreement or the consummation by Seller or the Acquired Companies of the transactions contemplated herein. Notwithstanding the foregoing, while to parties intend for the transactions contemplated by this Agreement to comply with applicable securities laws, Seller makes no representation or warranty with respect to such compliance.

(vii) No Condemnation. To Seller’s knowledge, as of the Effective Date, there are no existing or pending condemnation proceedings or deeds in lieu of condemnation affecting any of the Parcels comprising part of the Real Property. As of the Effective Date, Seller has not received any written notices regarding any pending condemnation proceedings or deeds in lieu of condemnation affecting any of the Parcels comprising part of the Real Property. If Seller receives any notice regarding any pending condemnation proceedings or deeds in lieu of condemnation or other proceedings as described in this clause (vii) affecting any of the Parcels, Seller shall notify Buyer within three (3) Business Days of receipt.

(viii) FIRPTA. No Seller is a “foreign person” or “foreign corporation” as those terms are defined in the Code and the regulations promulgated thereunder.

(ix) Bankruptcy. Neither Seller nor any of the Acquired Companies has: (A) commenced a voluntary case, or had entered against it a petition, for relief under the federal bankruptcy code or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceedings, to hold, administer and/or liquidate all or substantially all of its property, or (C) made an assignment for the benefit of creditors.

(x) Litigation. To Seller’s knowledge, as of the Effective Date, except for those matters described in Exhibit I, neither Seller nor any of the Acquired Companies has received any written notice of any pending claims (for which legal proceedings have been commenced), actions, suits, audits, proceedings or governmental investigations (“Litigation”) against the Real Property or Seller or the Acquired Companies other than Litigation which is covered in full by insurance of Seller (other than deductibles to be covered by Seller). If Seller or any of the Acquired Companies is served with process or receives written notice that Litigation has been commenced against it, Seller shall notify Buyer within three (3) Business Days.

(xi) Seller not a “Prohibited Person”.

(A) Seller and the Acquired Companies are in compliance with the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order, such other rules, regulations, legislation, or orders are collectively called the “Orders”).

(B) None of Seller, any Acquired Company, or, to Seller’s knowledge, any beneficial owner of Seller or any Acquired Company (other than the holder of an interest in any publicly traded company):

a. is listed on any Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the “Lists”);

b. is a person subject to the prohibitions contained in the Orders;

c. is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person subject to the prohibitions contained in the Orders;

d. is any of the governments of Cuba, Iran, North Korea, Myanmar, Syria or Sudan or any other country with whom a United States citizen or entity organized under the laws of the United States or its territories is prohibited from transacting business of the type contemplated by this Agreement (each, a “Prohibited Country”);

e. is established in, organized under or has their principal place of business in a Prohibited Country;

f. is a publicly traded company identified by an independent researcher specializing in global security as (1) owning or controlling material property or assets or having employees or facilities located in, (2) providing goods or services to or obtaining goods or services from, (3) having distribution agreements with, issuing credits or loans to or purchasing bonds or commercial paper issued by, or (4) investing in, any Prohibited Country or any company domiciled in any Prohibited Country; or

(xii) ERISA. Neither Seller or any of the Acquired Companies is (i) an “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) that is subject to the provisions of Title I of ERISA, (ii) a “plan” that is subject to the prohibited transaction provisions of Section 4975 of the Code or (iii) an entity whose assets are treated as “plan assets” under ERISA by reason of an employee benefit plan’s or plan’s investment in such entity.

(xiii) Leases. (A) As of the Effective Date, there are no leases, subleases, ground leases, licenses or other occupancy agreements to which Seller or any of the Acquired Companies is a party (including by assignment or other succession) affecting or relating to the Real Property existing as of the Effective Date except for the Existing Leases (provided, however, that no representation is or will be made by Seller that any Leases will be in effect as of the Closing Date and no representation is made with respect to subleases to which neither Seller nor any Acquired Company is a party); and (B) Exhibit C contains a true, correct and complete list of all of the Existing Leases; and true, correct and complete copies of the Existing Leases, including, without limitation, guaranties thereof and amendments thereto, have been made available via the Diligence Room to Buyer. None of Seller, the Acquired Companies, or any of their respective Affiliates has received written notice of a material default under any Existing Leases which remain uncured and not waived. Other than as set forth on Exhibit J, there are no outstanding Tenant Charge arrearages. For purposes of the foregoing, a “material default” shall mean a default that would materially impair the value, use or marketability of the Property as a whole.

(xiv) Rent Roll. Attached hereto as Exhibit K are the current rent rolls as of a date no more than five days prior to the date hereof with respect to the Parcels (the “Rent Rolls”). The information set forth in the Rent Rolls is true, accurate and complete in all material respects. The Rent Rolls set forth a list of all Security Deposits with respect to each Parcel. The Rent Rolls will be updated by Seller not more than three (3) days prior to Closing. There are no Security Deposits that have been applied against obligations of such Tenants except as set forth on the Rent Roll.

(xv) Commission Agreements. All leasing commission agreements entered into by Seller affecting all of any portion of the Property other than the leasing commission provisions set forth in the Management Agreements.

(xvi) Contracts. Except as set forth on Exhibit L-1, the Existing Leases, any Approved Leases, any Contracts identified on the Existing Title Policies, there are no existing Contracts to which any of the Acquired Companies is a party or that will be binding upon the Acquired Companies or the Property after Closing. From and after the Closing, the contracts evidencing or relating to Existing Loans and all Contracts that are terminated pursuant to Section 2(e)(ii) will not be binding on the Acquired Companies or the Property. Exhibit L-2 sets forth all agreements entered into by and between the Acquired Companies and any manager in connection with the property management of any of the Property (the “Management Agreements”).

(xvii) Financial Statements. Copies of the Acquired Companies financial statements consisting of the balance sheet of the Acquired Companies as of December 31, 2019 and the related statements of income and retained earnings, members’ equity and cash flow (the “Annual Financial Statement”), and unaudited financial statements consisting of the balance sheet of the Acquired Companies as of June 30, 2020 and the related statements of income and retained earnings, members’ equity and cash flow for the six-month period then ended (the “Interim Financial Statements” and together with the Annual Financial Statement, the “Financial Statements”) have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP, as customarily applied in the real estate industry, and applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which are not anticipated to be materially adverse). The Financial Statements are based on the books and records of the Acquired Companies and accurately reflect, in all material respects, the financial position of such Acquired Company as of the date of such Financial Statements. Since the date of the most recent Financial Statements, each of the Acquired Companies has conducted its business in the ordinary course and in a manner consistent with past practice as a special purpose entity whose sole business is the ownership of the applicable Parcels.

(xviii) Undisclosed Liabilities. The Acquired Companies have no written or documented liabilities, obligations or commitments, and to Seller’s knowledge, the Acquired Companies have no other liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, or otherwise that would be required by GAAP to be included in the Financial Statements (collectively, “Liabilities”), except (a) those which are adequately reflected or reserved against in the Financial Statements as of the date thereof, and (b) those which have been incurred in the ordinary course of business consistent with past practice since the date of such Financial Statements and which are not, in the aggregate, material to the value of the Property as a whole.

(xix) Employment Matters.

(A) None of the Acquired Companies has any employees.

(B) None of the Acquired Companies (i) is party to or bound by any collective bargaining agreement or other similar agreement with any union or other labor organization, (ii) has recognized any labor organization, and no labor organization has been elected, as the collective the collective bargaining agent for any employees of the Acquired Companies, or (iii) is obligated by, or subject to, any order of the National Labor Relations Board or other labor board or administration, or any unfair labor practice decision.

(xx) Tax Matters.

(A) Each of the Tax Returns required to be filed by the Acquired Companies with any Tax Authority on or before the Closing Date: (i) has been filed on or before the applicable due date (including any valid and timely extensions of such due date); and (ii) has been prepared in compliance with applicable laws, and is otherwise true, correct and complete in all material respects. All Taxes shown as due on such Tax Returns have been paid in full. There are no liens for Taxes on the assets of the Acquired Companies or interests therein, other than liens for Taxes that are not yet due or payable. All Taxes that the Acquired Companies have been required to collect or withhold have been duly collected or withheld and have been duly and timely paid to the proper Tax Authority.

(B) There has not been any audit, inquiry or investigation of the Acquired Companies’ Tax Returns by any Tax Authority in the past three (3) years. None of Seller or any of the Acquired Companies has been notified in writing that any such audit is contemplated or pending.

(C) Each of the Acquired Companies has at all times been treated as a “disregarded entity” within the meaning of Treasury Regulation 301.7701-3 (and none such entity has made any election to be treated as an association Taxable as a corporation for U.S. federal income Tax purposes).

(D) As used in this Agreement, (A) the term “Tax” (including, with correlative meanings, the terms “Taxes” and “Taxable”) means all U.S. federal, state, local and foreign Taxes, levies, duties, assessments or other changes or withholdings of a similar nature, in each case that is imposed by a Tax Authority, together with all interest, penalties and additions imposed with respect thereto; (B) the term “Tax Return” means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) relating to Taxes and any amendments thereto; and (D) “Tax Authority” means any U.S. federal, state or local governmental or regulatory with the authority to oversee, implement, collect or administer any Tax.

(xxi) Environmental Matters. Except as provided in Exhibit V, neither Seller nor any of the Acquired Companies has received written notice from any third party, including any governmental authority, indicating (A) that any Hazardous Materials exist on, under or about any of the Parcels in violation of any Environmental Laws, or (B) that such party proposes to carry out an environmental inspection, audit or other investigation of any of the Parcels (other than any potential environmental inspection, audit or other investigation by Buyer in connection with this Agreement). As used herein, the term “Hazardous Materials” shall mean any substance which is or contains (A) any “hazardous substance” as now or hereafter defined in CERCLA or any regulations promulgated under CERCLA; (B) any “hazardous waste” as now or hereafter defined in RCRA or regulations promulgated under RCRA; (C) any substance regulated by the TSCA; (D) gasoline, diesel fuel, or other petroleum hydrocarbons; (E) asbestos and asbestos containing materials, in any form, whether friable or non friable; (F) polychlorinated biphenyls; (G) radon gas; and (H) any additional substances or materials which are currently classified or considered to be hazardous or toxic under Environmental Requirements or the common law, or any other applicable laws relating to the Property. As used herein, the term “Environmental

Requirements” shall mean all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders, and decrees, now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities, or any other political subdivisions in which the Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of the Property, relating to pollution, the protection or regulation of human health, natural resources, or the environment, or the emission, discharge, release or threatened release of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or waste or Hazardous Materials into the environment (including, without limitation, ambient air, surface water, ground water or land or soil).

(xxii) Relationship with Affiliates. Except for the Management Agreements, none of Seller or any of its Affiliates (nor any officer or director of any of the foregoing) is a party to any Contract with any Acquired Company, including with respect to compensation or remuneration to be paid to Seller or any of its Affiliates (nor any officer or director of any of the foregoing) in connection with this Agreement or the transactions contemplated herein.

(xxiii) Real Property.

(A) None of Seller, the Acquired Companies, or any of their respective Affiliates has received written notice that any of Seller, the Acquired Companies, or any of their respective Affiliates have violated any covenants, conditions or restrictions affecting any Parcel, except for such violations that would not, individually or in the aggregate, reasonably be expected to materially impair the value, use or marketability of the Property as a whole.

(B) Exhibit M contains a list of outstanding or pending claims against any Existing Title Policy.

(C) Exhibit N details ongoing construction, renovation, repair or development projects with respect to any Parcel with costs or expenses in excess of $10,000 in the aggregate with respect to such Parcel or any tenant improvement funding obligations, tenant concessions or “free rent” obligations in excess of two months’ rent in the aggregate with respect to any Parcel currently outstanding (the “Construction Projects”). None of Seller nor any Acquired Company has received or given written notice of a material default of any obligation with respect to the Construction Projects which remains uncured.

(D) Other than Leases, neither Seller nor any Acquired Company has entered into an agreement which would restrict the current use and occupation of any Parcel after the Closing.

(E) To Seller’s knowledge, no fire or other casualty has occurred with respect to any Parcel which has not been restored.

(xxiv) Special Purpose Entities. Other than the ownership, leasing, financing, management and operation of the respective Parcels and other single family residential properties that have previously been sold or conveyed by the applicable Acquired Companies, if any by the applicable Acquired Companies, no Acquired Company (x) has owned, developed, leased, managed or operated any asset or property, (y) has engaged in any business, or (z) has any existing liabilities except those arising from or through such ownership, financing, leasing, management and operation.

(xxv) Insurance. Each Acquired Company maintains the insurance shown in Exhibit O, which insurance is in full force and effect. Except as detailed in Exhibit O, within the last three (3) years, none of the Acquired Companies have made any material claim against an insurance policy as to which the insurer has or is denying coverage. To Seller’s knowledge, none of the Acquired Companies are in default in any material respect under any insurance policy maintained by any of them.

(xxvi) Books and Records. The books and records of each Acquired Company are accurate in all material respects.

(xxvii) Indebtedness. Exhibit P sets forth a true and complete list as of the date of this Agreement of the Indebtedness of the Acquired Companies, other than (i) trade debt and other similar liabilities incurred in the ordinary course of business and (ii) other than any expenses to the extent that Buyer receives a credit against the Purchase Price or are adjusted between the parties in accordance with Section 7 hereof.

(xxviii) HOAs; HAP Payments. Other than as set forth on Exhibit Q, there are no HOA Fees or HAP payments due and payable and outstanding with respect to the Property. None of the Parcels consist of housing cooperatives or manufactured housing. Exhibit R is a true, accurate and complete list of Parcels subject to an HOA for which HOA Fees are paid on a regular basis.

(xxix) Tenant Inducement Costs. There are no Tenant Inducement Costs.

(xxx) Anti-Bribery; Anti-Corruption. None of Seller, the Acquired Companies or any of their Affiliates (i) has offered, promised, given or agreed to give to any person or entity any bribe on behalf of Buyer or its Affiliates or otherwise pertaining to the Acquired Companies or the Property; or (ii) has engaged in any activity or practice which would constitute an offense under any applicable anti-bribery and/or anti-corruption laws, including but not limited to the Unites States Foreign Corrupt Practices Act of 1977 with respect to the transaction contemplated by this Agreement;

(b) All references in this Section 10 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, to “Seller’s knowledge” or “to the knowledge of Seller” and words of similar import shall refer solely to facts within the actual knowledge as of the Effective Date (without independent investigation or inquiry) of Ralph Nacey or Eric Phillipps, the two principals of Conrex, but shall not otherwise be construed to refer to the knowledge of any other employee, officer, director, shareholder or agent of Seller or any Affiliate of Seller, and/or any of its officers, Affiliates or representatives, and shall in no event be deemed to include imputed or constructive knowledge. All references in this Agreement to “Seller’s Representations” shall mean Seller’s representations set forth in this Section 10 and in Section 19 of this Agreement.

(c) If Seller discovers any inaccuracy in any of the foregoing representations and warranties, or if events occur which would cause any of the foregoing representations and

warranties to be inaccurate, Seller shall bring such matter to the attention of Buyer within three (3) Business Days of obtaining actual knowledge thereof by written notice to Buyer (a “Representation Notice”). If such matter is material to the value of a particular Parcel or the Property as a whole, and if Seller is unable to provide assurance reasonably satisfactory to Buyer that the substantive circumstance causing such material breach of a representation or warranty will be cured prior to Closing (or if Seller provides such assurance but thereafter is unable to cure such material breach by the Closing Date), then, subject to the provisions of Section 5 hereof, Buyer shall have the following options, which options shall be exercised in each case no later than the later to occur of (i) five (5) Business Days after Seller’s delivery of the applicable Representation Notice, or (ii) the expiration of the Inspection Period. If the applicable Representation Notice discloses a matter or condition that would make a representation or warranty untrue and such matter or condition relates to the Property or the Acquired Companies as a whole or that materially adversely affects the value of the Property or the Acquired Companies as a whole, then (A) Buyer shall have the right to either (i) proceed to Closing hereunder without any reduction in Purchase Price, or (ii) terminate this Agreement and receive back the Deposit, and (B) if the matter or condition disclosed in the applicable Representation Notice was not caused by a breach of Seller’s covenants under this Agreement, then the foregoing remedy shall be Buyer’s sole remedy therefor. If the applicable Representation Notice discloses a matter or condition that would make a representation or warranty untrue and such matter or condition only relates to one or more particular Parcels, then (A) Buyer shall have the right to either (i) proceed to Closing with respect to the affected Parcel without any reduction in Purchase Price, or (ii) designate the affected Parcel or Parcels as Excluded Parcels pursuant to Section 5(a), and in such event, Section 5(c) shall apply, and (B) if the matter or condition disclosed in the applicable Representation Notice was not caused by a breach of Seller’s covenants under this Agreement, then the foregoing remedy shall be Buyer’s sole remedy therefor. In the event of any termination of this entire Agreement by Buyer pursuant to this Section, then, except as provided in Section 14, upon the return of the Deposit to Buyer, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement). If Buyer does not timely terminate the Agreement following the delivery by Seller to Buyer of information modifying a representation or warranty of Seller hereunder, then Buyer shall be deemed to have waived any objection to such matter, such matter thereafter shall not be construed as a breach of the representations and warranties of Seller set forth herein, and at Closing, Buyer shall be deemed to have acquired the Property subject to such information delivered by Seller.

(d) To the extent that a covenant of Seller set forth in this Agreement (or in any agreement delivered by Seller pursuant to this Agreement) pertains to a matter covered by representations of Seller set forth herein, Seller shall cease to be liable for performance of such covenant from and after the day which falls 270 days after the Closing Date.

11. Buyer Representations. Buyer hereby represents to Seller, as of the Effective Date and as of the Closing Date, as follows:

(a) Organization. Buyer is a corporation, duly organized and validly existing under the laws of the State of Delaware, and has all requisite corporate power and authority to carry on its business as now conducted.

(b) Authorization. Buyer has the corporate power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and Buyer has duly authorized the execution of this Agreement.

(c) Litigation. There is no Litigation pending and served upon Buyer, or to Buyer’s knowledge, threatened against Buyer, which if adversely determined, would adversely affect Buyer’s ability to consummate the transactions contemplated by this Agreement.

(d) ERISA. Buyer is not, and is not acquiring the Property with the assets of, (i) an “employee benefit plan” (as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a “plan” (as defined in Section 4975(e)(1) of the Internal Revenue Code, as amended) to which Section 4975 of said Code applies, or (iii) an entity whose underlying assets include “plan assets” of a plan described in (i) or (ii) by reason of such plan’s investment in the entity.

(e) Bankruptcy. Buyer has not (i) commenced a voluntary case, or had entered against it a petition, for relief under the federal bankruptcy code or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceedings, to hold, administer and/or liquidate all or substantially all of its property, or (iii) made an assignment for the benefit of creditors.

(f) Buyer not a “Prohibited Person”.

(i) Buyer is in compliance with the Order and other similar requirements contained in the rules and regulations of OFAC.

(ii) Neither Buyer, nor, to Buyer’s actual knowledge, any beneficial owner of Buyer:

(A) is listed on the Lists;

(B) is a person subject to the prohibitions contained in the Orders;

(C) is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person subject to the prohibitions contained in the Orders;

(D) is any of the governments of a Prohibited Country;

(E) is established in, organized under or has its principal place of business in a Prohibited Country; or

(F) is a person owned and controlled by a person described in clauses (a) to (e) above;

provided, that in each case, the foregoing shall not apply to any direct or indirect holder of publicly traded shares in any person or any Affiliate thereof.

(g) Anti-Bribery; Anti-Corruption.

(i) None of Buyer nor any of its Affiliates (i) has offered, promised, given or agreed to give to any person or entity any bribe on behalf of Seller or its Affiliates or otherwise pertaining to the Acquired Companies or the Property; or (ii) has engaged in any activity or practice which would constitute an offense under any applicable anti-bribery and/or anti-corruption laws, including but not limited to the Unites States Foreign Corrupt Practices Act of 1977 with respect to the transaction contemplated by this Agreement;

(ii) Buyer and its Affiliates (i) have in place, their own policies and procedures to address compliance with any applicable anti-corruption laws; and (ii) have in place, effective accounting procedures and internal controls necessary to record all expenditures in connection with this Agreement, which enable Buyer, Seller and Seller’s Affiliates to readily identify Buyer’s, and its Affiliates’ financial and related records in connection with this Agreement.

(h) No Conflict. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, does or will conflict with or result in a breach of (i) the organizational documents applicable to Buyer, (ii) any law, regulation, order, writ, judgment or injunction applicable to Buyer, or any other determination of any court or governmental authority applicable to Buyer, or (iii) any agreements to which Buyer is a party or by which any of its assets are bound

12. Conditions Precedent to Closing.

(a) Conditions to Buyer’s Obligations. Buyer shall not be obligated to close under this Agreement unless each of the following conditions shall be satisfied or waived by Buyer on or prior to the Closing Date:

(i) No Termination. Buyer shall have given a Continuation Notice to Seller and Escrow Holder pursuant to the second sentence of Section 19(e) prior to the expiration of the Inspection Period.

(ii) Title Policies. The Title Company shall be prepared to issue (or to endorse the respective Acquired Companies’ existing title insurance policies to the Closing Date), upon payment of the title premium and charges therefore, owner’s Title Policies for each of the Parcels with face coverage in the amount of the allocated portion of the Purchase Price for each Parcel, and subject only to the Permitted Encumbrances and otherwise as described in and in accordance with Section 4(a) hereof.

(iii) Accuracy of Representations. Other than with respect to any Excluded Parcel, and except as qualified pursuant to Section 10(c), the representations and warranties made by Seller in this Agreement shall be true and correct in all material respects as of the Closing Date, and Seller shall confirm to Buyer that there are no material adverse changes to Seller’s representations and warranties at Closing, except that if any loss or damage to Buyer arising out of such breach would be cured by the occurrence of the Closing or by the designation of one or more Parcels as Excluded Parcels in accordance with the terms of this Agreement, then the foregoing shall not be a condition to Buyer’s obligation to close hereunder.

(iv) No Default. Seller shall have performed in all material respects its obligations under this Agreement and shall not be in default hereunder, except that if Seller is ready, willing and able to proceed to Closing hereunder, and any material loss or damage to Buyer arising out of such default would be cured by the occurrence of the Closing or by the designation of one or more Parcels as Excluded Parcels in accordance with the terms of this Agreement, then such Seller default shall not be a condition to Seller’s obligation to close hereunder.

(v) Indebtedness Repayment. Seller shall have, or shall concurrently with Closing, paid off all Existing Loans of the Acquired Companies.

(vi) Excluded Parcels. In the event that any Property has been designated an Excluded Parcel, Seller shall have performed in all respects its obligations pursuant to Section 5(c)(ii).

(vii) MAE. No material adverse change shall exist with respect to the Property.

(viii) Occupancy. No less than ninety-two percent (92%) of the Parcels selected to be acquired by Buyer shall be occupied by tenants in accordance with each tenant’s respective lease agreement, free from any default or delinquency in rent payments, and none of the foregoing tenants shall have sought protection from creditors or taken any other action that would be subject to bankruptcy or other relief.

(b) Conditions to Seller’s Obligations. Seller shall not be obligated to close under this Agreement unless each of the following conditions shall be satisfied or waived by Seller prior to the Closing Date:

(i) Deposit and Failure to Terminate. Buyer shall have (x) delivered to Escrow Holder, in accordance with Section 2(a) of this Agreement, the Initial Deposit and Second Deposit, and (y) issued a Continuation Notice pursuant to the second sentence of Section 19(e) prior to the expiration of the Inspection Period.

(ii) No Default. Buyer shall have performed in all material respects its obligations under this Agreement and shall not be in default hereunder.

(iii) Accuracy of Representations. The representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects as of the Closing Date.

In the event of a failure of a condition set forth in Section 12(a), the following provisions shall apply.

(i) If the applicable failure of a condition (other than the Occupancy Condition) pertains to a matter or condition that relates to the Property or the Acquired Companies as a whole or materially adversely affects the value of the Property or the Acquired Companies as a whole, then Buyer shall have the right to either (A) proceed to Closing hereunder without any

reduction in Purchase Price notwithstanding the non-satisfaction of such condition, in which event Buyer shall be deemed to have waived any such condition, or (B) terminate this Agreement and receive back the Deposit. If the applicable failure of a condition (other than the Occupancy Condition) only relates to one or more particular Parcels, then Buyer shall have the right to either (Y) proceed to Closing with respect to the affected Parcel without any reduction in Purchase Price, or (Z) designate the affected Parcel or Parcels as Excluded Parcels pursuant to Section 5(a), and in such event, Section 5(c) shall apply. If the applicable failure of a condition was solely in Seller’s control and Buyer elects to terminate this Agreement pursuant to subsection (B) above, in addition to the receipt of the Deposit, Buyer shall also be entitled to the reimbursement of Pursuit Costs (as defined below); provided this sentence shall not apply to a termination by Buyer as a result of the failure of the Occupancy Condition. With respect to a failure of the Occupancy Condition, Buyer shall have the right to exercise the Occupancy Condition Remedies set forth above.

(ii) In the event of a failure of a condition set forth in Section 12(b), such failure shall be deemed to be a default by Buyer hereunder, and Seller shall have the remedies pursuant to Section 14, provided that Seller shall have the right to elect to close, notwithstanding the non-satisfaction of such condition, in which event Seller shall be deemed to have waived any such condition.

(iii) The foregoing provisions, however, are not intended to limit the rights and obligations of the parties with respect to a default under Section 14 of this Agreement. Each party shall act in good faith and shall not voluntarily cause any of the conditions precedent hereunder to fail to be satisfied, or voluntarily cause any of its respective representations or warranties to fail to be true, as of the date scheduled for Closing.

(d) Right to Cure Failure of Condition. In the event of a failure of a condition to Closing set forth in this Section 12 (including a breach of representation or warranty but other than the Occupancy Condition) that is capable and reasonably likely to be cured or satisfied by using commercially reasonable efforts (without being required to incur any material expense not otherwise required to be incurred hereunder or issue notices of default or commence legal proceedings), then the party whose obligation to close is conditioned on such item shall give notice of such failure to the other party (the “Failed Condition Party”) on or before the Closing Date originally set forth in Section 3 hereof, and the Failed Condition Party shall use commercially reasonable efforts to satisfy or cure such condition and the Closing Date automatically shall be extended to up to thirty (30) days after such notice to permit such cure by the Failed Condition Party. In the event such condition(s) is/are not satisfied or cured within such thirty (30) day period, then the provisions of Section 12(c) shall apply. The foregoing provisions, however, are not intended to limit the rights and obligations of the parties with respect to a default under Section 14 of this Agreement.

13. Deliveries at Closing; Mechanics of Closing.

(a) Seller’s Deliveries. On the Closing Date, Seller shall deliver to the Escrow Holder, the following:

(i) Assignment of Membership Interests. An Assignment of Membership Interests in the form attached hereto as Exhibit S (the “Assignment and Assumption of Membership Interests”).

(ii) Holdback Escrow. A Holdback Escrow Agreement in the form attached hereto as Exhibit T (the “Holdback Escrow Agreement”).

(iii) Owner’s Affidavits. If required by the Title Insurance Company in order to deliver title insurance required pursuant to Section 12(a)(ii), owner’s affidavits from each of the Acquired Companies in the forms as is reasonably required by the Title Insurance Company, and reasonably acceptable to Seller, for each jurisdiction in which the respective Parcels are located. In no event shall any individual be required to execute an owner’s affidavit in his/her individual capacity or have personal liability under any owner’s affidavits.

(iv) Authority Documents. An authorizing resolution and an incumbency certificate, and such other documents as may be reasonably necessary to evidence the authority and capacity of Seller and the authority of the signatory for Seller.

(v) FIRPTA Certification. An affidavit in the form attached hereto as Exhibit U with respect to compliance with the Foreign Investment in Real Property Tax Act (Code Section 1445 and the Treasury Regulations thereunder).

(vi) Transfer Tax Returns. Such Transfer Tax Returns and other documents as are required in each jurisdiction where each Parcel is located in order to transfer the Membership Interests, together with the applicable Transfer Tax to be paid in connection therewith to the extent payable by Seller under this Agreement.

(vii) Security Deposits. Security Deposits pursuant to Section 7(b).

(viii) Notices. Written notice from Seller (or the Acquired Companies or the respective management agents, as applicable) to each Tenant of the Real Property under the Leases in a form mutually agreed upon by the parties.

(ix) Original Documents. To the extent available, the originals (to the extent in Seller’s possession or control) or, if unavailable, copies, of all Leases (and Included Contracts).

(x) Closing Statement. A Closing Statement, mutually acceptable to Buyer and Seller, duly executed by Seller.

(xi) Other Documents. Any other documents which Seller is obligated to deliver to Buyer pursuant to this Agreement, including, without limitation, any and all Transfer Tax affidavits, recordation Tax affidavits, Tax allocation affidavits, and similar forms or instruments as may be reasonably required in order for the Escrow Holder to close the transactions contemplated by this Agreement and as may be reasonably acceptable to Seller.

(xii) Possession. Possession of the Property shall be delivered to Buyer as of the Closing subject to the Existing Leases, any Approved Leases and the Permitted Encumbrances. The parties shall cooperate to cause the existing management companies to effectuate a smooth transition of the Property ownership.

(xiii) Resignations of Directors and Officers. Written resignations, dated as of the Closing Date, of the directors and officer of each of the Acquired Companies.

(xiv) Indebtedness Repayment. Written evidence, dated as of the Closing Date evidencing the repayment in full of any Indebtedness and an undertaking by such lenders to release the liens on the Properties under the Existing Loans.

(b) Buyer’s Deliveries. On the Closing Date, Buyer will deliver to Escrow Holder, each of the following:

(i) Assignment and Assumption of Membership Interests. The Assignment and Assumption of Membership Interests duly executed by Buyer.

(ii) Holdback Escrow Agreement. The Holdback Escrow Agreement duly executed by Buyer.

(iii) Transfer Tax Returns. Such Transfer Tax returns and other documents as are required in each jurisdiction where each Parcel is located in order to transfer the Membership Interests (if any), together with the applicable Transfer Tax to be paid in connection therewith to the extent payable by Buyer under this Agreement.

(iv) Authority Documents. An authorizing resolution and an incumbency certificate, and such other documents as may be reasonably necessary to evidence the authority and capacity of Buyer and the authority of the signatory for Buyer.

(v) Cash. Such amounts in Cash as required pursuant to Section 2 hereof and pursuant to any other provision of this Agreement.

(vi) Closing Statement. A Closing Statement, mutually acceptable to Buyer and Seller, duly executed by Buyer.

(vii) Other Documents. Any other documents which Buyer is obligated to deliver to Seller pursuant to this Agreement or that may be requested by the Escrow Holder in order for the Escrow Holder to close the transactions contemplated by this Agreement.

(c) Closing Mechanics. When and only when (i) each of the conditions precedent set forth in Section 12(a) have been satisfied or waived by Buyer and (ii) each of the conditions precedent set forth in Section 12(b) have been satisfied or waived by Seller, Escrow Holder shall effect the Closing contemplated hereunder by (A) releasing from escrow the closing documents, (B) transferring to Seller an amount of funds equal to the Purchase Price (less the Holdback Escrow Amount) plus any other reimbursements or payments to be made to Seller at Closing and any other adjustments in accordance with the terms of this Agreement, and (C) delivering one (1) set of each of the documents set forth in this Section 13 herein to each of the parties. The Closing shall be accomplished through an escrow closing with the Escrow Holder, such that Seller’s proceeds shall be received by Seller on the Closing Date.

14. Default.

(a) Buyer Default. IF BUYER DEFAULTS IN ITS OBLIGATIONS TO ACQUIRE THE MEMBERSHIP INTERESTS AT CLOSING OR OTHERWISE DEFAULTS IN ITS OBLIGATIONS UNDER THIS AGREEMENT IN A MANNER THAT WOULD CAUSE A CONDITION TO CLOSING TO NOT OCCUR UNDER THE TERMS OF THIS AGREEMENT AND THE CLOSING DOES NOT IN FACT OCCUR, THEN (i) SELLER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT, (ii) SUBJECT TO THE TERMS, CONDITIONS AND PROCEDURES OF THE ESCROW AGREEMENT, SELLER SHALL HAVE THE RIGHT TO IMMEDIATELY RECEIVE THE INITIAL DEPOSIT, AND THE INITIAL DEPOSIT SHALL BE DEEMED LIQUIDATED DAMAGES AS SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER (INCLUDING, WITHOUT LIMITATION, SELLER’S RIGHTS TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT AND TO RECEIVE DAMAGES) FOR BUYER’S FAILURE TO PURCHASE THE MEMBERSHIP INTERESTS, WHICH SUMS SHALL BE PRESUMED TO BE A REASONABLE ESTIMATE OF THE AMOUNT OF ACTUAL DAMAGES SUSTAINED BY SELLER BECAUSE OF BUYER’S BREACH OF ITS OBLIGATIONS TO PURCHASE THE MEMBERSHIP INTERESTS AND (ii) BUYER SHALL BE RESPONSIBLE FOR ALL CANCELLATION CHARGES REQUIRED TO BE PAID TO ESCROW HOLDER AND ESCROW CHARGES. FROM THE NATURE OF THIS TRANSACTION, IT IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES THAT SELLER WOULD SUSTAIN IF BUYER DEFAULTS HEREUNDER. THE IMPRACTICABILITY AND DIFFICULTY OF FIXING ACTUAL DAMAGES IS CAUSED BY, WITHOUT LIMITATION, THE FACT THAT THE MEMBERSHIP INTERESTS AND THE REAL PROPERTY ARE UNIQUE. GIVEN THE FOREGOING FACTS, AMONG OTHERS, BUYER AND SELLER AGREE THAT LIQUIDATED DAMAGES ARE PARTICULARLY APPROPRIATE FOR THIS TRANSACTION AND AGREE THAT SAID LIQUIDATED DAMAGES SHALL BE PAID IN THE EVENT OF BUYER’S BREACH OF ITS OBLIGATIONS HEREUNDER, DESPITE ANY WORDS OR CHARACTERIZATIONS PREVIOUSLY USED OR CONTAINED IN THIS AGREEMENT IMPLYING ANY CONTRARY INTENT. NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR (AND SUCH LIQUIDATED DAMAGES SHALL NOT APPLY TO) DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT, OR FOR ATTORNEY FEES AND COSTS PROVIDED IN SECTION 27(a) HEREOF.

WE ACKNOWLEDGE THIS LIQUIDATED DAMAGES PROVISION:


		/s/ EP				/s/ DS
		Seller’s Initials				Buyer’s Initials

(b) Seller Default. In the event of a material default by Seller of its obligations under this Agreement where Buyer is ready, willing and able to proceed to Closing, then the following provisions shall apply. If the applicable material default pertains to a matter or condition that relates to the Property or the Acquired Companies as a whole or materially adversely affects the value of the Property or the Acquired Companies as a whole, then Buyer, as its sole and

exclusive remedy, may either (i) terminate this Agreement by delivery of notice of termination to Seller, whereupon subject to the terms, conditions and procedures of the Escrow Agreement, the Deposit shall be immediately returned to Buyer and if such material default is due to the intentional default by Seller (but in no event due to failure of any condition to Closing not caused by a default by Seller), Seller shall reimburse Buyer for its documented reasonable out of pocket costs and expenses incurred by Buyer in the negotiation of this Agreement, conducting its diligence activities and otherwise in preparation for the Closing up to the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00) (save and except attorneys fees, indemnification obligations, and fraud claims) in the aggregate for all such costs and expenses (“Pursuit Costs”), or (ii) continue this Agreement and bring an action for specific performance hereunder provided appropriate proceedings are promptly commenced by Buyer and prosecuted with diligence and continuity; provided that if specific performance is not a remedy available to Buyer due to Seller’s sale or conveyance of the Membership Interests or a material portion of the Property to a third party, Buyer and its Affiliates shall have all remedies available to it at law or equity. Notwithstanding anything herein to the contrary, in no event shall Buyer have the right (and Buyer hereby waives any right to) file or assert any lis pendens against any Parcel of the Real Property. In the event of any termination of this entire Agreement by Buyer pursuant to this Section 14, then, upon the return of the Deposit to Buyer and, if applicable, reimbursement to Buyer of its out of pocket costs, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement). If the applicable material default pertains to a matter or condition that relates solely to one or more particular Parcels, then Buyer shall have the right, as its sole and exclusive remedy, to either (i) proceed to Closing with respect to the affected Parcel(s) without any reduction in Purchase Price, or (ii) designate the affected Parcel or Parcels as Excluded Parcels pursuant to Section 5(a), and in such event, Section 5(c) shall apply.

15. Notices; Computation of Periods.

(a) Notices. All notices given by either party to the other shall be in writing and shall be sent either: (i) by prepaid nationally recognized overnight courier service for next Business Day delivery, addressed to the other party at the following addresses listed below or (ii) via e-mail to the e-mail address listed below; provided, however, that if such communication is given via e-mail, a counterpart of such communication shall concurrently be sent in the manner specified in Subsection (i) above. Addresses and e-mail addresses of the parties are set forth below.

As to Seller:

c/o Conrex Residential Property REIT, Inc.

1505 King Street ext. Ste 100

Charleston, South Carolina 29405

Attn: Ralph Nacey and Eric Phillipps

Email: rnacey@con-rex.com; ephillipps@con-rex.com

with copies at the same time to:

Bryan Cave Leighton Paisner LLP

1201 West Peachtree St NW, 14^th Floor

Atlanta, Georgia 30309

Attention: Todd Wade

Telephone: 404-572-6694

E-mail: todd.wade@bclplaw.com

As to Buyer:

c/o Nexpoint Real Estate Advisors

300 Crescent Court, Suite 700

Dallas, Texas 75201

Attn: Brian Mitts

Email: bmitts@nexpointadvisors.com

c/o Nexpoint Real Estate Advisors

300 Crescent Court, Suite 700

Dallas, Texas 75201

Attn: D.C. Sauter

Email: dcauter@NexPointadvisors.com

c/o Vinebrook Homes Trust, Inc.

3500 Park Center Drive, Suite 100

Dayton, Ohio, 45414

Attn: Dana Sprong

Email: dana.sprong@vinebrookhomes.com

with a copy at the same time to:

Wick Phillips Gould & Martin LLP

3131 McKinney Ave, Suite 100

Dallas, Texas 75204

Attn: Chris Fuller and Rachel Sam

Email: chris.fuller@wickphillips.com and rachel.sam@wickphillips.com

Any notice may be given on behalf of any party by its counsel. Notices given in the manner aforesaid shall be deemed sufficiently served or given for all purposes under this Agreement upon the earliest of actual receipt or refusal of delivery (or, in the case of email delivery, at the date and time of such email delivery with no bounceback notice having been received), provided that any notice delivered on day that is not a Business Day or after 5:00 p.m. on any day (in the time zone of the intended recipient), shall be deemed given on the next Business Day.

The parties acknowledge and agree that for purposes of this Agreement and notices sent by e-mail shall not be considered as having been effectively given, except to the extent also separately given through another means of notice contemplated hereby.

A party may change its respective notice address by giving notice in writing in the manner specified above.

(b) Computation of Periods. The term “Business Day” shall mean a date that is not a Saturday, Sunday or a holiday observed by federally insured banks in the State of South Carolina and/or the State of New York or by the United States Postal Service. If the final day of any period of time in any provision of this Agreement falls upon a day that is not a Business Day, then, the time of such period shall be extended to the next Business Day. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period is so computed is to be included, unless such last day is not a Business Day, in which event the period shall run until the end of the next Business Day.

16. Fire or Other Casualty.

(a) Casualty Insurance. Seller agrees to maintain in effect until the Closing Date the fire and extended coverage insurance policies now in effect on the Real Property (or substitute policies in equal or greater amounts).

(b) Casualty Damage. If any portion of any of the Parcels constituting part of the Real Property shall be damaged or destroyed by fire or other casualty between the Effective Date and the Closing Date, to the extent Seller has knowledge of such event, Seller shall give written notice thereof to Buyer. The proceeds of all fire and extended coverage insurance policies attributable to the damaged Parcel received by Seller prior to the Closing Date and not used by Seller for the protection or emergency repairs to the damaged Parcel (and Buyer hereby authorizes Seller to use the proceeds for such purposes) shall be disbursed by Seller to Buyer at Closing; and all unpaid claims under such insurance policies attributable to the damaged Parcel shall be assigned by Seller to Buyer on the Closing Date and Seller shall give a credit to Buyer at Closing for any unpaid deductibles thereunder. The obligation of Buyer to complete Closing under this Agreement shall in no way be voided or impaired, and Buyer shall not be excused from performing its obligations up to and at Closing without abatement of the Purchase Price. In addition, for clarity, the occurrence of a casualty with respect to any Parcel shall not give the Buyer the right to exclude such Parcel from the Property for purposes of Section 5.

(c) Claims Handling and Escrows. In the event that the Closing occurs following a fire or other casualty, Seller agrees to take such steps as Buyer reasonably may request in order to assure that any insurance proceeds available under Seller’s insurance policies are collected and made available to Buyer as contemplated hereby. Seller and Buyer both agree to cooperate in order to facilitate the administration of claims under Seller’s insurance policies, it being agreed, however, that after the Closing Buyer shall have the right to manage the claims handling process.

(d) Survival. Seller’s obligations under this Section 16 shall survive the Closing.

17. Condemnation. If any part of any Parcel comprising part of the Real Property shall be taken by exercise of the power of eminent domain, or deed in lieu of eminent domain (a “Taking”),

after the Effective Date, then Buyer shall have the right to designate the applicable Property an Excluded Parcel pursuant to Section 5(a), by written notice to Seller within ten (10) days of Seller’s notice to Buyer of such Taking, and in such event, Section 5(c) shall apply. If Buyer does not timely give notice of termination, then Buyer’s obligations under this Agreement with respect to such Parcel shall remain in effect notwithstanding such condemnation, this Agreement shall continue in full force and effect and there shall be no abatement of the Purchase Price. Seller shall be relieved, however, of its duty to provide title to the portion of the Parcel so taken, but Seller shall, on the Closing Date, assign to Buyer all rights and claims to any awards arising therefrom as well as any money theretofore received by Seller on account thereof, net of any reasonable expenses actually incurred by Seller, including attorney’s fees of collecting the same.

18. Assignability.

(a) Assignments Prohibited. Buyer may not assign or suffer an assignment of this Agreement and/or its rights under this Agreement, without the prior written consent of Seller, which consent Seller may deny in its sole and absolute discretion. Notwithstanding the foregoing, Seller’s consent shall not be required in respect to an assignment by Buyer of its interests herein to one or more Affiliates of Buyer, provided that (i) any such assignment shall not relieve the party originally designated as Buyer of its obligations hereunder, and (ii) on the date of such assignment, the assignee shall make the representations and warranties set forth in Section 11 to Seller. This Agreement will be binding upon and inure to the benefit of Seller and Buyer and their respective successors and permitted assigns. Whenever a reference is made in this Agreement to Seller or Buyer, such reference will include the successors and permitted assigns of such party under this Agreement.

(b) Prohibited Assignments. Notwithstanding the foregoing provisions of Section 18(a), Buyer shall have no right, under any circumstances, to assign this Agreement to any person that is unable to make Buyer representation set forth in Section 11(f) and Section 11(g).

(c) Successors and Assigns. Subject to the foregoing limitations, this Agreement shall extend to, and shall bind, the respective heirs, executors, personal representatives, successors and assigns of Seller and Buyer.

19. Inspections.

(a) Right to Inspect. Buyer, and Buyer’s agents and representatives, shall have the right, from time to time, prior to the Closing Date or earlier termination of this Agreement, during normal business hours, to enter upon up to twenty percent (20%) of the Parcels for the purpose of conducting interior physical inspections of the Property, review of the environmental status and structural aspects of the Real Property, making of surveys and generally for the reasonable ascertainment of matters relating to the Property; provided, however, that Buyer shall: (i) give Seller reasonable prior written notice of the time and place of such entry, and shall permit a representative of Seller to accompany Buyer if so elected by Seller (which notice shall be delivered by email to Seller (at the following email addresses: Eric Phillipps (ephillipps@con-rex.com) and Ralph Nacey (rnacey@con-rex.com) and shall include the proposed time and place of such entry, and subject to the rights of the tenants in possession); (ii) use commercially

reasonable efforts not to interfere with the operations of the Parcel or any Tenant thereof; (iii) restore any damage to the Property or any adjacent property caused by such actions; (iv) indemnify, defend and save Seller, and Seller Parties (herein, collectively, the “Indemnified Parties”) harmless of and from any and all actual out-of-pocket claims and/or liabilities which any of the Indemnified Parties suffers relating to such entry and such activities, including, without limitation, any claims by Tenants and/or invitees of the applicable Parcels; (v) not communicate with any Tenant, unless accompanied by Seller in each instance; (vi) prior to entry onto any Parcels, furnish Seller with a certificate of commercial general liability providing coverage for bodily injury and property damage liability maintained by Buyer (which may be part of an umbrella policy) with a limit of liability of $2,000,000 per occurrence and $2,000,000 general aggregate and naming Seller as additional insureds for all activities arising out the performance of Buyer’s or its agents’ inspection of the Property; and (vii) not conduct any environmental investigations or testing other than a standard “Phase I” investigation. Seller agrees to reasonably cooperate with Buyer, at no cost or expense to Seller, to complete any BPO reports requested by Buyer’s lender. All inspection rights under this Section 19(a) shall be subject to the rights of Tenants under the Existing Leases.

(b) Release and Indemnity With Respect to Buyer’s Inspection.

(i) Buyer agrees to release, indemnify and hold harmless Seller, its Affiliates, and their respective direct and indirect trustees, partners, stockholders, members, officers, directors, managers, employees, advisors, agents, independent contractors, lenders, investors, clients and representatives (collectively, the “Seller Parties”), from and against any and all liability, cost and expense (including, without limitation, attorneys’ fees and expenses of any of Seller Parties) arising from any injury or loss sustained by any of Buyer or any Buyer Party (defined below), while at any Parcel or otherwise in connection with performing Buyer’s inspection of the Parcels pursuant to this Section 19, except to the extent caused by Seller’s negligence or willful misconduct. Seller makes no representations or warranties regarding conditions at the Parcel relating to health or safety in connection with performance of Buyer’s inspection of the Parcels.

(ii) Buyer agrees to indemnify and hold harmless Seller Parties from and against all damages to the Parcels or otherwise sustained by any person or entity caused by Buyer’s inspection of the Parcels (including without limitation damages caused by Buyer’s employees, agents, advisors, partners, independent contractors, lenders, investors, clients and representatives and their respective Affiliates (collectively, the “Buyer Parties”)), and to restore each Parcel to its prior condition immediately upon notice from Seller, except to the extent caused by Seller’s negligence or willful misconduct.

(iii) Notwithstanding any provision to the contrary in this Section 19, Buyer shall have no obligation to indemnify any Seller Parties from any damages, claims, expenses, liabilities or costs arising from (i) the negligent acts or intentional misconduct of any of Seller Parties or (ii) Buyer’s or any Buyer Party’s discovery of existing conditions of the Parcels (except to the extent such conditions are physically exacerbated by Buyer or any Buyer Party). The release and indemnity provided in this Section 19 shall survive the termination of this Agreement indefinitely.

(c) Reports on Buyer’s Inspection of the Parcels. Should Seller provide Buyer with any information or reports with respect to the Parcels (herein, “Reports”), Buyer acknowledges that (i) neither Seller nor any of Seller Parties has made or makes any representations or warranties to Buyer concerning the accuracy or completeness of the Reports, the scope of work on which the Reports are based, or the reasonableness or validity of any conclusions or recommendations set forth therein or whether or not Seller nor any of Seller Parties has undertaken or performed any action based on any of the Reports, (ii) Seller shall have no obligation to share any internal analysis or assessment of the Reports or any conclusions that Seller may have drawn from its internal review of the Reports, and (iii) Seller shall be under no obligation or responsibility, express or implied, to update or supplement any Reports. Further Buyer understands such Reports would have been prepared solely for the benefit of the addressee or preparer of such Reports and Buyer is not entitled to rely on the Reports or the information they contain or distribute or disseminate the Reports or the information they contain to third parties. Buyer hereby agrees to waive and release Seller from any and all claims relating to Buyer’s review or other use of the Reports.

(d) No Liens Permitted. Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Seller, express or implied by inference or otherwise, to any party for the performance of any labor or the furnishing of any materials to the Property or any part thereof, nor as giving Buyer any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any liens against the Property or any part thereof. Buyer agrees to promptly cause the removal of, and indemnify, defend and hold Seller harmless with respect to, any mechanic’s or similar lien filed against the Real Property or any part thereof by any party performing any labor or services at the Property or supplying any materials to the Property at Buyer’s request.

(e) Buyer’s Right to Continue Prior to the End of the Inspection Period. Buyer shall have the right, in Buyer’s sole discretion, to review and approve the Property and all matters related thereto. If Buyer determines, in its sole discretion, that it wishes to move forward with the transactions contemplated by this Agreement, Buyer shall provide to Seller and Escrow Holder with a notice (a “Continuation Notice”) on or before the expiration of the Inspection Period. If Buyer determines, for any reason or no reason whatsoever, that it is not satisfied with the Property and all matters relating thereto as a result of Buyer’s inspection of the Property and review of the Diligence Materials, or as a result of any other analysis, Buyer shall have the right to not provide a Continuation Notice to Seller and Escrow Holder prior to the expiration of the Inspection Period.

(i) If Buyer provides a Continuation Notice to Seller and Escrow Holder prior to the expiration of the Inspection Period, the Inspection Period shall terminate and Buyer shall be deemed to have waived any right to terminate this Agreement pursuant to this Section 19(e).

(ii) If Buyer does not provide a Continuation Notice to Seller and Escrow Holder prior to the expiration of the Inspection Period, then this Agreement shall immediately terminate and neither party shall have any rights and obligations hereunder (except for (A) the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, and (B) the obligations of the parties under Section 14 of this Agreement, if any), and the Deposit shall be returned to Buyer pursuant to the Escrow Agreement, as Buyer’s sole and exclusive remedy.

(f) Survival. The provisions of this Section 19 shall survive termination of this Agreement and/or the Closing.

20. Brokers. Seller and Buyer each represents and warrants to the other that it has dealt with no broker or other intermediary in connection with this transaction other than Roofstock, Inc. (the “Disclosed Broker”). If any broker or other intermediary other than the Disclosed Broker claims to be entitled to a fee or commission by reason of having dealt with Seller or Buyer in connection with this transaction, or having introduced the Property (or any portion thereof) to Buyer for sale, or having been the inducing cause to the sale, the party with whom such broker claims to have dealt shall indemnify, defend and save harmless the other party of and from any claim for commission or compensation by such broker or other intermediary. Seller agrees to pay, pursuant to a separate agreement between Seller and the Disclosed Broker, any commission payable to the Disclosed Broker in connection herewith if, as and when the Closing occurs, and shall indemnify, defend and hold Buyer harmless with respect thereto. This Section 20 shall survive the termination of this Agreement and/or the Closing.

21. Condition of Property.

(a) NO WARRANTIES. THE ENTIRE AGREEMENT BETWEEN SELLER AND BUYER WITH RESPECT TO THE MEMBERSHIP INTERESTS AND THE PROPERTY IS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE DOCUMENTS EXECUTED AND DELIVERED BY THE PARTIES AT CLOSING AS DESCRIBED IN SECTION 13(a)(i), SECTION 13(a) (ii), SECTION 13(a)(iii), SECTION 13(a) (iv), AND THE PARTIES ARE NOT BOUND BY ANY OTHER AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY A PARTY HERETO, OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SUCH PARTY, OR ANY OTHER PARTY). WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT, EXCEPT FOR THE “SELLER’S REPRESENTATIONS” (AS DEFINED IN THIS AGREEMENT), AND ANY EXPRESS REPRESENTATIONS OF SELLER SET FORTH IN THE DOCUMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING AS DESCRIBED IN SECTION 13(a) (i), SECTION 13(a)(ii), SECTION 13(a)(iii), SECTION 13(a)(iv) (COLLECTIVELY, THE “EXPRESS REPRESENTATIONS”), BUYER AND BUYER’S REPRESENTATIVES WILL BE AFFORDED AN ADEQUATE OPPORTUNITY TO INSPECT THE BOOKS AND RECORDS OF THE ACQUIRED COMPANIES, THE PROPERTY, THE LEASES AND THE CONTRACTS, WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO BECOME FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THE CONDITION OF THE ACQUIRED COMPANIES, AND THAT, AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS, THE MEMBERSHIP INTERESTS, THE ACQUIRED COMPANIES, THE PROPERTY, THE LEASES, THE CONTRACTS, AND PERSONAL PROPERTY, IF ANY, WILL BE PURCHASED BY BUYER IN AN “AS IS” AND “WHERE IS” CONDITION (SUBJECT TO FURTHER WORK OR MODIFICATIONS PERMITTED TO BE PERFORMED

PRIOR TO CLOSING PER THE TERMS OF THIS AGREEMENT) AND, SUBJECT TO THE EXPRESS REPRESENTATIONS, WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER, OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT FOR THE EXPRESS REPRESENTATIONS) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE FOREGOING, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, THE ACTUAL OR PROJECTED INCOME OR EXPENSE ARISING FROM OWNING OR OPERATING THE PROPERTY, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH. BUYER ACKNOWLEDGES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS, NEITHER SELLER NOR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER, NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED. THIS SECTION SHALL SURVIVE CLOSING INDEFINITELY AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE CLOSING.

(b) CHANGE OF CONDITIONS. IN THE EVENT CLOSING OCCURS HEREUNDER, BUYER SHALL ACCEPT THE MEMBERSHIP INTERESTS, ACQUIRED COMPANIES, AND PROPERTY AT THE TIME OF CLOSING IN THE SAME CONDITION AS THE SAME ARE AS OF THE EFFECTIVE DATE, AS SUCH CONDITION SHALL HAVE CHANGED BY REASON OF (i) CHANGES OR MODIFICATIONS PERMITTED OR APPROVED BY THE TERMS OF THIS AGREEMENT, (ii) REASONABLE WEAR AND TEAR AND (iii) SUBJECT TO SECTION 16 HEREOF, DAMAGE BY FIRE OR OTHER CASUALTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT AS PROVIDED IN SECTION 16, THE FACT THAT ANY PORTION OF THE PROPERTY OR ANY EQUIPMENT OR MACHINERY THEREIN OR ANY PART THEREOF MAY NOT BE IN WORKING ORDER OR CONDITION AT THE CLOSING DATE BY REASON OF WEAR AND TEAR OR DAMAGE BY FIRE OR OTHER CASUALTY, OR BY REASON OF ITS PRESENT CONDITION, SHALL NOT RELIEVE BUYER OF ITS OBLIGATION TO COMPLETE CLOSING UNDER THIS AGREEMENT AND PAY THE FULL PURCHASE PRICE. EXCEPT AS PROVIDED IN SECTION 16, 17 OR SUBSECTIONS (c) AND (e) BELOW OR AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER HAS NO OBLIGATION TO MAKE ANY REPAIRS OR REPLACEMENTS REQUIRED BY REASON OF WEAR AND TEAR OR FIRE OR OTHER CASUALTY, BUT MAY, AT ITS OPTION AND ITS COST, MAKE ANY SUCH REPAIRS AND REPLACEMENTS PRIOR TO THE CLOSING DATE.

Seller shall not be obligated to perform any such maintenance, repairs or restoration to the Real Property between the Effective Date and the Closing and Buyer shall accept the Real Property in its “as-is” condition as of the Closing. To the extent of Seller’s maintenance and repair obligations under the Leases, between the Effective Date and the Closing Date, Seller shall perform all customary ordinary repairs to the Property as Seller has customarily previously performed to maintain them in substantially the same condition as they are as of the Effective Date, as said condition shall be changed by (i) changes or modifications permitted or allowed by the terms of the Leases, (ii) changes or modifications permitted or approved by the terms of this Agreement, (iii) reasonable wear and tear, or (iv) damage by fire or other casualty, subject however to the provisions of Section 16 hereof. Without limiting the generality of the foregoing, Seller shall have no obligation to make any structural or extraordinary repairs or capital improvements between the Effective Date and the Closing Date.

(d) Pre-Closing Notice Covenants. Provided this Agreement has not been terminated, if after the Effective Date but prior to the Closing Date, Seller shall (i) receive a written notice from a Tenant alleging a material default by the landlord under a Lease, (ii) receive written notice of any violation of laws which would be Seller’s obligation to cure under the applicable Lease with respect to a Parcel, (iii) receive written notice of any Litigation instituted against Seller and affecting the Property or any particular Parcel, (iv) obtain actual knowledge of any casualty or Taking affecting any portion of the Property, or (v) receive written notice from any governmental authority or third party of any violations of any Environmental Requirements affecting the Property or any particular Parcel, then Seller shall deliver to Buyer a copy of any notice issued or received by Seller within three (3) days of delivery or receipt by Seller of any such notice.

(e) RELEASE.

(i) WITHOUT LIMITING THE PROVISIONS OF SUBSECTION (a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OTHER THAN THE EXPRESS REPRESENTATIONS, BUYER HEREBY RELEASES SELLER, AND ITS PARENT, AFFILIATED AND SUBSIDIARY ENTITIES AND ALL OF THEIR RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEY’S FEES WHETHER THE SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE “CLAIMS”) ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE REAL PROPERTY, WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, (ii) ANY PROVISIONS OF THE LEASES, (iii) ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, AND (iv) SOLELY TO THE EXTENT ARISING FROM AND AFTER THE CLOSING DATE, ANY LIABILITIES, CLAIMS OR CONDITIONS OCCURRING WITH RESPECT TO THE ACQUIRED COMPANIES. THE RELEASE SET FORTH IN THIS SUBSECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER ANY ENVIRONMENTAL REQUIREMENTS OF THE UNITED STATES, THE STATE IN WHICH

THE REAL PROPERTY IS LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE EFFECTIVE DATE, AND ANY LOSSES, LIABILITIES OR CLAIMS OF ANY TYPE ARISING FROM AND AFTER THE CLOSING DATE. BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER’S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER’S COUNSEL. BUYER EXPRESSLY WAIVES ITS RIGHTS GRANTED UNDER ANY PROVISION OF LAW THAT PROVIDES THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT BUYER DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS AGREEMENT TO RELEASE SELLER. IN ORDER TO CONFIRM SUCH WAIVER, BUYER HAS INITIALED THIS SUBSECTION IN THE SPACE PROVIDED BELOW.

Buyer’s Initials: /s/ DS

(ii) SELLER AGREES THAT IT DOES NOT HAVE AND WILL NOT HAVE ANY CLAIMS AGAINST ANY BUYER PARTY (OTHER THAN BUYER) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SUBJECT TO THE TERMS OF THIS AGREEMENT, SELLER AGREES TO LOOK SOLELY TO BUYER AND ITS ASSETS FOR THE SATISFACTION OF ANY LIABILITY OR OBLIGATION ARISING UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR FOR THE PERFORMANCE OF ANY OF THE COVENANTS, WARRANTIES OR OTHER AGREEMENTS CONTAINED HEREIN, AND FURTHER AGREE NOT TO SUE OR OTHERWISE SEEK TO ENFORCE ANY PERSONAL OBLIGATION AGAINST ANY OF BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN) WITH RESPECT TO ANY MATTERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF THIS SECTION 21(e)(ii), SELLER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL CLAIMS AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER IT MAY NOW OR HEREAFTER HAVE AGAINST THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN), AND HEREBY UNCONDITIONALLY AND IRREVOCABLY RELEASE AND DISCHARGE THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN) FROM ANY AND ALL LIABILITY WHATSOEVER WHICH MAY NOW OR HEREAFTER ACCRUE IN FAVOR SELLER AGAINST THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN), IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN ORDER TO CONFIRM SUCH WAIVER, SELLER HAS INITIALED THIS SUBSECTION IN THE SPACE PROVIDED BELOW.

Seller’s Initials: /s/ EP

(iii) BUYER AGREES THAT IT DOES NOT HAVE AND WILL NOT HAVE ANY CLAIMS AGAINST ANY SELLER PARTIES (OTHER THAN SELLER) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SUBJECT TO THE TERMS OF THIS AGREEMENT, BUYER AGREES TO LOOK SOLELY TO SELLER AND ITS ASSETS FOR THE SATISFACTION OF ANY LIABILITY OR OBLIGATION ARISING UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR FOR THE PERFORMANCE OF ANY OF THE COVENANTS, WARRANTIES OR OTHER AGREEMENTS CONTAINED HEREIN, AND FURTHER AGREE NOT TO SUE OR OTHERWISE SEEK TO ENFORCE ANY PERSONAL OBLIGATION AGAINST ANY OF SELLER PARTIES (OTHER THAN SELLER AS PROVIDED HEREIN) WITH RESPECT TO ANY MATTERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF THIS SECTION 21(e)(iii), BUYER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL CLAIMS AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER IT MAY NOW OR HEREAFTER HAVE AGAINST SELLER PARTIES (OTHER THAN SELLER AS PROVIDED HEREIN), AND HEREBY UNCONDITIONALLY AND IRREVOCABLY RELEASE AND DISCHARGE SELLER PARTIES (OTHER THAN SELLER AS PROVIDED HEREIN) FROM ANY AND ALL LIABILITY WHATSOEVER WHICH MAY NOW OR HEREAFTER ACCRUE IN FAVOR BUYER AGAINST SELLER PARTIES (OTHER THAN SELLER AS PROVIDED HEREIN), IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN ORDER TO CONFIRM SUCH WAIVER, BUYER HAS INITIALED THIS SUBSECTION IN THE SPACE PROVIDED BELOW.

Buyer’s Initials: /s/ DS

(f) Buyer’s Review of Diligence Materials. Buyer acknowledges that Seller makes no warranties or representations regarding the adequacy, accuracy or completeness of the Diligence Materials, except for Seller’s Representations. Buyer further acknowledges that Seller has no obligation to locate, to procure or to provide to Buyer any other documents or materials relating to the Property or the Acquired Companies, other than the Diligence Materials. Buyer may receive additional materials regarding the Property and/or the Acquired Companies, but Buyer acknowledges that while such materials may prove useful in Buyer’s assessment of the transactions contemplated hereunder, Seller has not made, and shall not be deemed to have made, any warranties or representations regarding the accuracy or completeness of such additional materials, it being understood that Buyer shall conduct its own independent diligence of the Property. Buyer further represents and warrants to Seller that Buyer is a sophisticated and experienced investor in and operator of real property, including real property improved and operated with improvements such as those within the Property, and that it has determined, in its judgment, that the length of the Inspection Period will be sufficient in order to permit Buyer to assess the Property (including its physical condition) and the Acquired Companies and to make an informed decision within the Inspection Period as to whether to waive Buyer’s termination rights under Section 19(e) and, thereby, to commit to purchase the Membership Interests in accordance with the terms of this Agreement.

22. Survival of Provisions; Indemnification.

(a) Acceptance by Buyer at Closing of the Assignment and Assumption of Membership Interests shall constitute an acknowledgment by Buyer of full performance by Seller of all of Seller’s obligations under this Agreement, except for the Express Representations and the obligations of Seller that are expressly stated to survive Closing.

(b) Notwithstanding any provision to the contrary set forth in this Agreement (except as provided in this Section 22(b)), Seller’s Express Representations shall survive Closing under this Agreement for a period of 270 days following the Closing (the “Survival Period”), subject however to the provisions of the remainder of this Section 22; provided that the representations and warranties set forth in Sections 10(a)(i)-(v) (the “Fundamental Representations”) shall survive indefinitely.

(c) Following the Closing, subject to the other provisions of this Section 22, Seller shall indemnify and hold Buyer and Buyer Parties harmless from and against any and all actual out of pocket costs, losses, liabilities, fees, expenses, damages, deficiencies, interest and penalties (including, without limitation, reasonable attorneys’ fees and disbursements, but excluding any consequential (including lost profits), punitive, or speculative damages (collectively, “Losses”), actually incurred by Buyer and any such Buyer Party to the extent resulting from (i) any breach of any of Seller’s Express Representations, (ii) any breach of any covenant of Seller contained in this Agreement or in any such Closing document solely to the extent such covenant is expressly provided herein to survive the Closing, (iii) any third-party claims made against any Acquired Company to the extent arising out of or relating to facts or circumstances occurring prior to the Closing Date, and (iv) any Excluded Parcel, and the liabilities related to any Excluded Parcel.

(d) Following the Closing, Buyer shall indemnify and hold Seller and Seller Parties harmless from and against any and all actual Losses actually incurred by Seller and any such Seller Party to the extent resulting from (i) any breach of any representations or warranties by Buyer hereunder or in any of the documents executed and delivered by Buyer at Closing, (ii) any breach of any covenant of Buyer contained in this Agreement or in any such Closing document solely to the extent such covenant is expressly provided herein to survive the Closing, and (iii) any third-party claims made against any Acquired Company to the extent arising out of or relating to facts or circumstances occurring from and after the Closing Date.

(e) Seller’s liability with respect to any claims made pursuant to Section 22 shall be subject to the following limitations:

(i) If Buyer has actual knowledge that any of the Express Representations are breached prior to the Closing Date, Buyer’s sole right and remedy shall be to terminate this Agreement (or, if applicable, to designate the affected Parcel(s) as Excluded Parcel(s)) by giving to Seller written notice of such termination or designation, identifying with reasonable specificity the Express Representation breached and the factual circumstances resulting in such breach. If Buyer has actual knowledge of such breach and fails to give such written termination or designation notice to Seller on or prior to the Closing Date, Buyer shall be deemed to have waived such breach of Express Representation and any right or remedy by reason of such breach to the extent Buyer had actual knowledge of such breach prior to Closing. In addition, if Buyer issues a Continuation Notice during the Inspection Period pursuant to Section 19(e), Buyer

shall be deemed to have waived any right or remedy (including, without limitation, any right under this Agreement to terminate this Agreement) by reason of any breach of the Express Representations to the extent Buyer had knowledge of such breach prior to the expiration of the Inspection Period. If Buyer shall notify Seller of any breach of any representation prior to the Closing (other than a breach of representation or warranty deemed waived by Buyer during the Inspection Period pursuant to the immediately preceding sentence) and exercises its right to terminate this Agreement by virtue thereof, Seller shall have the right to extend the Closing to attempt to cure such breach as provided in (and subject to the limitations set forth in) Section 12(d) hereof. In the event of any termination by Buyer pursuant to this Section, then upon the return of the Deposit as provided for in this Agreement, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement) and all executed counterparts of this Agreement shall be returned to Seller

(ii) Seller shall have no liability on account of any such breach or default unless Buyer shall have given to Seller written notice (“Warranty Notice”) describing such breach or default with reasonable specificity within the Survival Period, and shall have given to Seller an opportunity to cure any such breach or default within thirty (30) days after Buyer’s Warranty Notice.

(iii) No claim shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than Three Hundred Thousand Dollars ($300,000) (the “Deductible”) in which event the amount of such claims in excess of the Deductible shall be actionable. Save and except attorneys fees, indemnification obligations, and fraud claims, in no event shall the aggregate liability of Seller to Buyer by reason of a breach or default exceed FOUR MILLION FIVE HUNDRED FIFTEEN THOUSAND FIFTEEN THOUSAND DOLLARS ($4,515,015,000) (the “Liability Cap”); provided that the Deductible and Liability Cap shall not apply with respect to a breach or default of a Fundamental Representation. Seller’s liability shall be limited to actual damages to the extent actually caused by Seller’s breach, and in no event shall Seller or any Seller Party be liable for any consequential (including lost profits), punitive, or speculative damages under this Agreement.

(iv) Following delivery of a Warranty Notice, the parties shall proceed for a period of thirty (30) days after Seller’s receipt of the Warranty Notice to attempt to resolve and settle Buyer’s claim pursuant to such Warranty Notice, and if the parties are unable to resolve and settle such claim within such thirty (30) day period, then any litigation with respect to any Seller’s Representations must be commenced within thirty (30) days after the date of the Warranty Notice (herein the “Warranty Claim Period”), and if not commenced within the Warranty Claim Period, then Buyer shall be deemed to have waived its claims for such breach or default. Any proceeding or litigation based upon a claim of fraud or similar theory shall be subject to Buyer similarly giving Seller a Warranty Notice as provided above and an action commenced by Buyer within the Warranty Claim Period and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

(f) Holdback Escrow Account. For the purpose of securing Seller’s obligations pursuant to this Agreement, including with respect to Seller’s Representations, and without limiting Seller’s obligations hereunder, at the Closing, Buyer shall deliver to the Escrow Holder by wire transfer of immediately available funds to an interest-bearing account administered by the Escrow Holder the amount of the Liability Cap (the “Holdback Escrow Amount”), pursuant to the Holdback Escrow Agreement. Following the expiry of the Survival Period, the Escrow Holder shall release to Seller the excess, if any, of any amount of the Holdback Escrow Amount in excess of the maximum amount of the pending good-faith indemnification claims outstanding pursuant to the terms and conditions of the Holdback Escrow Agreement.

(g) All indemnification payments shall be treated as adjustments to the Purchase Prices for U.S. federal, state and local income Tax purposes.

(h) Survival. The provisions of this Section 22 shall survive Closing.

23. Miscellaneous.

(a) Captions or Headings; Interpretation. The captions or headings of the Sections and Subsections of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the terms or provisions of this Agreement. Wherever in this Agreement the singular number is used, the same shall include the plural and vice versa and the masculine gender shall include the feminine gender and vice versa as the context shall require.

(b) Entire Agreement; Binding Effect. This Agreement constitutes the entire agreement between the parties with respect to the sale of the Property, supersedes all other writings and communications between the parties and there are no other representations, warranties or agreements, written or oral, between Seller and Buyer relating to the transactions contemplated herein. The parties acknowledge and affirm that they did not rely on any statement, oral or written, not contained in this Agreement in making their respective decisions to enter into this Agreement. Subject to the provisions of Section 18, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, representatives, successors and permitted assigns.

(c) Amendments and Waivers. No change, alteration, amendment, modification or waiver of any of the terms or provisions of this Agreement shall be valid, unless the same shall be in writing and signed by Buyer and Seller.

(d) Counterparts. This Agreement may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one agreement.

(e) Applicable Law. This Agreement shall be governed and construed according to the laws of the State of Delaware.

(f) Right to Waive Conditions. Either party may waive any of the terms and conditions of this Agreement made for its benefit provided such waiver is in writing and signed by the party waiving such term or condition.

or the applicable enforceable portion of such term or provision, shall not be affected thereby, unless such invalidity or unenforceability materially frustrates the intent of the parties as set forth herein. Each term, covenant, condition and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

(h) Confidentiality. Seller and Buyer agree to treat all information received with respect to the Property or the other party, whether such information is obtained from Seller or from Buyer’s own due diligence investigations, in a confidential manner, except to the extent such information is in the public domain or readily available to the public. Seller and Buyer shall not disclose any such information to any third parties, other than such disclosure to such party’s counsel, consultants, accountants, lenders, investors, separate accounts and funds and advisers, in each case, as may be required in connection with the transactions contemplated hereby (such disclosure to be made expressly subject to this confidentiality requirement) and any such disclosure that is required by law. The foregoing shall not apply to Buyer following Closing in respect of information with respect to the Property. Seller and Buyer agree to keep this Agreement confidential and not make any public announcements, press releases or disclosures with respect to the subject matter of this Agreement prior to Closing without the written consent of the other party.

(i) Agreement Not To Be Recorded. This Agreement shall not be filed of record by or on behalf of Buyer in any office or place of public record. If Buyer fails to comply with the terms hereof by recording or attempting to record this Agreement or a notice thereof, such act shall not operate to bind or cloud the title to the Property. Seller shall, nevertheless, have the right forthwith to institute appropriate legal proceedings to have the same removed from record. If Buyer shall cause or permit this Agreement or a copy thereof to be filed in an office or place of public record, Seller, at its option, and in addition to Seller’s other rights and remedies, may treat such act as a material default of this Agreement on the part of Buyer entitling Seller to retain the Deposit. However, the filing of this Agreement in any lawsuit or other proceedings between the parties in which such document is relevant or material shall not be deemed to be a violation of this Section.

(j) Further Assurances. Seller and Buyer each agree to take such further steps, and deliver such further documents, as are reasonably necessary in order to implement the transactions contemplated hereby, including the execution and delivery of supplemental escrow instructions to the extent reasonably requested by the Escrow Holder. Notwithstanding the foregoing, neither party shall have any obligation to take and such steps or execute or deliver any such further documents if the same would be inconsistent in any material respect with the rights and obligations of the parties contemplated by this Agreement.

24. Sophistication of the Parties. Each party hereto hereby acknowledges and agrees that it is experienced in the consummation of transactions of the type governed by this Agreement, that it has consulted legal counsel in connection with the negotiation of this Agreement and that it has bargaining power equal to that of the other parties hereto in connection with the negotiation and execution of this Agreement. Accordingly, the parties hereto agree the rule of contract construction to the effect that an agreement shall be construed against the draftsman shall have no application in the construction or interpretation of this Agreement.

25. Limited Liability. The obligations of Seller under this Agreement or directly or indirectly arising out of this Agreement shall be limited solely to Seller’s collective interest in the Membership Interests and the Property, and neither Buyer nor anyone else claiming by or through Buyer shall have any claim against any other asset of Seller, any of Seller Parties or any other person. The provisions of this Section 25 are in addition to, and not in substitution of, any other limitations on the liability of Seller set forth in this Agreement.

26. Joint and Several Obligations. If Buyer consists of more than one person or entity, each such person and entity shall have joint and several liability for the obligations of Buyer hereunder.

27. Enforcement.

(a) If either party hereto fails to perform any of its obligations under this Agreement or if a dispute arises between the parties hereto concerning the meaning or interpretation of any provision of this Agreement, then the defaulting party or the party not prevailing in such dispute shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements. Any such attorneys’ fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys’ fees obligation is intended to be severable form the other provisions of this Agreement and to survive and not be merged into any such judgment.

(b) Each of the Indemnified Parties shall be deemed intended third-party beneficiaries of those provisions of this Agreement and all agreements delivered pursuant to this Agreement which may provide that Buyer shall release and/or indemnify Seller and/or other Indemnified Parties against any obligation set forth herein. Each of the Indemnified Parties may enforce such provisions directly against Buyer. The provisions of Section 25, Section 24, and Section 26 shall similarly inure to the benefit of each of the Indemnified Parties.

28. Force Majeure. In the event Buyer is subject to any delays in performing its due diligence as a result of any of the following causes: acts of God, accident, riots, war, terrorist act, epidemic, pandemic, quarantine, civil commotion, breakdown of communication facilities, natural catastrophes, governmental acts or omissions, changes in laws, rules, or regulations at the local, state, or federal level limiting or prohibiting travel, national strikes, fire, or explosion, then so long as Buyer, within three (3) days after learning of such delay(s), provides written notice to Seller detailing the cause of the delay and the amount of days for which Buyer is delayed, then the Inspection Period and Closing Outside Date each shall be extended on a day for basis for each day of the delay.

29. Schedules and Exhibits. This Exhibits identified on the List of Exhibits on the Table of Contents annexed hereto (or otherwise referenced in this Agreement) are a material part of this Agreement and are incorporated in this Agreement by reference.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto, intending legally to be bound hereby, have executed this Agreement as of the date first above written.


Conrex Residential Property Group 2013-1 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-2 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-3 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal

[Signatures continued on following page]

Signature Page to

Agreement of Purchase and Sale


Conrex Residential Property Group 2013-4 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-5 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-6 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-7 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-8 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-9 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-10 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-11 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal


Conrex Residential Property Group 2013-12 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-13 Holding Company, LLC, a Delaware limited liability company



By:		/s/ Eric Phillipps



Name:		Eric Phillipps



Title:		Principal

[Signatures continued on following page]


BUYER:

VineBrook Homes Trust, Inc.,
a Delaware corporation

By:		/s/Dana Sprong



Name:		Dana Sprong



Title:		Sr VP Acquisitions and Dispositions

AGREEMENT OF ESCROW HOLDER

The undersigned, Chicago Title Insurance Company, whose address is as set forth in Section 2(a) of the Agreement, hereby agrees to act as the “Escrow Holder” under and in accordance with the terms of the above Agreement.


CHICAGO TITLE INSURANCE COMPANY



By:		/s/ Susan Vander Meer



Name:		Susan Vander Meer



Title:		Escrow Manager

Exhibit A

Chart Showing Acquired Companies

[Omitted]

Exhibit B

List of Properties

[Omitted]

Exhibit C

List of Existing Leases

[Omitted]

Exhibit D

List of Existing Loans

[Omitted]

Exhibit E

Escrow Agreement

[Omitted]

Exhibit F

Allocation of Purchase Price

[Omitted]

Exhibit G

Closing Cost Allocations

[Omitted]

Exhibit H

Required Consents

[Omitted]

Exhibit I

List of Pending Litigation

[Omitted]

Exhibit J

List of Tenant Charge Arrearages

[Omitted]

Exhibit K

Rent Roll

[Omitted]

Exhibit L-1

List of Existing Contracts

[Omitted]

Exhibit L-2

List of Management Agreements

[Omitted]

Exhibit M

Claims Against Title Policy

[Omitted]

Exhibit N

Construction Projects

[Omitted]

Exhibit O

List of Insurance Policies

[Omitted]

Exhibit P

List of Indebtedness

[Omitted]

Exhibit Q

List of Outstanding HOA Fees and HAP Payments

[Omitted]

Exhibit R

List of Parcels Subject to an HOA

[Omitted]

Exhibit S

Form of Assignment of Membership Interests

[Omitted]

Exhibit T

Form of Escrow Holdback Agreement

[Omitted]

Exhibit U

FIRPTA Certification

[Omitted]

Exhibit V

Environmental Matters

[Omitted]

FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF

MEMBERSHIP INTERESTS

THIS FIRST AMENDMENT to Agreement of Purchase and Sale of Membership Interests (“Amendment”) is made and entered into by and between Conrex Residential Property Group 2013-1 Holding Company, LLC, and the other undersigned Seller entities (collectively, “Seller”), and Vinebrook Homes Trust, Inc. (“Buyer”), as of October 29, 2020 (the “Amendment Date”).

RECITALS

WHEREAS, Seller and Buyer entered into that certain Agreement of Purchase and Sale of Membership Interests dated effective October 19, 2020 (the “Agreement”) for the sale and purchase of the Property, as more particularly described in the Agreement; and

WHEREAS, Seller and Buyer wish to amend the Agreement as set forth below.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is acknowledged, Seller and Buyer hereby agree as follows:

1. Recitals; Capitalized Terms. The parties hereto agree that the foregoing Recitals are true and accurate and are incorporated into the Agreement section of this Amendment by this reference. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

2. Section 1(b). Section 1(b) of the Agreement is deleted in its entirety and replaced with the following: “Intentionally deleted.”.

3. Section 2.(b). Section 2(b) of the Agreement is hereby modified to add the following subsection:

“(iv) Notwithstanding the foregoing, the parties may mutually agree to modify the composition of the Purchase Price in a manner to provide that all or a portion of the Purchase Price may be comprised, in addition to cash, of Seller obtaining units of ownership in Buyer (“OP Units”), Seller’s conversion of OP Units into ownership of a REIT formed by Buyer involving the Property, or a combination thereof.”

4. Section 10.(a)(5). The last sentence of Section 10.(a)(v) of the Agreement is hereby deleted in its entirety and replaced with the following:

“Notwithstanding anything to the contrary contained herein, in the event the consent set forth in Exhibit H is not obtained on or before November 4, 2020, Buyer shall have the right to terminate this Agreement and shall also be entitled to the reimbursement of that the form of consideration used to acquire the Property could be in the form of cash, Seller obtaining units of ownership in Buyer (“OP Units”), Seller’s conversion of OP Units into ownership of a REIT formed by Buyer involving the Property, or a combination thereof; and further, that the parties will use commercially reasonable efforts to modify the structure implemented to acquire the Property in a manner allowing for the deferral of taxation to the Seller and its equity owners to the extent payment of the Consideration for the Property is made in OP Units or property other than cash. The parties agree that the overall form of consideration and structure used to acquire the Property shall be mutually agreed upon between Seller and Buyer on or before the Closing Date.”

5. Miscellaneous. The headings in this Amendment are for reference and convenience only and do not constitute a substantive part of this Amendment. In the event of any inconsistency or conflict between the terms of this Amendment and the Agreement, the terms of this Amendment shall control. Except as expressly modified herein, all terms and conditions of the Agreement continue in full force and effect.

6. Counterpart. This Amendment may be executed in counterpart signatures, each of which shall be deemed an original and together shall constitute one instrument. Facsimile and electronic “PDF” signatures of this Amendment shall be treated as original signatures and given full force and effect.

[Signatures on Following Pages]

IN WITNESS WHERE OF, Seller and Buyer have executed this Amendment as of the Amendment Date.


SELLER:

Conrex Residential Property Group 2013-1 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phil1ipps
Name:		Eric Phil1ipps
Title:		Principal

Conrex Residential Property Group 2013-2 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phil1ipps
Name:		Eric Phil1ipps
Title:		Principal

Conrex Residential Property Group 2013-3 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phil1ipps
Name:		Eric Phil1ipps
Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-4 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phillipps
Name:		Eric Phillipps
Title:		Principal

Conrex Residential Property Group 2013-5 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phillipps
Name:		Eric Phillipps
Title:		Principal

Conrex Residential Property Group 2013-6 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phillipps
Name:		Eric Phillipps
Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-7 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-8 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-9 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-10 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-11 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-12 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

[Signatures continued on following page]


Conrex Residential Property Group 2013-13 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

[Signatures continued on following page]


BUYER:

VineBrook Homes Trust, Inc.,
a Delaware corporation

By:		/s/ Dana Sprong
Name:		Dana Sprong
Title:		Sr VP Acquisitions and Dispositions

SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF

MEMBERSHIP INTERESTS

This SECOND AMENDMENT to Agreement for Purchase and Sale of Membership Interests (this “Amendment”) is made and entered into by and between Conrex Residential Property Group 2013-1 Holding Company, LLC, and the other undersigned Seller entities (collectively, “Seller”), and Vinebrook Homes Trust, Inc. (“Buyer”) as of the January 11, 2021 (the “Amendment Date”).

RECITALS

WHEREAS, Seller and Buyer entered into that certain Agreement for Purchase and Sale of Membership Interests dated effective October 19, 2020, as amended by that certain First Amendment to Agreement for Purchase and Sale of Membership Interests dated effective October 29, 2020 (as amended, the “Agreement”) for the sale and purchase of the Property, as more particularly described in the Agreement;

WHEREAS, by written notice to Seller dated December 3, 2020 (the “Notice”), Buyer designated thirty (30) Parcels as Excluded Properties due to Material Defects; and

WHEREAS, Seller and Buyer desire to amend the terms of the Agreement as set forth in this Amendment.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which ais acknowledged, Seller and Buyer agree as follows:

1. Recitals; Capitalized Terms. The parties hereto agree that the foregoing Recitals are true and accurate and are incorpomted into the Agreement section of this Amendment by this reference. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

2. Exclusion of Parcels; Purchase Price. Buyer and Seller acknowledge and agree that the Parcels set forth on Schedule 1 to this Agreement are Excluded Parcels by mutual agreement of the parties (the “Agreed Excluded Properties”). The Purchase Price will be reduced at Closing by an amount equal to Two Million Three Hundred Seventy-Five Thousand Four Hundred Ninety-Nine and No/100 Dollars ($2,375,499.00), being the amount set forth in the Allocation Schedule allocated to such Agreed Excluded Properties.

3. Concession Parcels. Notwithstanding Buyer’s designation in the Notice of the Parcels set forth on Schedule 2 as Excluded Parcels, Buyer and Seller acknowledge and agree that the Parcels set forth on Schedule 2 shall not be Excluded Parcels. Buyer shall acquire the Parcels set forth on Schedule 2 at Closing, and the Purchase Price shall be reduced at Closing by an amount equal to Two Hundred Fifty-Five Thousand and No/100 Dollars ($255,000.00).

4. Miscellaneous. The headings in this Amendment are for reference and convenience only and do not constitute a substantive part of this Amendment. In the event of any inconsistency or conflict between the terms of this Amendment and the Agreement, the terms of this Amendment shall control. Except as expressly modified herein, all terms and conditions of the Agreement continue in full force and effect.

5. Counterpart. This Amendment may by executed in counterpart signatures, each of which shall be deemed an original and together shall constitute one instrument. Facsimile and electronic “PDF” signatures of this Amendment shall be treated as original signatures and given full force and effect.

[Signatures on Following Pages]

IN WITNESS WHERE OF, Seller and Buyer have executed this Amendment as of the Amendment Date.


SELLER:

Conrex Residential Property Group 2013-1 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-2 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-3 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-4 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-5 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-6 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal


Conrex Residential Property Group 2013-7 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-8 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-9 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-10 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-11 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-12 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal

Conrex Residential Property Group 2013-13 Holding Company, a Delaware limited liability company

By:		/s/ Eric Phi11ipps
Name:		Eric Phi11ipps
Title:		Principal


BUYER:

VineBrook Homes Trust, Inc., a Delaware Corporation

By:		/s/ Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signer

Schedule I

Agreed Excluded Parcels

[Omitted]

Schedule II

Concession Parcels

[Omitted]

THIRD AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF

MEMBERSHIP INTERESTS

This THIRD AMENDMENT to Agreement for Purchase and Sale of Membership Interests (this “Amendment”) is made and entered into by and among Conrex Residential Property Group 2013-1 Holding Company, LLC, and the other undersigned Seller entities (collectively, “Seller”), Vinebrook Homes Trust, Inc. (“Buyer”), and VB Three, LLC (“Buyer Assignee”) effective as of January 22, 2021 (the “Amendment Date”).

RECITALS

WHEREAS, Seller and Buyer entered into that certain Agreement for Purchase and Sale of Membership Interests dated effective October 19, 2020 (the “Original Agreement”), as amended by that certain First Amendment to Agreement for Purchase and Sale of Membership Interests dated effective October 29, 2020 (the “First Amendment”) and that certain Second Amendment to Agreement for Purchase and Sale of Membership Interests dated effective January 11, 2021 (the “Second Amendment”, and, collectively with the Original Agreement, the First Amendment, the “Agreement”) for the sale and purchase of the Property, as more particularly described in the Agreement;

WHEREAS, Seller and Buyer desire to amend the terms of the Agreement as set forth in this Amendment.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which ais acknowledged, Seller and Buyer agree as follows:

2. Exclusion of Parcels; Purchase Price. Buyer and Seller acknowledge and agree that the Parcels set forth on Schedule 1 to this Amendment are Excluded Parcels by mutual agreement of the parties (the “Agreed Excluded Properties”). The Purchase Price will be reduced at Closing by an amount equal to Two Hundred Seventy-One Thousand Eight Hundred Ninety-Seven and No/100 Dollars ($271,897.00), being the amount set forth in the Allocation Schedule allocated to such Agreed Excluded Properties. For avoidance of doubt, the Parcels deemed Excluded Parcels and the Purchase Price reduction effected by this Paragraph 2 are in addition to the Parcels deemed Excluded Parcels and the Purchase Price reduction effected by the Second Amendment.

3. Excluded Properties. The Parties hereby agree that Seller’s obligations to transfer the Excluded Properties prior to Closing as provided by Section 5(c)(ii) shall be modified to provide Seller shall satisfy such obligations within two (2) Business Days after Closing (hereinafter referred to as the “Excluded Properties Delay”). In connection with the foregoing, Seller and shall indemnify, hold harmless, defend (using counsel reasonably approved by Buyer), pay, and reimburse Buyer and its affiliates, and each of their respective agents, officers, employees, and contractors, from, for, and against any and all suits, actions, claims, costs, fees, sums, amounts, losses, causes of

action, damages, liabilities, and expenses (including reasonable attorneys’ fees, court costs, and alternative dispute resolution expenses) caused in whole or in part or arising directly or indirectly out of the Excluded Properties Delay. The indemnification obligations of Seller contained herein shall survive the Closing.

4. Additional Parcels. The Parcels set forth on Schedule 2 to this Amendment are hereby added to Exhibit B to the Original Agreement and Seller shall convey at closing to Buyer all right, title and interest of and obligations with respect to, each of the Acquired Companies in and to such Parcels set forth on Schedule 2 to this Amendment. The Purchase Price shall not be adjusted on account of the Parcels set forth on Schedule 2 to this Amendment.

5. Occupancy Condition Remedies. Seller and Buyer acknowledge and agree that the Occupancy Condition set forth in Section 12(a)(viii) has not been satisfied. Notwithstanding, Buyer has elected to proceed to Closing and have Seller provide Buyer with a credit at Closing in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00).

6. Accounts Receivable. Section 1(a) of the Agreement is hereby revised to include the following as part of the definition of “Property”: Accounts receivable relating to any Parcel with respect to the period prior to the Closing Date.

Additionally, Section 1(d)(i) of the Agreement is deleted in its entirety and replaced with the following:

“(i) Intentionally deleted.”

7. Rent Prorations. Section 7(a)(i)(B) of the Agreement is deleted in its entirety and replaced with the following:

“(B) All Tenant Charges shall be deemed final as of Closing and there shall be no adjustment or proration of same after Closing. Additionally, in no event shall Seller be permitted to sue a Tenant, either before and/or after Closing, for any delinquent rent (or other Tenant Charges) due to Seller (and not previously paid to Seller) under a Lease.”

8. Closing Costs. Sections 8(a) and 8(b) of the Agreement shall be deleted and replaced in their entirety with the following:

“8. Closing Costs.

(a) Buyer’s Costs. Buyer shall pay: (i) the costs of its counsel, architect, engineers and other professionals and consultants, (ii) the cost of obtaining any surveys, (iii) any mortgage recording Tax on any mortgage financing which Buyer may obtain in connection with its acquisition of the Property, and (iv) one-half of the escrow fee and closing fees charged by the Escrow Holder, (vi) the premiums and other fees payable at Closing in connection with the binding of a R&W Insurance Policy, if any, (v) the costs of Seller’s counsels related to the restructuring, negotiation and related documentation directly related to the contribution by certain shareholders of Conrex Residential Property REIT, Inc. (the “REIT”) of their shares in the REIT into one or more affiliates of Buyer and the transactions among the parties related thereto, and (vi) costs incurred by Seller, if any, directly related to Buyer’s anticipated sale of Properties scheduled promptly after Closing; provided, however, in no event shall Buyer’s costs related to items (v) and (vi) set forth herein exceed $100,000.00.

(b) Seller’s Costs. Seller shall pay: (i) except as provided by Section 8(a), the costs of its counsel and other professionals and consultants; and (ii) one-half of the escrow fee and closing fees charged by the Escrow Holder.”

9. Assignment of Agreement. Buyer hereby assigns, sells, conveys and transfers to Buyer Assignee all right, title and interest of Buyer in and to the Agreement. By its execution of this Amendment, Buyer Assignee hereby assumes all obligations and liabilities of Buyer under the Agreement, shall have all of the rights of Buyer thereunder, and makes the representations and warranties of Buyer set forth in Section 11 of the Original Agreement to Seller as of the Amendment Date.

10. Abandonment of Restructuring. While the parties and their Affiliates contemplated a restructuring of the transaction to facilitate a potential equity contribution by certain of the REIT shareholders, which restructuring included an Exchange Agreement, an Agreement and Plan of Merger, and Contribution Agreement and the transactions contemplated thereby, the parties and their Affiliates ultimately concluded the alternative structure was not feasible, and each party hereby agrees and confirms, on behalf of itself and its Affiliates, that such documents have been abandoned and shall have no legal effect.

11. Miscellaneous. The headings in this Amendment are for reference and convenience only and do not constitute a substantive part of this Amendment. In the event of any inconsistency or conflict between the terms of this Amendment and the Agreement, the terms of this Amendment shall control. Except as expressly modified herein, all terms and conditions of the Agreement continue in full force and effect.

12. Counterpart. This Amendment may by executed in counterpart signatures, each of which shall be deemed an original and together shall constitute one instrument. Facsimile and electronic “PDF” signatures of this Amendment shall be treated as original signatures and given full force and effect.

[Signatures on Following Pages]

IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of the Amendment Date.


SELLER:

Conrex Residential Property Group 2013-1 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-2 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-3 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-4 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-5 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-6 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President


Conrex Residential Property Group 2013-7 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-8 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-9 Holding Company, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-10 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-11 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-12 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President

Conrex Residential Property Group 2013-13 Holding Company, LLC, a Delaware limited liability company

By:		/s/ Whit Bundy
Name:		Whit Bundy
Title:		Executive Vice President


BUYER:

VineBrook Homes Trust, Inc., a Delaware Corporation

By:		/s/ Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signing Officer

BUYER ASSIGNEE:

VB Three, LLC, a Delaware limited liability company

By:		/s/ Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signing Officer

Schedule I

Agreed Excluded Parcels

[Omitted]

Schedule II

Additional Parcels – Vacant Lots

[Omitted]

Exhibit 2.6

EXECUTION VERSION

AGREEMENT FOR PURCHASE AND SALE OF

MEMBERSHIP INTERESTS

BY AND BETWEEN

REX RESIDENTIAL PROPERTY HOLDINGS, LLC

and other Seller entities

collectively, as Seller

AND

VINEBROOK HOMES OPERATING PARTNERSHIP, L.P.

as Buyer

REX RESIDENTIAL Portfolio of

Single Family Properties

TABLE OF CONTENTS


		Page
1.	Purchase and Sale; Membership Interests		4

2.	Deposit; Purchase Price; Inspection Period		6

3.	Closing		10

4.	Condition of Title		11

5.	Right to Exclude Parcels		14

6.	Interim Operating Covenants		16

7.	Apportionments		19

8.	Closing Costs		22

9.	Municipal Violations/Notices		23

10.	Seller’s Representations		23

11.	Buyer Representations		33

12.	Conditions Precedent to Closing		35

13.	Deliveries at Closing; Mechanics of Closing		37

14.	Default		39

15.	Notices; Computation of Periods		41

16.	Fire or Other Casualty		43

17.	Condemnation		43

18.	Assignability		44

19.	Inspections		44

20.	Brokers		46

21.	Condition of Property		47

22.	Survival of Provisions; Indemnification		51

23.	Miscellaneous		53

24.	Sophistication of the Parties		55

- i -


25.	Limited Liability	55

26.	Joint and Several Obligations	55

27.	Enforcement	55

28.	Schedules and Exhibits	56

29.	Tax Matters	56

LIST OF EXHIBITS


EXHIBIT A		CHART SHOWING ACQUIRED COMPANIES

EXHIBIT B		LIST OF PROPERTIES

EXHIBIT C		LIST OF EXISTING LEASES

EXHIBIT D-1		LIST OF EXISTING CONTRACTS

EXHIBIT D-2		LIST OF MANAGEMENT AGREEMENTS

EXHIBIT E		ESCROW AGREEMENT

EXHIBIT F		ALLOCATION OF PURCHASE PRICE

EXHIBIT G		LIST OF PENDING LITIGATION

EXHIBIT H		ASSIGNMENT OF MEMBERSHIP INTERESTS

EXHIBIT I		FIRPTA CERTIFICATION

EXHIBIT J		LIST OF TENANT CHARGE ARREARAGES

EXHIBIT K		RENT ROLL

EXHIBIT L		LIST OF INSURANCE POLICIES

EXHIBIT M		LIST OF INDEBTEDNESS/EXISTING LOANS

EXHIBIT N		LIST OF PARCELS SUBJECT TO REGULAR HOA PAYMENTS

EXHIBIT O		FORM OF ESCROW HOLDBACK AGREEMENT

- ii -

AGREEMENT FOR PURCHASE AND SALE

OF MEMBERSHIP INTERESTS

THIS AGREEMENT FOR PURCHASE AND SALE OF MEMBERSHIP INTERESTS (this “Agreement”), dated as of December 16, 2020 (the “Effective Date”), is entered into by and among each of sellers set forth on the signature pages attached hereto (collectively, “Seller”), and VineBrook Homes Operating Partnership, L.P., Delaware limited partnership (“Buyer”).

Recitals

A. Each applicable Seller owns 100% of the membership interests in the respective subsidiary company depicted as being owned by it on Exhibit A attached hereto (collectively, the “Acquired Companies, and individually, an “Acquired Company”).

B. Each Acquired Company owns a fee interest in the single family residential properties in multiple states as listed after the name of such Acquired Company in Exhibit B attached hereto.

Agreement

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

DEFINITIONS. The following terms shall have the meanings given to them in the referenced Section or other portion of this Agreement:


Definition		Section
Accountants		Section 31(a)
Acquired Company		Recitals
Advanced Rents		Section 1(a)(ii)
Affiliate		Section 6(e)
Agreement		Preamble
Allocation Schedule		Section 2(c)(ii)
Annual Financial Statement		Section 10(a)(xvii)
Approved Lease		Section 6(a)
Assignment and Assumption of Membership Interests		Section 13(a)(i)
Asset Management Agreements		Section 10(a)(xvi)
Business Day		Section 15(b)
Buyer		Preamble
Buyer CapEx Credit		Section 5(a)(i)
Buyer Indemnity Survival Period		Section 23(c)
Buyer Parties		Section 19(b)(ii)
Buyer Warranty Notice		Section 22(d)(ii)
Buyer’s Undertakings		Section 23(a)
Cash		Section 2(a)(i)


Definition		Section
Claims		Section 21(e)(i)
Closing		Section 3
Closing Date		Section 3(a)
Closing Statement		Section 7(a)(xii)
Code		Section 2(c)
Construction Projects		Section 10(a)(xxiii)(C)
Continuation Notice		Section 19(e)
Contract		Section 6(c)(ii)(D)
Contract Default		Section 10(a)(xiii)
Deductible		Section 22(e)(iii)
Deposit		Section 2(a)(i)
Diligence Materials		Section 2(d)
Diligence Room		Section 2(d)
Disclosed Broker		Section 20
Effective Date		Preamble
Environmental Requirements		Section 10(a)(xxi)
ERISA		Section 10(a)(xii)
Escrow Agreement		Section 2(a)(ii)
Escrow Holder		Section 2(a)(i)
Excluded Parcel		Section 5(c)(i)
Excluded Parcel Cap		Section 5(a)
Excluded Property		Section 1(a)(v)
Existing Leases		Section 1(a)(ii)
Existing Loans		Section 1(e)
Existing Title Policies		Section 2(d)(iv)
Failed Condition Party		Section 12(d)
Financial Statements		Section 10(a)(xvii)
Financing Liens		Section 1(e)
Flow Through Tax Returns		Section 31(a)
HAP		Section 2(d)(x)
HAP Contracts		Section 10(a)(xvi)
HAP Payments		Section 2(d)(x)
Hazardous Materials		Section 10(a)(xxi)
HOA		Section 7(a)(vii)
HOA Fees		Section 7(a)(vii)
Holdback Escrow Amount		Section 22(f)
Indebtedness		Section 1(e)
Indemnified Seller Parties		Section 19(a)
Individual MAE		Section 10(c)(ii)
Initial Deposit		Section 2(a)(i)
Inspection Period		Section 2(e)(i)
Interim Financial Statements		Section 10(a)(xvii)
IRS		Section 2(a)(i)
Leases		Section 1(a)(ii)
Lender		Section 6(d)
Liabilities		Section 10(a)(xviii)
Liability Cap		Section 22(d)(iii)


Definition		Section
Lists		Section 10(a)(xi)(B)(a)
Litigation		Section 10(a)(x)
Losses		Section 22(c)
Management Agreements		Section 10(a)(xvi)
Material Adverse Effect		Section 10(c)(ii)
Material Default		Section 14(b)
Material Defect		Section 5(a)(i)
Material Defect Notice		Section 5(a)(i)
Membership Interests		Section 1(a)
Monetary Liens		Section 4(b)
OFAC		Section 10(a)(xi)(A)
Order		Section 10(a)(xi)(A)
Outside Closing Date		Section 3
Parcel		Section 1(a)
Permits		Section 1(a)(iii)
Permitted Encumbrances		Section 4(a)
Personal Property		Section 1(c)
Pre-Closing Tax Period		Section 29(c)
Pre-Closing Tax Refund		Section 7(a)(v)
Prohibited Country		Section 10(a)(xi)(B)(d)
Property		Section 1(a)
Property Files		Section 2(d)(vii)
Purchase Price		Section 2(b)
Real Property		Section 1(a)(i)
Release Claims		Section 6(e)
Released Parties		Section 6(e)
Releasing Parties		Section 6(e)
Rent Rolls		Section 10(a)(xiv)
Reports		Section 19(c)
Representation Notice		Section 10(c)
Scheduled Closing Date		Section 3
Second Deposit		Section 2(a)(i)
Security Deposits		Section 1(a)(ii)
Seller		Preamble
Seller Indemnified Covenants		Section 22(c)
Seller Excluded Property Liabilities		Section 22(c)
Seller Indemnity Survival Period		Section 22(e)
Seller Parties		Section 19(b)(i)
Seller’s Representations		Section 10(a)
Seller’s Undertakings		Section 21(a)
Straddle Period		Section 29(c)
Taking		Section 17
Tax		Section 10(a)(xx)(I)
Taxes		Section 10(a)(xx)(I)
Taxable		Section 10(a)(xx)(I)
Tax Authority		Section 10(a)(xx)(I)
Tax Protection Agreements		Section 10(a)(xx)(I)


Definition		Section
Tax Representations		Section 10(a)(xx)(I)
Tax Return		Section 7(a)(i)
Tenant Charges		Section 7(a)(iii)
Tenant Inducement Costs		Section 7(a)(iii)
Tenants		Section 1(a)(ii)
Tenant Liens		Section 1(c)
Transaction		Section 23(j)
Transfer Taxes		Section 8(c)
Treasury Regulations		Section 2(c)(i)
Voluntary Liens		Section 4(b)
Warranties		Section 1(a)(iv)

1. Purchase and Sale; Membership Interests.

(a) Buyer agrees to purchase, and Seller agrees to sell, upon the terms and conditions hereinafter set forth, 100% of the membership interests in the Acquired Companies, free and clear of all liens and encumbrances (except as otherwise provided herein), including all rights, interests, and obligations that may be allocable to such membership interests, including all of the respective Seller’s proportionate right, title, and interest in and to the business, properties, and assets of the Acquired Companies, and to the capital, distributions, profits, and losses of the Acquired Companies allocable or attributable to such membership interests from and after the Closing, including all voting rights, rights to distributions, and all other appurtenant rights and privileges appurtenant thereto (collectively, the “Membership Interests”) and by virtue thereof, indirect ownership of the parcels of real property owned by the respective Acquired Companies as listed in Exhibit B attached hereto (each a “Parcel,” or collectively, the “Parcels”), including all right, title and interest of, and obligations with respect to, each of the Acquired Companies in and to the following property (collectively, the “Property”):

(ii) Each Acquired Company’s interest as landlord under any leases, ground leases, licenses or other occupancy agreements affecting or relating to the Real Property existing as of the Effective Date and listed on Exhibit C attached hereto (the “Existing Leases”) (as the same may be amended, modified, renewed, extended, expired or terminated in compliance with the terms of this Agreement, together with all leases, licenses and other occupancy agreements for Parcels entered into by Seller after the Effective Date hereof in compliance with the terms of this Agreement (collectively with the Existing Leases, the “Leases”), to the extent the Leases do not expire by their terms, or are not terminated pursuant to a tenant termination right set forth in an Existing Lease or pursuant to a default by the applicable Tenant, prior to the Closing Date (as hereinafter defined), in accordance with the terms of this Agreement, and each Acquired Company’s interest in all security deposits (“Security Deposits”) and advance payments (“Advanced Rents”) to occupy all or any portion of, or use facilities within, the Real Property made by tenants or licensees (“Tenants”) under the Leases;

(v) All Included Contracts.

Notwithstanding anything herein to the contrary, to the extent any Parcel described in Exhibit B hereto is or becomes an Excluded Parcel (as hereinafter defined), such Parcel, and all of the above appurtenant rights and any Personal Property solely relating to such Parcel (the “Excluded Property”), shall be excluded from the definition of “Property” hereunder.

(b) Notwithstanding anything herein to the contrary, for U.S. federal income Tax purposes (and any comparable provision of state and local income Tax Law), unless otherwise required by law or a “determination” within the meaning of Section 1313(a) of the Code, the parties agree to treat the transactions contemplated by this Agreement as purchases and sales of the assets owned by the Acquired Companies. Each party hereto shall file all Tax Returns consistent with this treatment.

(d) Notwithstanding anything in this Agreement to the contrary, the Property shall not include, and Seller shall not be required to sell, transfer or convey to Buyer, any of the following:

(i) Other than as contemplated by Section 7, accounts receivable relating to any Parcel with respect to the period prior to the Closing Date.

(ii) Confidential or proprietary information (including attorney-client communications and work product, including Seller’s internal work product).

(iv) All cash on hand-held by any of the Acquired Companies with respect to the period prior to Closing, accounts, deposits (including, without limitation, bank and demand deposit accounts (but excluding any Security Deposits and Advanced Rents), and insurance policies of Seller, except to the extent a credit is received by Seller at Closing in accordance with the terms herein.

(e) Indebtedness. At Closing, Seller shall cause the Acquired Companies to (i) repay in full any existing obligations and indebtedness of the Acquired Companies (a) for borrowed money (other than trade debt and other similar liabilities incurred in the ordinary course of business), (b) evidenced by a note, bond, debenture or similar instrument, (c) created or arising under any capital lease, conditional sale, earn out or other arrangement for the deferral of purchase price of any Property, (d) drawn under letters of credit, banker’s acceptances or similar credit transactions, (e) for any other person’s obligation or indebtedness of the same type as any of the foregoing, whether as obligor, guarantor or otherwise, and/or (f) for interest (including default interest) and penalties on any of the foregoing (“Indebtedness”), other than any expenses to the extent that Buyer receives a credit against the Purchase Price or are adjusted between the parties in accordance with Section 7 hereof, (ii) obtain a payoff letter (which payoff letter shall include a confirmation from the applicable lender that it will release all Financing Liens after Closing following receipt of the applicable payoff funds) from the applicable lenders with respect to any and all liens on the Parcels or any Property comprising any mortgages, deeds of trust, security agreements, financing statements or other instruments which evidence or secure Indebtedness of Seller or the Acquired Companies, but excluding Tenant Liens (“Financing Liens”), including, without limitation, the existing loans listed in Exhibit M (the “Existing Loans”) that are secured by the Parcels, and, such payoff letter shall include a confirmation from the applicable lender that, upon receipt of the payoff funds at Closing, it will promptly terminate all loan documents, including guaranties and indemnities, pertaining to such Existing Loans, and release the applicable Acquired Company as borrower and any pledge of the Membership Interests that is collateral for any Financing Liens, and authorize filing the applicable UCC termination statements as required to terminate any liens on the Membership Interests. This Section 1(e) shall survive the Closing.

2. Deposit; Purchase Price; Inspection Period.

(a) Delivery of Deposit. Not later than two (2) Business Days after the Effective Date, Buyer shall deposit with Chicago Title Insurance Company Chicago Title Insurance Company, 4170 Ashford Dunwoody Road, Suite 460, Atlanta, Georgia 30319 (the “Escrow Holder”) immediately available good funds in United States dollars (“Cash”) in the amount of SIX MILLION TWENTY THOUSAND SEVEN AND 20/100 DOLLARS ($6,020,007.20) (the “Initial Deposit”),

to be held in an escrow established by Escrow Holder pursuant to this Agreement and the Escrow Agreement (hereinafter defined). The Initial Deposit shall be non-refundable for any reason other than a Seller default pursuant to Section 14(b) or as otherwise expressly provided in this Agreement. For avoidance of doubt, if Buyer does not deliver a Continuation Notice to Seller as provided in Section 19(e) hereof and this Agreement terminates during the Inspection Period, Escrow Holder shall deliver the Initial Deposit to Seller (and not Buyer) unless a Seller default exists pursuant to or as otherwise expressly provided in this Agreement, in which event, Escrow Holder shall not release the Initial Deposit to Seller. In the event Buyer has delivered a Continuation Notice to Seller as provided in Section 19(e) hereof, then not later than two (2) Business Days after the expiration of the Inspection Period (as such terms are hereinafter defined), Buyer shall deliver to Escrow Holder additional Cash in the amount of SIX MILLION TWENTY THOUSAND SEVEN AND 20/100 DOLLARS ($6,020,007.20) (the “Second Deposit”). The Initial Deposit, and if applicable, the Second Deposit, and all earnings thereon, shall be referred to herein collectively as the “Deposit.” The Deposit shall, at Buyer’s election, be invested by Escrow Holder from time to time in an interest bearing money market account or an alternative investment approved by both Buyer and Seller, which approval shall not be unreasonably withheld. Interest, income and gains on funds within the Deposit shall be for the account of, and shall be reported to the Internal Revenue Service as earned by Buyer, and Buyer shall provide Escrow Holder with Buyer’s taxpayer identification number and an Internal Revenue Service (“IRS”) Form W-9 in connection with the delivery of the Deposit. In the event Buyer fails to deliver the Initial Deposit in accordance with the terms herein, then this Agreement shall automatically be deemed null and void and of no further effect without the necessity of confirmation by either party. In the event Buyer fails to deliver the Second Deposit in accordance with the terms herein, then this Agreement shall terminate and Escrow Holder shall deliver the Initial Deposit to Seller (and not Buyer). As used herein, “Business Day” is defined in Section 15(b). If any period expires on a day which is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, the provisions of Section 15(b) shall apply.

(i) Concurrently with the execution and delivery of this Agreement, Buyer and Seller shall execute and deliver an Escrow Agreement in the form of Exhibit E attached hereto (the “Escrow Agreement”).

(ii) Buyer and Seller agree to execute such further or supplemental escrow instructions as Escrow Holder reasonably may request in connection with its performance under this Agreement, provided that the same are consistent in all material respects with the terms and conditions of this Agreement and the Escrow Agreement.

(b) Purchase Price. The purchase price for the Acquired Companies shall be THREE HUNDRED MILLION THREE HUNDRED SIXTY AND NO/100 DOLLARS ($300,000,360.00) (the “Purchase Price”), subject to adjustment in accordance with the provisions hereof. The Purchase Price shall be paid at Closing as follows:

(i) Buyer shall pay the balance of the Purchase Price, as adjusted in accordance with Section 7 hereof, less the Deposit to Escrow Holder;

(ii) Escrow Holder shall disburse the Deposit and the balance of the Purchase Price (as adjusted in accordance with Section 7 hereof) to Seller in accordance with the Closing Statement executed by the parties at Closing and separate instructions provided by Seller and Buyer (separately) to Escrow Holder, which instructions shall be consistent with this Agreement; and

(i) Seller and Buyer hereby agree that for all purposes hereunder, the Purchase Price shall be allocated among the Parcels as set forth on the allocation schedule attached hereto as Exhibit F (the “Allocation Schedule”). Neither Seller nor Buyer shall take a position in any Tax Return, examination, or administrative or judicial proceeding relating to any Tax Return that is inconsistent with the Allocation Schedule unless required by a “determination” within the meaning of Section 1313(a) of the Code.

(ii) This Section 2(c) shall survive the Closing.

(d) Diligence Materials. To the extent reasonably feasible, within five (5) business days after the Effective Date, Seller shall place, or shall cause to be placed, the following materials into a link at a website or data room (the “Diligence Room”), in each case solely to the extent the same are within the possession or control of Seller (collectively, the “Diligence Materials”), provided that Buyer acknowledges that several of the items below cannot feasibly be provided within five (5) business days and Seller shall use commercially reasonable diligent efforts to provide the following Diligence Materials as soon as possible, but in no event more than three (3) weeks after the Effective Date:

(i) Monthly rent rolls at and since January 1, 2020 (including a delinquency report of Tenant Charge arrearages for each month beginning January 2020), dated December 1, 2020, which rent rolls shall be updated monthly by no later than the 15th of the following month and shall include details related to any change in status of the property for any Parcel(s);

(ii) copies of all Existing Leases and any addendums, amendments, supplements, renewals and/or assignments thereto for current tenants, schedule of leases including lease renewal and expiration data, lease concessions, uncollectable/bad debt expense and screening criteria;

(iii) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, written reports with details related to any Parcels that are being held for sale, triage and/or subject to construction;

(v) copies of existing title insurance policies for each of the Parcels (the “Existing Title Policies”);

(vi) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible disclosure of any properties located in a flood zone, with, to Seller’s knowledge, the presence of oil tanks, septic, cistern or well water systems, and HOA documentation;

(vii) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, certificates of occupancy for each Parcel;

(viii) within ten (10) days after the Effective Date, to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, two years of audited financial statements for the Acquired Companies for 2018 and 2019; plus 2020 year-to-date estimated P&Ls for each Parcel;

(ix) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, municipal occupancy certifications, inspection reports, two years of work order history (including current open work orders), open and unresolved violations and two years of notices of violation (also to include any open violations that originated over two years ago), two years of eviction filing reports by unit;

(x) claims (notices of claim or filed suits including condemnations);

(xi) articles of organization and operating agreements for each of the Acquired Companies, and any other governing documents with respect to the Acquired Companies, if any, including all certificates of formation and by-laws, and, to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, historical organizational documents;

(xii) copies of documentation relating to any outstanding and unresolved Litigation with respect to Seller, any of the Acquired Companies, any Tenant (in connection with the Property) or the Property other than Litigation that is covered by insurance;

(xiii) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, information related to mold at any Parcel and copies of any disclosures, communications, notices or claims thereto;

(xiv) documentation relating to on-going capital expenditure projects in excess of ten percent (10%) of the value for each respective Parcel;

(xv) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control, and readily accessible, copies of any and all surveys including ALTA surveys, Geotechnical, engineering, environmental, wetland, and all other physical inspections and property condition reports with respect to each of the Parcels, including soil reports;

(xvi) tax returns for the each Acquired Company covering the shorter of (a) the past five (5) years prior to the Effective Date, or (b) the period of existence of each Acquired Company;

(xvii) to the extent in Seller’s possession or control or to the extent in Seller’s property manager’s possession or control,, documentation relating to any prior environmental remediation efforts at the Properties within the period that is the shorter of (a) the past five (5) years prior to the Effective Date, or (b) the period of ownership of the applicable Parcel by the applicable Acquired Company; and

(xviii) documentation relating to any open or ongoing environmental remediation efforts at the Properties; and

(xix) a list of all Parcels for which an Acquired Company is receiving Section 8 housing choice voucher payments or other tenant-based rental subsidies benefitting Tenants (“HAP Payments”) pursuant to any Housing Assistance Program (“HAP”); and

Upon Buyer’s request, Seller further shall post in the Diligence Room any other material documents, reports or financial information material to the Property in the possession or control of Seller and readily accessible, which are not proprietary or attorney-client privileged and which is not Seller’s own work product, which materials shall, upon Buyer’s request, be posted to the Diligence Room, or if such posting is not reasonably feasible at nominal cost shall remain subject to access at Seller’s office. Seller makes no representations or warranties with respect to the Diligence Materials except as expressly provided in this Agreement. Buyer shall be responsible for determining the completeness of the materials delivered pursuant to this Section, and Seller shall have no responsibility therefor.

(e) Inspection Period.

(i) Buyer shall have the right, from the Effective Date hereof through 5:00 p.m. Eastern Time on February 1, 2021 (the “Inspection Period”), to assess Buyer’s decision as to whether to proceed to purchase the Membership Interests. Unless Buyer has delivered a notice to Seller and Escrow Holder prior to the expiration of the Inspection Period a Continuation Notice pursuant to Section 19(e), this Agreement shall terminate promptly upon expiration of the Inspection Period without further action by Seller or Buyer, it being understood that Buyer shall have no obligation to deliver a Continuation Notice hereunder. Prior to the termination of this Agreement, Buyer shall have access to the Diligence Room to assess the materials placed into the Diligence Room. Buyer shall have access to inspect certain of the Parcels pursuant to Section 19 hereof on the terms and conditions contained in this Agreement. Seller agrees to reasonably cooperate with Buyer, at no cost or expense to Seller, in connection with Buyer’s completion of any BPO reports requested by Buyer’s lender.

(ii) All Leases and HAP Contracts (collectively, the “Included Contracts”) entered in to by an Acquired Company shall not be terminated and shall remain in effect as of the Closing. If any of the Included Contracts which benefit any Parcel or Parcels has been entered into by Seller or its Affiliates (other than the Acquired Companies), Seller shall cause the assignment at Closing of such Included Contracts to Buyer or an Acquired Company, and Buyer or such Acquired Company shall assume such Included Contracts. At Closing, Seller shall, or shall cause the Acquired Companies or such other of Seller’s Affiliates to, terminate, at no cost to Buyer, all Contracts (including Management Agreements) other than the Included Contracts. This Section 2(e)(ii) shall survive the Closing.

3. Closing. The closing of the conveyances contemplated hereby (the “Closing”) shall be held and completed fifteen (15) days after the expiration of the Inspection Period (the “Scheduled Closing Date”); provided, however, that the Closing shall be subject to extension in accordance with the express provisions of this Agreement or the mutual written agreement of Buyer and Seller. In no event shall Closing occur later than February 28, 2021 (the “Outside Closing Date”).

(a) Closing Date. The date that Closing actually occurs shall be referred to herein as the “Closing Date.”

(b) Designation of Reporting Person. In order to assure compliance with the requirements of Section 6045 of the Code, and any related reporting requirements of the Code, the parties agree as follows:

(i) The Escrow Holder is designated as the person to be responsible for all information reporting under Section 6045(e) of the Code.

(ii) Seller and Buyer shall:

(A) provide, or cause to be provided, to the Escrow Holder all information and certifications regarding such party, as reasonably requested by the Escrow Holder or otherwise required to be provided by a party to the transaction described herein under Section 6045 of the Code; and

(B) provide, or cause to be provided, to the Escrow Holder such party’s taxpayer identification number and a statement (on IRS Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Escrow Holder), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Escrow Holder is correct.

4. Condition of Title.

(a) Title to the Real Property shall subject only to the Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:

(i) rights of Tenants under any Existing Leases and under any Approved Leases (in each case, as the same may be modified prior to the Closing in accordance with the terms of this Agreement);

(ii) taxes and other governmental charges not yet due and payable;

(iii) Utility easements and restrictive covenants (provided that such restrictive covenants do not prohibit the use of the relevant property as a residential dwelling);

(iv) any matters affecting the Property set forth in the Existing Title Policies as to which Buyer does not timely object in accordance with this Section 4;

(v) any matters set forth in the updated Title Commitments obtained by Buyer (if any) as to which Buyer does not timely object in accordance with this Section 4;

(vi) any matters which would be disclosed by an accurate survey of each Real Property;

(vii) any Tenant Liens; and

(viii) any matters pertaining to the organization or authority of Buyer or created by, through, under, at the direction of or with the consent of Buyer.

(ii) Buyer shall be deemed to have waived its right to object to any encumbrance or other title exception or matter pertaining to the Real Property unless Buyer shall have given Seller a specific written notice of its objection in Buyer’s reasonable discretion (based solely on a title or survey matter that would cause the applicable Parcel to not be rentable in the ordinary course of business) to any such matter (a “Title Objection Notice”) not later than the expiration of the Inspection Period (the “Title Objection Date”). Seller shall have no obligation to cure any alleged defect, objection or survey matter raised in any Title Objection Notice (a “Title Objection”), except for Monetary Liens and Voluntary Liens (defined below).

(iv) In the event that any matters of title first occur or arise following the Title Objection Date, then Buyer shall have the right to give a Title Objection Notice at any time prior to Closing solely with respect to the title matters that first occur or arise following the Title Objection Date and the provisions of this Section 4(c) shall apply.

(v) Should Buyer timely deliver a Title Objection Notice to Seller as above provided, Seller shall have the right, at its sole option, upon written notice to Buyer within ten (10) Business Days of receipt of Buyer’s Title Objection Notice (if any) to elect either of the following:

(A) to (1) use commercially reasonable efforts to remove or cure any Title Objection; or (2) provide OS National LLC, 3097 Satellite Blvd., Ste. 600, Duluth, GA 30096, Attn: Jim Duggan, Phone: 678-527-7864, Email: jduggan@osnational.com (the “Title Company”) such assurances as the Title Company requires to insure Buyer against any loss arising from such Title Objection (in either of which events such matter shall be a “Seller Cure Matter”), or

(vi) In the event Seller elects to use commercially reasonable efforts to cure a Title Objection pursuant to Section 4(c)(iv)(A)(1), and Seller is unable to cure such Title Objection on or before the date originally scheduled for Closing, then Seller shall have the right to defer the Closing from time to time (but in no event for more than twenty (20) days after the originally scheduled Closing Date) in order to provide Seller an opportunity to cure such Title Objection or to proceed under Section 4(c)(iv)(A)(2) (provided that the extension(s) of the Closing Date pursuant to this clause (A) shall not cause the Closing Date to extend beyond the Outside Closing Date). In the event Seller is unable to cure any Title Objection to which Seller elected to attempt to cure pursuant to Section 4(c)(iv)(A)(1) or Section 4(c)(iv)(A)(2) on or before the date scheduled for Closing (as such date may be extended as set forth above), then Buyer shall have the election set forth in Section 4(e).

(d) Reliance on Title Policy. Buyer acknowledges that Seller makes no representation regarding any Acquired Company’s title to any Parcels or any of the Real Property or any title insurance company’s willingness to issue a title insurance policy on the Closing Date in any particular form, other than as set forth in Seller’s Representations (as defined below). Except as expressly set forth in Seller’s Representations, with respect to all matters affecting title to the Real Property and any liens or other encumbrances affecting the Real Property, Seller makes no representations or warranties in connection therewith and Buyer shall rely on the existing title policies (or any updated or replacement title policies obtained by Buyer) in connection with the status of title to Parcels and the Real Property. The provisions of this Section 4(d) shall survive Closing indefinitely.

(e) Buyer’s Rights with Respect to Title. If, Seller does not elect to cure any Title Objections as provided in Section 4(c)(iv) above, or if title to any Parcels is subject to any new liens or encumbrances first occurring after the Effective Date and prior to Closing and Seller does not elect to cure such liens or exception as provided in Section 4(c)(iv) above, Buyer may elect, as its sole right and remedy by reason thereof, within five (5) Business Days of Seller’s election (or deemed election) in accordance with Section 4(c)(iv) above, either (i) to retain such affected Parcel as part of the transaction based on the existing title the applicable Acquired Company can convey, with no abatement of the Purchase Price or (ii) to designate the applicable affected Parcel an Excluded Parcel, subject to the provisions (including the limitation on the number of Excluded Parcels) set forth in Section 5 below and the Escrow Agreement (in which event such Parcel shall be an Excluded Parcel), and any portion of the Deposit allocable to the applicable Excluded Parcel shall be applied to the other Parcels. Failure by Buyer to timely make the election described in clause (ii) of this Section 4(e) shall be deemed an election by Buyer to proceed under clause (i) of this Section 4(e).

(f) Monetary Liens; Voluntary Liens. Notwithstanding the foregoing, Seller shall cause the removal, at or prior to the Closing Date, of all “Voluntary Liens”, which shall mean (i) liens, covenants and other encumbrances which Seller has knowingly and intentionally placed or knowingly and intentionally allowed to be placed on the Property after the Effective Date without the consent of Buyer, and (ii) liens or encumbrances that secure the payment of a liquidated sum of money including, without limitation, mortgages, deeds of trust, entered into by Seller and filed against the Real Property prior to Closing (other than (A) Taxes and assessments not yet due and payable, (B) obligations which are to be performed by the Tenants under the Leases (including Tenant Liens), (C) the liens created due to any act or omission of Buyer, or with the consent of Buyer under this Agreement, and (D) liens that are insured pursuant to the applicable Existing Title Policy and are not an exception to the coverage provided therein); provided, however, that Seller instead may cause the Title Company to insure title to the Property free of any exception for any such Voluntary Lien in satisfaction of Seller’s obligations hereunder. In addition to the foregoing, Seller shall cause the removal, at or prior to the Closing Date, of Monetary Liens; provided, however, notwithstanding the foregoing, Seller shall not be required to

expend sums in excess of $2,500 per Parcel, to remove any Monetary Liens that were not created by Seller, unless Seller expressly agrees to do so in writing; further provided that if Seller does not elect to remove such Monetary Liens, Buyer shall have the option of designating any such Parcel(s) an Excluded Parcel, subject to the provisions of Section 5. The term “Monetary Liens” as used herein shall mean liens or encumbrances that secure the payment of a liquidated sum of money (and that were not voluntarily entered into by Seller) including, without limitation, judgment liens, mechanics’ liens, and Tax liens filed against the Real Property prior to Closing (other than (i) Taxes and assessments not yet due and payable, (ii) obligations which are to be performed by the Tenants under the Leases (including Tenant Liens), (iii) Voluntary Liens, and (iv) the liens created due to any act or omission of Buyer, or with the consent of Buyer under this Agreement), provided, however, that Seller instead may cause the Title Company to insure title to the Property free of any exception for any such Monetary Lien in an manner reasonably acceptable to Buyer.

5. Limited Right to Exclude Parcels.

(a) At any time prior to the expiration of the Inspection Period (except as expressly provided below), without terminating this entire Agreement, Buyer shall have the right to designate certain individual Parcels (together with all related Property pertaining to such Parcel) as an Excluded Parcel solely in the event such Parcel has a Material Defect by giving notice of such exclusion (a “Material Defect Notice”), provided that, unless otherwise expressly set forth herein, Buyer shall not be permitted to designate in the aggregate, under any provision of this Agreement (together with any Parcels designated by Seller pursuant to Section 5(b)) more than ninety (90) Parcels (the “Buyer Excluded Parcel Cap”) as Excluded Parcels. “Material Defect” shall mean any one of the following:

(i) Buyer has made a Title Objection (as defined in Section 4(c)) within the time period set forth in Section 4(c) (including the time period for providing a Title Objection Notice for matters that first occur or arise after the Title Objection Date), that (i) has a material adverse effect on the value of the particular Parcel as a single family home or the ability to lease the particular Parcel in the ordinary course of business, (ii) is not a Permitted Encumbrance, and (iii) is not a Monetary Lien or Voluntary Lien (as such terms are defined in Section 4, it being understood that Seller shall be required to remove Monetary Liens and Voluntary Liens pursuant to Section 4 hereof), and Seller has not elected to cure or remove such Title Objection pursuant to Section 4(c)(iv)(A)(2) ;

(ii) such Parcel is subject to, or subject to a written threat of, a condemnation proceeding (provided that Buyer shall have the right to designate any Parcel as an Excluded Parcel under this clause (B) at any time prior to Closing).

(iii) such Parcel has Hazardous Materials in violation of, or is otherwise in violation of, applicable Environmental Requirements (as such terms are hereinafter defined) which would cost over Seven Thousand Five Hundred Dollars ($7,500.00) to remediate unless within five (5) Business Days following delivery of the applicable Material Defect Notice to Seller, Seller elects, in its sole discretion, to either (x) remediate such Hazardous Materials prior to Closing, or (y) give Buyer credit at Closing for the amount of such costs to the extent such costs exceed $7,500 (a “Buyer Hazmat Credit”).

(iv) such Parcel requires a capital expense infusion of more than Seven Thousand Five Hundred Dollars ($7,500.00) in order to make the Property in rentable condition in the ordinary course of business assuming similar standards as currently being used on the Property by the Acquired Companies prior to Closing, unless (i) such damage is covered by insurance that is available to Buyer following Closing or (ii) within five (5) Business Days following delivery of the applicable Material Defect Notice to Seller, Seller elects, in its sole discretion, to either (x) repair such Property prior to Closing, or (y) give Buyer credit at Closing for the amount of such costs to the extent such costs exceed $7,500.00 (a “Buyer CapEx Credit”).

(b) In addition to Buyer’s rights set forth in Section 5(a), Buyer shall, at any time prior to the Closing Date, have the right to designate a Parcel an Excluded Parcel solely pursuant to Section 10, Section 10(c), Section 12(c), Section 12, or Section 17, in each case, subject to the Buyer Excluded Parcel Cap.

(c) Seller Exclusion Rights. Seller shall have the right to designate a Parcel an Excluded Parcel in accordance with Section 10(c)(i), Section 12(c)(ii), or Section 14(b) in each case subject to the Seller Excluded Parcel Cap (exclusive of any Parcels designated by Buyer pursuant to Section 5(a)). Seller shall not be permitted to designate more than fifty (50) Parcels as Excluded Parcels (exclusive of any Parcels designated as Excluded Parcels by Buyer pursuant to Section 5(a) or otherwise pursuant to this Agreement)(the “Seller Excluded Parcel Cap” and collectively with the Buyer Excluded Parcel Cap, the “Excluded Parcel Cap”),

(d) Excluded Parcels.

(i) In the event that any Parcel is designated an “Excluded Parcel” pursuant to this Section 5, Section 10(c), Section 12(c), Section 14, or Section 17, then (i) Buyer shall no longer be obligated to acquire, and Seller shall no longer be obligated to sell, such Excluded Parcel (and all related Excluded Property), (ii) other than as set forth in Section 5(d)(ii) below and Section 22(c), this Agreement shall be terminated with respect to such Excluded Parcels and all related Excluded Property, and Buyer’s and Seller’s obligations hereunder with respect to such Excluded Parcel and all related Excluded Property shall be null and void, (iii) Buyer and Seller shall be obligated to proceed to Closing with respect to all Parcels (and related Property) other than the Excluded Parcels and such related Excluded Property (subject to the terms herein), (iv) Seller’s Representations shall be deemed modified to exclude any such Excluded Parcels and all related Excluded Property, and (v) at Closing, the Purchase Price will be reduced by the amount set forth in the Allocation Schedule allocated to such Excluded Parcel.

(ii) In the event that any Parcel is designated an Excluded Parcel hereunder, then immediately prior to Closing, Seller shall cause the applicable Acquired Company to convey all of such Acquired Company’s right, title and interest in and to the Excluded Parcel, and execute and deliver any and all deeds, assignments, bills of sales, Transfer Tax Returns and other requirements as may be required to convey such Excluded Parcel and all related Excluded Property to an Affiliate of Seller (other than any Acquired Company) prior to Closing. Any and all costs and expenses incurred in connection with such transfer, including any Transfer Taxes, recording Taxes and other charges, shall be borne by Seller and paid at Closing. Such conveyance shall be made without any representation or warranty of any kind from the Acquired Companies or Buyer.

(e) Failure to Exclude Parcels. If, on or before the expiration of the Inspection Period, Buyer has actual knowledge that any Parcel has a Material Defect, and even if Buyer has delivered to Seller a Title Objection Notice in accordance with Section 4(c)(ii), but Buyer does not designate such Parcel an Excluded Parcel prior to the expiration of the Inspection Period, Buyer shall have waived the right to subsequently designate such Parcel as an Excluded Parcel or to terminate this Agreement as a result of such Material Defect. Without limitation, Buyer shall be deemed to have “actual knowledge” of any matters disclosed in any title policies and Included Contracts and any third party reports delivered to Buyer during the Inspection Period.

(g) Excluded Parcels Exceed the Excluded Parcel Cap. Buyer shall not have the right to designate Parcels as Excluded Parcels in excess of the Buyer Excluded Parcel Cap prior to the expiration of the Inspection Period, it being understood that if Buyer believes there are Parcels with Material Defects in excess of the Buyer Excluded Parcel Cap prior to the expiration of the Inspection Period, then Buyer’s option shall be to either (x) waive the Material Defect for any Parcels in excess of the Buyer Excluded Parcel Cap, or (y) terminate this Agreement prior to the expiration of the Inspection Period, in which event, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement). In the event, after the expiration of the Inspection Period and prior to Closing any Parcel is properly designated an “Excluded Parcel” because of a Material Defect pursuant to Section 5(a) or any other applicable provision of this Agreement or by mutual agreement of the parties, and such Excluded Parcels, in the aggregate, exceed the Excluded Parcel Cap (unless Seller agrees to increase the Excluded Parcel Cap, in which event the parties shall proceed to Closing), then Buyer shall have the right to (i) proceed to Closing but shall be obligated to acquire any Excluded Parcels in excess of the Excluded Parcel Cap (the designation of which Excluded Parcels shall be determined by Buyer, in its sole discretion), or (ii) terminate this Agreement, in which event, upon the return of the Deposit to Buyer, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement).

6. Interim Operating Covenants.

(a) Leases. At Closing, the respective Parcels shall be subject to the Leases. During the period from the Effective Date to the Closing (or earlier termination of this Agreement), Seller shall not, and shall not cause or permit the Acquired Companies to, enter into new leases for Parcels now vacant or for Parcels which may become vacant, or enter into any amendments of any Existing Leases or consent to any renewals, extensions, expansions or terminations of any Leases (other than those to which the Tenant is entitled pursuant to the terms of the Existing Lease) unless such actions are in the ordinary course of business and on similar lease forms, rental rates and other terms as is consistent with the past practices of Seller.

(b) Approved Leases. Any new lease entered into by Seller after the Effective Date in accordance with Section 6(a) hereof, and any lease extended or otherwise amended or modified after the Effective Date in accordance with Section 6(a) hereof, shall be referred to herein as an “Approved Lease.” Buyer expressly acknowledges that the termination of any of the Existing Leases or Approved Leases prior to Closing by reason of the expiration of its term or the default of the Tenant thereunder (so long as such termination is in compliance with the provisions of Section 6(a)), or a failure of a proposed tenant to follow through with the execution thereof, shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price.

(i) Except (1) to the extent compelled or required by applicable law or any HOA, (2) as otherwise permitted by this Agreement, or (3) as consented to in writing by Buyer, during the period from Effective Date to the Closing Date, Seller shall cause each of the Acquired Companies to, and each Acquired Company shall: (A) conduct its business and operations and operate, manage and maintain the Parcels in all material respects in the ordinary course, consistent with past practice and applicable law, including continuing the existing repair and maintenance program for the Parcels spending at least $2,800 per year per Parcel (“Required R&M Spend”); (B) use commercially reasonable efforts to maintain its assets and properties consistent with past practice and applicable law; (C) perform, in all material respects, all of its obligations under the Leases and other agreements of the Acquired Companies; (D) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice; and (E) maintain in full force and effect the insurance policies currently in effect with respect to the Parcels (or replacements continuing substantially similar coverage). At Closing, if it is determined that Seller has not, at a minimum, met the Required R&M Spend (measured for the period starting January 1, 2020 through Closing on an annualized basis), then for each Parcel for which the Required R&M Spend has not been met, Buyer shall receive a credit at Closing for each such Parcel in an amount equal to the positive difference between the Required R&M Spend and the amount, if any, that Seller actually spent for the repair and maintenance of each such Parcel during such period.

(ii) Without limiting the generality of the foregoing, except (1) to the extent compelled or required by applicable law or any HOA, (2) as otherwise permitted by this Agreement, or (3) as consented to in writing by Buyer, which consent shall be in Buyer’s sole discretion (except if such actions are necessary or are in response to any emergency with respect to any Acquired Company or Parcel, then no consent shall be required), during the period from Effective Date to the Closing Date, Seller shall cause each Acquired Company not to, and each Acquired Company shall not:

(A) modify or amend any of the organizational documents of any Acquired Company;

(B) issue, or authorize the issuance of, any membership interest of any Acquired Company, or form a subsidiary of an Acquired Company;

(C) incur or suffer to exist any Indebtedness except for (i) existing Indebtedness as of the Effective Date, and (ii) trade payables incurred in the ordinary course of business consistent with past practice that are subject to adjustments pursuant to Section 7; or take any action which would cause a breach or default under any Indebtedness beyond the expiration of any applicable cure periods;

(D) enter into new contracts or agreements relating to the construction, management, service, utility operation, maintenance, repair or improvement of the Property, or otherwise imposing obligations on or affecting the Property or any Acquired Company, including management agreements, easement agreements, brokerage agreements for the leasing of the Property, equipment leases, maintenance agreements, warranties, Management Agreements (hereinafter defined) and other contracts and parking agreements (each, a “Contract”), other than (i) Contracts that are terminated at Closing at no cost to Buyer, and (ii) Included Contracts;

(G) hire any employees;

(H) enter into, modify, amend, or terminate any collective bargaining or similar Contract with any union, works council, or labor organization;

(I) file or cause to be filed, or amend, any Tax Return with respect to the Acquired Companies other than in accordance with past practice, enter into any closing agreement, make or change any Tax election, change any Tax method of accounting, or agree to extend the statute of limitations in respect of any Taxes;

(J) settle or compromise any pending or threatened Litigation which is not paid by insurance and which settlement is in excess of $30,000;

(L) authorize, agree, resolve or consent to any of the foregoing.

(d) Notices. If Seller or any of the Acquired Companies is served with process or receives written notice that Litigation has been commenced against it, Seller shall notify Buyer within three (3) Business Days.

(e) Efforts. Upon the terms and conditions set forth herein, each of the parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things, necessary, proper or advisable to make effective as promptly as practicable, but in no event later than the Closing Date, the transactions contemplated herein. If requested by Buyer, Seller shall reasonably cooperate with Buyer (at no material cost to Seller) with respect to any financing to be obtained by Buyer at Closing by any lender (a “Lender”), including providing customary owner’s affidavits from the Acquired Companies to the extent required by a Lender if Buyer obtains mortgage financing, provided that (i) Seller shall not be required to waive or reduce any rights or increase its obligations or liabilities under this Agreement and in no event shall any Seller Parties (other than Seller and the Acquired Companies) be required to incur any obligations or liabilities, and (ii) any such owner’s affidavits shall be subject to Seller’s review and reasonable approval.

(f) Release of Acquired Companies. Solely if and when the Closing occurs, and effective as of the Closing Date, Seller, on behalf of itself and its Affiliates and each of its and their respective officers, directors, employees, agents, successors and assigns (the “Releasing Parties”), hereby releases, acquits and forever discharges the Acquired Companies and their respective successors and assigns, together with their present and former directors and officers (solely in their capacity as such but not in any other capacities) (collectively, the “Released Parties”), from any and all manner of claims, actions, suits, damages, demands and liabilities whatsoever in law or equity,

whether known or unknown, liquidated or unliquidated, fixed, contingent, direct or indirect (collectively, “Release Claims”), which the Releasing Party ever had, has or may have against any of the Released Parties for, upon, or by reason of any matter, transaction, act, omission or thing whatsoever arising under or in connection with any of the Released Parties, from the beginning of time up to, but not including, the Closing Date, other than (i) obligations arising under this Agreement and any documents executed and delivered by the parties at Closing, and (ii) Release Claims solely among Seller. This release shall become effective only upon completion of the Closing and prior to such date shall have no force or effect and shall not be legally binding on the parties. For purposes of this Agreement, “Affiliate” shall mean, with respect to any entity, any other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first entity, as the case may be. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise. This Section 6(f) shall survive the Closing.

(g) No-Shop. Between the Effective Date and ending on the earlier of (i) the Closing Date or (ii) the termination of this Agreement, none of Seller, the Acquired Companies or any of their Affiliates shall solicit, encourage or enter into any discussions, or exchange proposals regarding, continue or enter into discussions or negotiations with respect to, or enter into or consummate any agreement or understanding in connection with any proposal regarding, any purchase or other acquisition of all or any portion of the assets or properties (including the Property) of any of the Acquired Companies (other than the sale of products or services in the ordinary course of business consistent with past practices) or any membership interest (whether newly issued or currently outstanding) of any of the Acquired Companies, any merger, business combination or recapitalization involving any of the Acquired Companies, the liquidation, dissolution or reorganization of any Acquired Company, or any similar transaction, and Seller and the Acquired Companies shall cause each Acquired Company’s and each of their Affiliates’ directors, officers, employees, agents, representatives to refrain from any of the foregoing; provided, that Seller and the Acquired Companies shall not be required to initiate litigation against any such directors, officers, employees, agents or representatives.

(h) Termination of Affiliate Agreements. Prior to the Closing Date, Seller shall cause all contracts and agreements (other than Included Contracts) between any Acquired Company and any Affiliate of Seller, other persons with whom any Acquired Company is not dealing at arm’s-length, employee, officer or director of Seller or any Acquired Company or any entity controlled by any employees, officers or directors of Seller or any Acquired Company to be terminated without further obligations of or liabilities on the Acquired Companies. This Section 6(h) shall survive the Closing.

7. Apportionments.

(b) Rent. Rent, including, without limitation, fixed rent, prepaid rent, and additional rent, if applicable (collectively, “Tenant Charges”), shall be apportioned as of the Closing Date in accordance with the provisions of this Section 7.

(i) To the extent that Tenant Charges under a Lease with respect to the month of the Closing have been paid prior to the Closing, the same shall be prorated as of the Closing Date between Buyer and Seller based on the number of days during the month in which the Closing Date occurs and Buyer shall be entitled to a credit at Closing for the portion of such payments attributable to the period beginning on the Closing Date. Seller shall retain the right to receive all payments for unpaid Tenant Charges attributable to the period prior to the Closing Date.

(ii) All amounts collected by Buyer from Tenants under the Leases after Closing shall be Buyer’s sole and exclusive property and shall not be prorated after Closing.

(iii) Any Tenant Charges prepaid and applicable to the period following the Closing Date shall be credited by Seller to the Buyer on the Closing Date.

(c) Leasing Commissions. Seller agrees that it shall be responsible for payment of, and Seller shall pay the same on or prior to Closing or give Buyer a credit at Closing for, any unpaid installments of any leasing or brokerage commissions due on account of the existing term and the existing leased premises of the Existing Leases, whether such installments of leasing or brokerage commissions are payable before or after the Effective Date or before or after the Closing Date. Except as provided below in this Section 7, if Seller enters into any Approved Lease or amends an Existing Lease prior to Closing in accordance with Section 6 of this Agreement, then any commission payable with respect thereto shall be apportioned between Seller and Buyer as of the Closing Date based on the period of the initial lease term or amended lease term during which the applicable tenant is paying rent (i.e. excluding any free rent periods), as applicable, that occurs prior to and after Closing.

(d) Tenant Inducement Costs; Free Rent Periods. Because there are no Tenant Inducement Costs associated with the Leases, there shall be no apportionment of any Tenant Inducement Costs. For purposes of this Agreement, the term “Tenant Inducement Costs” means tenant improvement costs, moving costs, improvement allowances and similar tenant inducement costs which are to be borne by the landlord per the terms of the Lease, but the term “Tenant Inducement Costs” shall not include any reduced Tenant Charges on account of free or reduced rent periods. Buyer acknowledges that some Leases may have a free rent period (no more than one month rent) and there shall be no apportionment between the parties as a result of such free rent periods.

(e) Prorations Under Included Contracts. Except as otherwise provided herein (e.g., in Section 7(c) with respect to leasing commissions), amounts payable under any Included Contracts and other operating and maintenance expenses and other recurring costs relating to the Property shall be apportioned as of the Closing Date.

(f) Taxes and Assessments. Real property Taxes shall be apportioned on the Closing Date: (A) Seller shall be allocated and bear all liability for real property Taxes relating to the period up to the Closing Date and (B) Buyer shall be allocated and bear all liability for real property Taxes relating to the periods from and after the Closing Date. For purposes of the foregoing, any Real property Taxes for a Straddle Period shall be allocated based on the principles in Section 29(a)(ii). If the real property Tax bill for the Tax year in which the Closing occurs has not been issued on or before the Closing Date, the apportionment of real property Taxes shall be computed based upon the most

recent Tax bill available. If, on the Closing Date, bills for the real property Taxes imposed upon the Real Property for the Tax year in which Closing occurs have been issued and are due but shall not have been paid, such real property Taxes shall be paid at the time of Closing pursuant to the apportionment provided by this Section 7(f). For the avoidance of doubt, any refunds of real property Taxes (including in the form of a direct credit or estimated Tax payments) with respect to the period up to the Closing Date (any such refund, a “ Pre-Closing Tax Refund”), shall be for the account of Seller, and Buyer shall pay over to Seller any such Pre-Closing Tax Refund (including any interest received with respect thereto) within ten (10) Business Days after receipt, or if the refund is in the form of a direct credit, within ten (10) Business Days after the date on which the Tax Return claiming such refund is filed. Buyer shall cooperate with Seller in obtaining such refunds, including through the filing of amended Tax Returns or refund claims, provided Seller shall reimburse Buyer for all reasonable and actual third party associated costs and expenses incurred in connection therewith.

(g) HAP Payments. HAP Payments and all dues, fees, assessments and impositions with respect to a Parcel shall be apportioned as of the Closing Date.

(h) HOA FEES. Charges levied or assessed or imposed against a Parcel (“HOA Fees”), by a homeowners’ association, property owner’s association or similar entity (“HOA”) shall be apportioned as of the Closing Date.

(i) Credits. Buyer shall receive a credit at Closing in the amount of all HazMat Credits and Buyer CapEx Credits in the aggregate, if any.

(j) Other Income and Expenses. All other income or revenue of the Property, and all other operating expenses of the Property, shall be prorated as of 12:01 a.m. on the Closing Date to the extent received prior to Closing.

(k) Accounting. Upon the request of Seller (which request may be made from time to time but shall not be made more than once in any calendar quarter), Buyer shall provide Seller an accounting of all sums received and/or paid by Buyer under any of the Leases.

(l) Preliminary Closing Adjustment. Seller and Buyer shall jointly prepare a preliminary closing statement (the “Closing Statement”), and shall deliver such preliminary Closing Statement to the Escrow Holder on or prior to the Closing Date. The preliminary Closing Statement and the apportionments and/or pro ration allocations reflected therein shall be based upon actual figures to the extent available. If any of the apportionments and/or pro rations cannot be calculated accurately based on actual figures on the Closing Date, they shall be calculated based on Seller’s and Buyer’s good faith estimates thereof, subject to reconciliation as hereinafter provided.

(m) Post-Closing Reconciliation. If there is an error on the preliminary Closing Statement or, if after the actual figures are available as to any items that were estimated on the preliminary Closing Statement, it is determined that any actual pro ration or apportionment varies from the amount thereof reflected on the preliminary Closing Statement, the pro ration or apportionment shall be adjusted based on the actual figures as soon as feasible. Either party owing the other party a sum of money based on such subsequent pro ration(s) shall promptly pay said sum to the other party, which payment shall be treated as an adjustment to the Purchase Price, including for applicable Tax purposes. The parties shall seek to complete all such reconciliations within 180 days after the Closing Date, after which time such reconciliations shall be deemed final (and neither party shall have any further right to dispute the same), except for (i) Taxes, which shall be reconciled within sixty (60) after the date the actual Taxes are finalized, and (ii) any specific matters for which either party has given notice of dispute to the other party and is actively pursuing resolution of such dispute. Seller and Buyer and Buyer’s property manager, shall maintain and make available to each other any books or records necessary for the adjustment of any items hereunder.

(n) Tenant Security Deposits. At Closing, Seller shall turn over to Buyer (or give Buyer a credit for), all Security Deposits then held by Seller as of the Closing Date by or for Seller under the Leases, to the extent not previously applied in accordance with the Leases, including any accrued interest. Buyer will cause all Security Deposits to be maintained after Closing in accordance with the requirements of applicable law and shall indemnify and defend Seller and the other Indemnified Seller Parties from all claims of Tenants with respect to the Security Deposits actually delivered to Buyer or for which Buyer received a credit at Closing, which indemnity shall survive Closing indefinitely.

(o) Utilities. Because the Tenants under the Leases are responsible for paying utilities, there shall be no apportionment at Closing for utility expenses.

(p) Survival. The provisions of this Section 7 shall survive Closing for 270 days except as provided in Section 7(n).

8. Closing Costs.

(b) Seller’s Costs. Seller shall pay: (i) the costs of its counsel and other professionals and consultants; and (ii) one-half of the escrow Fee to the Escrow Holder and all of any other closing fees charged by the Escrow Holder.

(c) Other Taxes and Charges. With respect to the costs associated with the provision of a standard owner’s title insurance policy and any endorsements standard owner’s title insurance policy requested by Buyer to be issued at Closing and any coinsurance or reinsurance costs, if any (“Title Costs”), Buyer and Seller shall divide such Title Costs on a 50/50 basis, provided that in no event shall Seller’s share of the Title Costs exceed $300,000.00. With respect to (i) any and all transfer, sales (including bulk sales), use, documentary, stamp and other similar taxes, and all conveyance fees, recording charges and other similar fees and charges (including interest, penalties and/or additional amounts with respect thereto) incurred in connection with the consummation of the Transactions (collectively, “Transfer Taxes”) and (ii) all other closing costs not specifically set forth herein shall be paid in accordance with the general custom (i.e., as between the Buyer and Seller) in the jurisdiction in which such costs, charges, and Transfer Taxes are imposed. Any Tax Returns that must be filed in connection with Transfer Taxes shall be prepared and filed by the party primarily or customarily responsible under applicable local law for filing such Tax Returns, and such party shall use its reasonable best efforts to provide a draft of such Tax Returns to the other party at least five (5) Business Days prior to the date such Tax Returns are due to be filed for such other party’s review and consent (not to be unreasonably withheld, delayed or conditioned). Buyer and Seller shall cooperate in the timely completion and filing of all such Tax Returns. To the extent that a party makes a payment of a Transfer Tax (or portion thereof) for which the other party should have paid, such other party shall promptly reimburse the party that paid the Transfer Taxes in the amount of such payment.

(d) Survival. The provisions of this Section 8 shall survive Closing for 270 days.

9. Municipal Violations. To the extent the Tenants under their respective Leases are to comply with specific laws, ordinances, public regulations or statutes applicable to their respective leased premises (“Tenant Compliance Requirements”), Buyer shall look solely to the Tenants under the Leases to comply with any notices concerning the existence of any uncorrected Tenant Compliance Requirements (including any fines, interest or penalties thereon due to non-compliance therewith) in respect of the Real Property, and Seller shall not be responsible to comply with any Tenant Compliance Requirements; provided, Buyer shall have the right to pursue Seller with respect to any notices concerning the existence of any uncorrected violation issued by any public authority that is not a Tenant Compliance Requirement. The provisions of this Section 9 shall survive Closing indefinitely.

10. Seller’s Representations.

(a) Seller hereby represents to Buyer, as of the Effective Date and as of Closing, except for such representations and warranties that are expressly provided as of the Effective Date, as follows (the representations and warranties made by Seller pursuant to this Section 10(a) and Section 20 of this Agreement, collectively, the “Seller’s Representations”):

(iv) Capitalization. The capitalization and record owners of all of the limited liability company interests of each Acquired Company is as set forth on Exhibit A. All of the Membership Interests are duly authorized, have been validly issued and are fully paid and non-assessable, are owned beneficially and of record by Seller, free and clear of any lien (except any liens that will be released as part of Closing), and were issued in compliance with applicable securities laws or exemptions therefrom. Except as set forth on Exhibit A, no limited liability company interests or other interests of any Acquired Company were issued, reserved for issuance or outstanding. No person has preemptive rights with respect to securities of any Acquired Company. No Acquired Company has any outstanding securities convertible into or exchangeable or exercisable for its limited liability

company interests or any rights to subscribe for or to purchase, or any agreements providing for the issuance (contingent or otherwise) of, or any calls against, commitments by or claims against it of any character relating to, any of its limited liability company interests. Other than the limited liability company agreement for each Acquired Company (a true and correct copy of which has been provided by Seller to Buyer), no Acquired Company is a party to and there is not, and immediately after the Closing there will not be, any Contract, right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement or shareholders or members agreement, whether or not any Acquired Company is a party thereto, with respect to the purchase, sale or voting of any limited liability company interests of any Acquired Company or any securities convertible into or exchangeable or exercisable for any limited liability company interests of any Acquired Company. None of the Acquired Companies owns any equity interest in any other entity.

(v) No Conflicts. The execution, delivery and performance by Seller and each Acquired Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (a) conflict with or result in a violation or breach of, or default under, any provision of the organizational documents of Seller or the Acquired Companies; (b) conflict with or result in a violation or breach of any provision of any law or governmental order applicable to Seller or the Acquired Companies; or (c) require the consent, notice or other action by any person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Acquired Companies or Seller is a party or by which the Acquired Companies or Seller is bound or to which any of their respective properties and assets are subject.

(vi) Consents. The execution, delivery and performance by Seller and each Acquired Company of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (a) conflict with or result in a violation or breach of any provision of any law or governmental order applicable to Seller or the Acquired Companies; or (b) require the consent, notice or other action by any person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Acquired Companies or Seller is a party or by which the Acquired Companies or Seller is bound or to which any of their respective properties and assets are subject.

(vii) Governmental Authorizations and Consents No consents, licenses, approvals or authorizations of, any governmental authority are required to be obtained or made by Seller or any Acquired Company in connection with the execution, delivery, performance, validity and enforceability of this Agreement or the consummation by Seller or the Acquired Companies of the transactions contemplated herein; provided that the foregoing shall not be deemed to be a representation regarding the applicability of any Federal or State securities laws.

(viii) No Condemnation. To Seller’s knowledge, as of the Effective Date, there are no existing condemnation proceedings or deeds in lieu of condemnation affecting any of the Parcels comprising part of the Real Property. As of the Effective Date, Seller has not received any written notices regarding any pending condemnation proceedings or deeds in lieu of condemnation affecting any of the Parcels comprising part of the Real Property. If Seller receives any notice regarding any pending condemnation proceedings or deeds in lieu of condemnation or other proceedings as described in this clause (viii) affecting any of the Parcels, Seller shall notify Buyer within three (3) Business Days of receipt.

(ix) FIRPTA. No Seller is a “foreign person” or “foreign corporation” as those terms are defined in the Code and the regulations promulgated thereunder.

(x) Bankruptcy. Neither Seller nor any of the Acquired Companies has: (A) commenced a voluntary case, or had entered against it a petition, for relief under the federal bankruptcy code or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceedings, to hold, administer and/or liquidate all or substantially all of its property, or (C) made an assignment for the benefit of creditors.

(xi) Litigation. Except for those matters described in Exhibit G, neither Seller nor any of the Acquired Companies has received any written notice of any pending claims (for which legal proceedings have been commenced), actions, suits, audits, proceedings or governmental investigations (“Litigation”) against the Real Property or Seller or the Acquired Companies. To Seller’s knowledge, each of the matters described on Exhibit G is Litigation which is fully covered by insurance of Seller or its existing manager, subject to deductibles (to be covered by Seller).

(xii) Seller not a “Prohibited Person”.

(B) None of Seller, any Acquired Company, or, to Seller’s knowledge, any beneficial owner of Seller or any Acquired Company (other than the holder of an interest in any publicly traded company):

b. is a person subject to the prohibitions contained in the Orders;

c. is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person subject to the prohibitions contained in the Orders;

e. is established in, organized under or has their principal place of business in a Prohibited Country;

g. is a person Affiliated with a person described in clauses (a) to (f) above.

(xiii) ERISA. Neither Seller or any of the Acquired Companies is (i) an “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) that is subject to the provisions of Title I of ERISA, (ii) a “plan” that is subject to the prohibited transaction provisions of Section 4975 of the Code or (iii) an entity whose assets are treated as “plan assets” under ERISA by reason of an employee benefit plan’s or plan’s investment in such entity.

(xiv) Leases. As of the Effective Date, (A) there are no leases, subleases, ground leases, licenses or other occupancy agreements to which Seller or any of the Acquired Companies is a party (including by assignment or other succession) affecting or relating to the Real Property existing as of the Effective Date except for the Existing Leases (provided, however, that no representation is or will be made by Seller that any Leases will be in effect as of the Closing Date and no representation is made with respect to subleases to which neither Seller nor any Acquired Company is a party); and (B) Exhibit C contains a true and correct list of all of the Existing Leases; and copies of the Existing Leases, including, without limitation, guaranties thereof and amendments thereto, have been made available via the Diligence Room to Buyer. As of the Effective Date, to Seller’s knowledge, none of Seller, the Acquired Companies, or any of their respective Affiliates has received written notice of a Contract Default under any Existing Leases which remain uncured and not waived. Other than as set forth on Exhibit J, there are no outstanding Tenant Charge arrearages in excess of ninety (90) days. For purposes of this Agreement, a “Contract Default” shall mean a default under any agreement that would have an Individual MAE.

(xv) Rent Roll. Attached hereto as Exhibit K are the current rent rolls as of December 1, 2020 with respect to the Parcels (the “Rent Rolls”). To Seller’s knowledge, the information set forth in the Rent Rolls is true, accurate and complete in all material respects, as of the date thereof. The Rent Rolls set forth a list of all Security Deposits with respect to each Parcel. The Rent Rolls will be updated by Seller not more than ten (10) days prior to Closing. There are no Security Deposits that have been applied against obligations of such Tenants except as set forth on the Rent Rolls.

(xvi) Commission Agreements. There are no leasing commission agreements entered into by Seller affecting all of any portion of the Property other than the leasing commission provisions set forth in the Management Agreements which will be terminated by Seller concurrently with, or prior to, the Closing Date.

(xvii) Contracts. Except for (i) the HAP Contracts set forth on Exhibit D-1 (the “HAP Contracts”) and (ii) the Existing Leases, any Approved Leases, any Contracts identified on the Existing Title Policies, the Asset Management Agreements set forth on Exhibit D-1 (the “Asset Management Agreements”), the Management Agreements set forth on Exhibit D-2 hereto (the

“Management Agreements”) and contracts evidencing or relating to Existing Loans, there are no existing Contracts to which any of the Acquired Companies is a party or that will be binding upon the Acquired Companies or the Property after Closing. The contracts evidencing or relating to Existing Loans, the Asset Management Agreements, the Management Agreements, and all Contracts that are required to be terminated pursuant to Section 2(e)(ii) will be terminated as of or prior to the Closing Date and will not be binding on the Acquired Companies or the Property from and after the Closing Date. No Acquired Company is party to any Contract guaranteeing the obligations of any other Person, other than the contracts evidencing the Existing Loans that will be released in full at Closing.

(xviii) Financial Statements. Copies of all financial statements of Rex Residential Venture LLC (“Rex Residential”), which is consolidated with the Sellers and the Acquired Companies, consisting of the balance sheet of Rex Residential (consolidated with the Sellers and the Acquired Companies) as of December 31, 2019 and the related statements of income and retained earnings, members’ equity and cash flow (the “Annual Financial Statement”), and unaudited financial statements consisting of the balance sheet of Rex Residential (consolidated with the Sellers and the Acquired Companies) as of September 30, 2020 and the related statements of income and retained earnings, members’ equity and cash flow for the six-month period then ended (the “Interim Financial Statements” and together with the Annual Financial Statement, the “Financial Statements”) have been delivered to Buyer. The Financial Statements have been prepared in accordance with GAAP, as customarily applied in the real estate industry, and applied on a consistent basis throughout the period involved. The Financial Statements are based on the books and records of Rex Residential and accurately reflect, in all material respects, the financial position of Rex Residential as of the date of such Financial Statements. Since the date of the most recent Financial Statements, Rex Residential has conducted its business in the ordinary course and in a manner consistent with past practice as a special purpose entity whose sole business is the ownership of the Sellers. The sole business of the Sellers is the ownership of the Acquired Companies, and the sole business of the Acquired Companies is the ownership of the applicable Parcels. Rex Residential does not own any assets or have any liabilities other than its interest in Sellers, and Sellers do not own any assets or have any liabilities other than their respective interests in the applicable Acquired Companies.

(xix) Undisclosed Liabilities. The Acquired Companies have no written or documented liabilities, obligations or commitments, and to Seller’s knowledge, the Acquired Companies have no other liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, or otherwise that would be required by GAAP to be included in the Financial Statements (collectively, “Liabilities”), except (a) those which are adequately reflected or reserved against in the Financial Statements delivered to Buyer and (b) those which have been incurred in the ordinary course of business consistent with past practice since the date of such Financial Statements and which are not, in the aggregate, material in amount.

(xx) Employment Matters.

(A) None of the Acquired Companies has any employees.

(xxi) Tax Matters.

(A) Each of the U.S. federal and state income and franchise Tax Returns and all other material Tax Returns required to be filed by the Acquired Companies with any governmental or Tax Authority on or before the Closing Date: (i) has been filed on or before the applicable due date (including any valid and timely extensions of such due date); and (ii) has been prepared in compliance with applicable laws and accurately reflects all liability for Taxes of the Acquired Companies for the periods covered thereby, and is otherwise true, correct and complete. None of the Acquired Companies currently is the beneficiary of any extension of time within which to file any such Tax Return. Seller has not caused any Acquired Company to revoke or amend any such Tax Returns or related filings of the Acquired Companies with respect to any Tax year(s) that ended prior to the Closing Date. All Taxes and Tax liabilities due and payable by or with respect to the income, assets, or operations of the Acquired Companies (including, but not limited, to estimated Taxes for the Acquired Companies’ current taxable years) have been timely paid in full. There are no liens for Taxes on the assets of the Acquired Companies or interests therein, other than liens for Taxes that are not yet due or payable. All Taxes that the Acquired Companies have been required to collect or withhold have been duly collected or withheld and have been duly and timely paid to the proper governmental or Tax Authority in accordance with applicable law.

(B) There has not been any audit, inquiry or investigation of the Acquired Companies’ Tax Returns by any governmental or Tax Authority in the past four (4) years. None of Seller or any of the Acquired Companies has been notified in writing that any such audit is contemplated or pending. None of Seller or any of the Acquired Companies has received any written notices from any governmental or Tax Authority relating to any issue which could reasonably be expected to affect the Tax liability of the Acquired Companies and none of Seller or any of the Acquired Companies are presently contesting the Tax liability of any Acquired Company before any court, tribunal or agency. No deficiency for Taxes has been threatened, asserted or assessed by a governmental or Tax Authority in writing against the Acquired Companies that has not been satisfied by payment in full, settled or withdrawn. None of Seller or any of the Acquired Companies has waived any statute of limitations in respect of any Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, in each case that is currently outstanding, and no request for any such waiver or extension is currently pending and no closing agreements, private letter rulings, Tax holidays, technical advice memoranda or similar agreements or rulings related to Taxes have been entered into, issued by or requested from any governmental or Tax Authority with or in respect of the Acquired Companies.

(C) None of the Acquired Companies has agreed to, and is not required to, make any adjustment for any period pursuant to Section 481(a) of the Code (or a similar provision of the Code or an analogous law relating to Taxes of any state, local or non-U.S. jurisdiction) by reason of any change in any accounting method. There is no application pending with any governmental or Tax Authority requesting permission for any such change in any accounting method of the Acquired Companies, and the IRS has not issued in writing any proposal regarding any such adjustment or change in accounting method. No Acquired Company will be required to include any item of income in, or exclude any item of deduction from, Taxable income for any Taxable period (or portion thereof) ending after the Closing as a result of any (i) change in method of accounting for a Taxable period ending on or prior to the Closing Date, (ii) use of an improper method of accounting for a Taxable period ending on or prior to the Closing Date, (iii) installment sale or open transaction made on or prior to the Closing Date, or (iv) prepaid amount received on or prior to the Closing Date. No Acquired Company is a party to any lease subject to the provisions of Section 467 of the Code.

(D) Each of the Acquired Companies has at all times been treated as a “disregarded entity” within the meaning of Treasury Regulation 301.7701-3 (and none such entity has made any election to be treated as an association Taxable as a corporation for U.S. federal income Tax purposes). None of the Acquired Companies has entered into any hedging transactions other than pursuant to any Existing Loans that will be paid in full at Closing.

(E) None of the Acquired Companies is a party to any contract relating to allocating, indemnifying or sharing the payment of, or liability for, Taxes, or could have any obligations pursuant to any such contract or any similar contract that will be binding on such Acquired Company after the Closing, other than any such agreement the primary purpose of which is to address matters other than Tax matters. None of the Acquired Companies has any liability for the Taxes of any third party under Treasury Regulation Section 1.1502-6 for any company or any analogous provisions of state, local or non-U.S. Tax law, as a transferee or as a successor or otherwise.

(F) None of the Acquired Companies has engaged in any “listed” transactions (as defined under the Treasury Regulations promulgated under Section 6011 of the Code).

(G) There are no Tax Protection Agreements in force at the date of this Agreement, and, as of the date of this Agreement, no person has raised in writing, or to the knowledge of Seller threatened to raise, a claim against any Acquired Company for any breach of (or any payment otherwise required under) any Tax Protection Agreements.

(H) None of the Acquired Companies holds an interest in any subsidiary or any equity or debt security or other economic interest in any other corporation, partnership, limited liability company, trust, joint venture, or other business enterprise or has made any loans of money to its present or former officers, employees or members.

(I) As used in this Agreement, (A) the term “Tax” (including, with correlative meanings, the terms “Taxes” and “Taxable”) means all U.S. federal, state, local and foreign Taxes, levies, imposts, duties, assessments or other changes or withholdings of a similar nature, in each case that is imposed by a Tax Authority, together with all interest, penalties and additions imposed with respect thereto; (B) the term “Tax Return” means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) relating to Taxes and any amendments thereto; (C) “Tax Protection Agreements” means any agreement to which any Acquired Company or any of its subsidiaries is a party pursuant to which an Acquired Company or any of its subsidiaries has agreed to (i) maintain a minimum level of debt or continue a particular debt or allocate a certain amount of debt to a particular owner, (ii) retain or not dispose of assets for a period of time that has not since expired, (iii) make or refrain from making Tax elections, and/or (iv) only dispose of assets in a particular manner, in each case for Tax reasons; and (D) “Tax Authority” means any U.S. federal, state or local governmental or regulatory with the authority to oversee, implement, collect or administer any Tax.

(xxii) Environmental Matters. Neither Seller nor any of the Acquired Companies has received written notice from any third party, including any governmental authority, indicating (A) that any Hazardous Materials exist on, under or about any of the Parcels in violation of any Environmental Laws, or (B) that such party proposes to carry out an environmental inspection, audit or other investigation of any of the Parcels (other than any potential environmental inspection, audit or other investigation by Buyer in connection with this Agreement) except such matters as have been remediated and cured as required by any applicable Environmental Laws. As used herein, the term “Hazardous Materials” shall mean any substance which is or contains (A) any “hazardous substance” as now or hereafter defined in CERCLA or any regulations promulgated under CERCLA; (B) any “hazardous waste” as now or hereafter defined in RCRA or regulations promulgated under RCRA; (C) any substance regulated by the TSCA; (D) gasoline, diesel fuel, or other petroleum hydrocarbons; (E) asbestos and asbestos containing materials, in any form, whether friable or non-friable; (F) polychlorinated biphenyls; (G) radon gas; and (H) any additional substances or materials which are currently classified or considered to be hazardous or toxic under Environmental Requirements or the common law, or any other applicable laws relating to the Property. As used herein, the term “Environmental Requirements” shall mean all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders, and decrees, now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities, or any other political subdivisions in which the Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of the Property, relating to pollution, the protection or regulation of human health, natural resources, or the environment, or the emission, discharge, release or threatened release of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or waste or Hazardous Materials into the environment (including, without limitation, ambient air, surface water, ground water or land or soil).

(xxiii) Relationship with Affiliates. Except for the Management Agreements and the Asset Management Agreements, none of Seller or any of its Affiliates (nor any officer or director of any of the foregoing) is a party to any Contract with any Acquired Company, including with respect to compensation or remuneration to be paid to Seller or any of its Affiliates (nor any officer or director of any of the foregoing) in connection with this Agreement or the transactions contemplated herein, which will not be terminated as of the Closing.

(xxiv) Real Property.

(B) There are no outstanding or pending claims against any Existing Title Policy.

(C) There are no ongoing construction, renovation, repair or development projects with respect to any Parcel with unpaid costs or expenses in excess of $10,000 in the aggregate with respect to such Parcel or any tenant improvement funding obligations, tenant concessions or “free rent” obligations in excess of in the aggregate two (2) months’ rent with respect to any Parcel currently outstanding (the “Construction Projects”), except as described in Schedule 10. None of Seller nor any Acquired Company has received or given written notice of a material default of any obligation with respect to the Construction Projects which remains uncured.

(D) Other than the Leases, neither Seller nor any Acquired Company has entered into an agreement which would restrict the current use and occupation of any Parcel.

(E) To Seller’s knowledge, no fire or other casualty has occurred with respect to any Parcel which has not been restored, except as described in Schedule 10.

(xxv) Special Purpose Entities. Other than the ownership, leasing, financing, management and operation of the respective Parcels (and other single family residential properties have previously been sold or conveyed by the applicable Acquired Companies, if any) by the applicable Acquired Companies, no Acquired Company (x) has owned, developed, leased, managed or operated any asset or property, (y) has engaged in any business, or (z) has any existing liabilities except those arising from or through such ownership, financing, leasing, management and operation.

(xxvi) Compliance with Laws. Subject to the terms and conditions of Section 9 above, which shall modify the following representations as applicable, to Seller’s Knowledge, none of the Acquired Companies is in violation in any material respect of, nor is there a failure on the part of any Acquired Company to comply with in any material respect with, any state or federal law that is applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets.

(xxvii) Insurance. Each Acquired Company maintains the insurance shown in Exhibit L, which insurance is in full force and effect. Within the last three (3) years, none of the Acquired Companies have made any material claim against an insurance policy as to which the insurer has or is denying coverage. To Seller’s knowledge, none of the Acquired Companies are in default in any material respect under any insurance policy maintained by any of them.

(xxviii) Books and Records. The books and records of each Acquired Company are accurate in all material respects.

(xxix) Existing Bank Accounts. Contemporaneously with or promptly following Closing, any existing bank accounts under the control of any Acquired Company shall be closed.

(xxx) Indebtedness. Exhibit M sets forth a true and complete list as of the date of this Agreement of the Indebtedness of the Acquired Companies, other than (i) trade debt and other similar liabilities incurred in the ordinary course of business and (ii) other than any expenses to the extent that Buyer receives a credit against the Purchase Price or are adjusted between the parties in accordance with Section 7 hereof. As of the Closing Date, none of the Acquired Companies will have any outstanding Indebtedness, other than any expenses to the extent that Buyer receives a credit against the Purchase Price or are adjusted between the parties in accordance with Section 7 hereof.

(xxxi) HOAs; HAP Payments. Other than as to be adjusted between the parties in accordance with Section 7 hereof, there are no HOA Fees or HAP payments due and payable and outstanding with respect to the Property. None of the Parcels consist of housing cooperatives or manufactured housing. Exhibit N is a true, accurate and complete list of Parcels subject to an HOA for which HOA Fees are paid on a regular basis.

(xxxii) Tenant Inducement Costs. There are no Tenant Inducement Costs.

(xxxiii) Anti-Bribery; Anti-Corruption.

(A) None of Seller, the Acquired Companies or any of their Affiliates (i) has offered, promised, given or agreed to give to any person or entity any bribe on behalf of Buyer or its Affiliates or otherwise pertaining to the Acquired Companies or the Property; or (ii) has engaged in any activity or practice which would constitute an offense under any applicable anti-bribery and/or anti-corruption laws, including but not limited to the Unites States Foreign Corrupt Practices Act of 1977 with respect to the transaction contemplated by this Agreement;

(B) Seller, the Acquired Companies and their Affiliates (i) have in place, their own policies and procedures to address compliance with any applicable anti-corruption laws; and (ii) have in place, effective accounting procedures and internal controls necessary to record all expenditures in connection with this Agreement, which enable Seller, Buyer and Buyer’s Affiliates to readily identify Seller’s, the Acquired Companies’ and their Affiliates’ financial and related records in connection with this Agreement.

(b) All references in any Seller’s Representations and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, to “Seller’s knowledge” or “to the knowledge of Seller” and words of similar import shall refer solely to facts within the actual knowledge as of the Effective Date (without independent investigation or inquiry) of Howard Fife, a Principal of Westport Capital Partners LLC, but shall not otherwise be construed to refer to the knowledge of any other employee, officer, director, shareholder or agent of Seller or any Affiliate of Seller, and/or any of its officers, Affiliates or representatives, and shall in no event be deemed to include imputed or constructive knowledge.

(c) If at any time after the Effective Date and prior to the Closing Date, Seller or Buyer discovers any material inaccuracy in any of the foregoing representations and warranties, or if events occur which would cause any of the foregoing representations and warranties to be inaccurate, then the applicable party shall bring such matter to the attention of the other party within ten (10) Business Days of obtaining actual knowledge thereof (but no later than five (5) Business Days prior to the Closing Date, to the extent Buyer obtained actual knowledge thereof prior to such time) by written notice to the other party (a “Representation Notice”).

(i) Except as limited as set forth in Section 10(a)(xiv) and/or Section 10(a)(xv), if the applicable Representation Notice discloses a matter or condition that would make a representation or warranty untrue, and such matter or condition only relates to one or more particular Parcels and could reasonably expected to have an Individual MAE (defined below) on the respective individual Parcel(s), then (A) if Buyer does not waive any breach of a representation of Seller arising from such inaccuracy in writing, Seller shall have the right to cure such inaccuracy by including in such Representation Notice, notice to Buyer of its election to either cure such matter or condition prior to Closing or designate such affected Parcel or Parcels as an Excluded Parcel, subject to the Excluded Parcel Cap, and in such event, the provisions of Section 5(c) shall apply with respect to such Excluded Parcel or Excluded Parcels, as the case may be; and (B) to the extent Seller has not elected to cure such matter or condition or designate such affected Parcel as an Excluded Parcel in accordance with clause (A) above or Seller is otherwise not permitted to so designate such Parcel as an Excluded Parcel, then Buyer shall have the right to either (1) proceed to Closing with respect to the affected Parcel without any reduction in Purchase Price, or (2) at any time prior to Closing, subject to the Excluded Parcel Cap, designate the affected Parcel or Parcels as Excluded Parcels, and in such event, Section 5(c) shall apply with respect to such Excluded Parcel or Excluded Parcels, as the case may be.

(ii) If the applicable Representation Notice discloses a matter or condition that relates to the Properties or the Acquired Companies, taken as a whole, and such matter or condition, could reasonably expected to have a Material Adverse Effect, and if Seller is unable to provide assurance reasonably satisfactory to Buyer that the substantive circumstance causing such material breach of a representation or warranty will be cured prior to Closing (or if Seller provides such assurance but thereafter is unable to cure such material breach by the Closing Date), then Buyer shall have the right to either (1) proceed to Closing hereunder without any reduction in Purchase Price, or (2) terminate this Agreement and receive back the Deposit subject to and in accordance with the Escrow Agreement (it being understood that if the matter or condition disclosed in the applicable Representation Notice was not caused by a breach of Seller’s covenants under this Agreement, then the foregoing remedy shall be Buyer’s sole remedy therefor). For purposes of this Agreement, “Material Adverse Effect” shall mean: (1) with respect to a Parcel, any material and adverse effect on (i) Seller’s ability to transfer the Property, (ii) the value, use or marketability of a Parcel, or (iii) the ability to lease the particular Parcel in the ordinary course of business, (all of the preceding item 1, an “Individual MAE”); or (2) with respect to all Parcels taken as a whole, any one or more occurrences of an Individual MAE, the cumulative effect of such occurrences, when combined with all other such occurrences, has had, or would be reasonably expected to have, a material adverse effect on (i) a portion of the Property in excess of the Excluded Parcel Cap, in the aggregate, or (ii) on the business, operations or conditions (financial or otherwise) of the Acquired Companies or the Buyer after Closing.

(d) In the event of any termination of this entire Agreement by Buyer pursuant to Section 10(c)(ii), then, except as provided in Section 14, upon the return of the Deposit to Buyer, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement). Notwithstanding anything herein to the contrary, in the event a Representation Update discloses a change to a representation or warranty that occurs after the Effective Date and pertains to a representation or warranty that is made expressly and solely as of the Effective Date, and such change or breach of representation or warranty is not caused by a default by Seller under any other provision of this Agreement, then Buyer shall not have the right to terminate this Agreement or designate such Parcels as Excluded Parcels with respect to such Representation Update.

11. Buyer Representations. Buyer hereby represents to Seller, as of the Effective Date and as of the Closing Date, as follows:

(a) Organization. Buyer is a limited partnership, duly organized and validly existing under the laws of the State of Delaware, and has all requisite limited partnership power and authority to carry on its business as now conducted.

(b) Authorization. Buyer has the limited partnership power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and Buyer has duly authorized the execution of this Agreement.

Section 4975 of said Code applies, or (iii) an entity whose underlying assets include “plan assets” of a plan described in (i) or (ii) by reason of such plan’s investment in the entity.

(f) Buyer not a “Prohibited Person”.

(i) Buyer is in compliance with the Order and other similar requirements contained in the rules and regulations of OFAC.

(ii) Neither Buyer, nor, to Buyer’s actual knowledge, any beneficial owner of Buyer:

a. is listed on the Lists;

b. is a person subject to the prohibitions contained in the Orders;

c. is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person subject to the prohibitions contained in the Orders;

d. is any of the governments of a Prohibited Country;

e. is established in, organized under or has its principal place of business in a Prohibited Country; or

f. is a person owned and controlled by a person described in clauses (a) to (e) above;

provided, that in each case, the foregoing shall not apply to any direct or indirect holder of publicly traded shares in any person or any Affiliate thereof.

(g) Anti-Bribery; Anti-Corruption.

12. Conditions Precedent to Closing.

(i) No Termination. Buyer shall have given a Continuation Notice to Seller and Escrow Holder pursuant to the second sentence of Section 19(e) prior to the expiration of the Inspection Period.

(iii) Accuracy of Representations. Other than with respect to any Excluded Property, and except as qualified pursuant to Section 10(a)(xiv) and/or Section 10(a)(xv) above, the representations and warranties made by Seller in this Agreement shall be true and correct in all material respects as of the Closing Date (unless such representation and warranty is made as of a specific date, in which case, such representations and warranties shall be true and correct in all material respects as of such specific date), and Seller shall confirm to Buyer that there are no material adverse changes to Seller’s Representations at Closing, subject to the provisions of Section 10(a)(xiv) and/or Section 10(a)(xv) and any Representation Notices provided.

(iv) No Default. Seller shall have performed in all material respects its obligations under this Agreement and shall not be in default hereunder.

(v) Indebtedness Repayment. Seller shall have previously, or shall concurrently with Closing, performed in all respects its obligations under Section 1(e).

(vi) Excluded Parcels. In the event that any Parcel has been designated an Excluded Parcel, Seller shall have performed in all respects its obligations pursuant to Section 5(d)(ii).

(vii) [Intentionally Omitted].

(ii) No Default. Buyer shall have performed in all material respects its obligations under this Agreement and shall not be in default hereunder.

(iii) Accuracy of Representations. The representations and warranties made by Buyer in this Agreement shall be true and correct in all material respects as of the Closing Date.

Subject to the provisions of Section 12(d) below, in the event of a failure of a condition set forth in Section 12(a), the following provisions shall apply.

(i) If the applicable failure of a condition pertains to a matter or condition that relates to the Property or the Acquired Companies as a whole or materially adversely affects the value of the Property or the Acquired Companies as a whole, then Buyer shall have the right to either (A) proceed to Closing hereunder without any reduction in Purchase Price notwithstanding the non-satisfaction of such condition, in which event Buyer shall be deemed to have waived any such condition, or (B) terminate this Agreement and receive back the Deposit.

(ii) If the applicable failure of a condition only relates to one or more particular Parcels and, with respect to a failure of the conditions set forth in Section 12(a)(iii) and/or Section 12(a)(iv), could reasonably be expected to have a material adverse effect on the value or ability to lease the particular affected Parcel, but subject to the Buyer’s Excluded Parcel Cap, then Buyer shall have the right to either (Y) proceed to Closing with respect to the affected Parcel without any reduction in Purchase Price, or (Z) designate the affected Parcel or Parcels as Excluded Parcels pursuant to Section 5(a), and in such event, Section 5(c) shall apply, or (iii) if Buyer is prohibited from designating the affected Parcel or Parcels as Excluded Parcels because the Buyer’s Excluded Parcel Cap has been reached (and Seller does not agree to increase the Buyer’s Excluded Parcel Cap), then Buyer shall have the remedies forth in Section 12(c)(i) above.

(iii) [Intentionally Omitted.].

(iv) In the event Buyer elects to terminate this Agreement pursuant to this Section 12(c) and the condition, matter or breach giving rise to such termination relates to one or more specific Parcels, then, if designating such affected Parcel as an Excluded Parcel would cure or eliminate the applicable condition, matter or default that gave rise to such termination, Seller shall have the right, by delivery of written notice to Buyer within five (5) Business Days following receipt of a termination notice from Buyer, to designate such affected Parcel or Parcels as an Excluded Parcel, and in such event, (i) this Agreement shall continue in full force and effect with respect to the other Property than with respect to such Excluded Parcel and any other Excluded Parcels, and (ii) the provisions of Section 5(c) shall apply with respect to such Excluded Parcel.

(v) The foregoing provisions constitute the sole rights and remedies of the Parties with respect to a failure of a condition to Closing hereunder; provided, however, the foregoing provisions are not intended to limit, the rights and obligations of the parties with respect to a default under Section 14 of this Agreement. Each party shall act in good faith and shall not voluntarily cause any of the conditions precedent hereunder to fail to be satisfied, or voluntarily cause any of its respective representations or warranties to fail to be true, as of the date scheduled for Closing, it being understood that such actions shall constitute a default hereunder.

(d) Right to Cure Failure of Closing Condition. In the event of a failure of a condition to Closing set forth in this Section 12 (including a breach of representation or warranty) that is capable and reasonably likely to be cured or satisfied by using commercially reasonable efforts (without being required to incur any material expense not otherwise required to be incurred hereunder or issue notices of default or commence legal proceedings), then the party whose obligation to close is conditioned on such item shall give notice of such failure to the other party (the “Failed Condition Party”) on or before the Scheduled Closing Date originally set forth in Section 3 hereof, and the Failed Condition Party shall use commercially reasonable efforts to satisfy or cure such condition and the Closing Date automatically shall be extended to up to thirty (30) days after such notice to permit such cure by the Failed Condition Party. In the event such condition(s) is/are not satisfied or cured within such thirty (30) day period, then the provisions of Section 12(c) shall apply. The foregoing provisions, however, are not intended to limit the rights and obligations of the parties with respect to a default under Section 14 of this Agreement.

13. Deliveries at Closing; Mechanics of Closing.

(a) Seller’s Deliveries. On the Closing Date, Seller shall deliver to the Escrow Holder, the following:

(i) Assignment of Membership Interests. An Assignment of Membership Interests in the form attached hereto as Exhibit H (the “Assignment and Assumption of Membership Interests”).

(ii) Holdback Escrow. A Holdback Escrow Agreement in the form attached hereto as Exhibit O (the “Holdback Escrow Agreement”).

(v) FIRPTA Certification. An affidavit in the form attached hereto as Exhibit I with respect to compliance with the Foreign Investment in Real Property Tax Act (Code Section 1445 and the Treasury Regulations thereunder) and IRS Form W-9, in each case, completed and executed, which shall be provided by each Seller, provided that to the extent a Seller fails to provide the forgoing, Buyer may waive such requirement and withhold Tax pursuant to Section 2(c).

(vi) Transfer Tax Returns. Such Transfer Tax returns and other documents as are required in each jurisdiction where each Parcel is located in order to transfer the Membership Interests (if any), together with the applicable Transfer Tax to be paid in connection therewith to the extent payable by Seller under this Agreement.

(vii) Security Deposits. Security Deposits pursuant to Section7(n).

(ix) Original Documents. To the extent available, the originals (to the extent in Seller’s possession or control) or, if unavailable, copies, of all Leases and Included Contracts.

(x) Closing Statement. A Closing Statement, mutually acceptable to Buyer and Seller, duly executed by Seller.

(xii) Possession. Possession of the Property shall be delivered to Buyer as of the Closing subject to the Existing Leases, any Approved Leases and the provisions of Section 6(a) above. The parties shall cooperate to cause the existing management companies to effectuate a smooth transition of the Property ownership.

(xiii) Resignations of Directors and Officers. Written resignations, dated as of the Closing Date, of the directors and officer of each of the Acquired Companies.

(xiv) Indebtedness Repayment. Written evidence, dated as of the Closing Date evidencing the repayment in full of any Indebtedness, the release and the undertaking by such lenders to release the liens on the Properties under the Existing Loans.

(b) Buyer’s Deliveries. On the Closing Date, Buyer will deliver to Escrow Holder, each of the following:

(i) Assignment and Assumption of Membership Interests. The Assignment and Assumption of Membership Interests, duly executed by Buyer.

(ii) Holdback Escrow Agreement. The Holdback Escrow Agreement duly executed by Buyer.

(iv) Authority Documents. An authorizing resolution and an incumbency certificate, and such other documents as may be reasonably necessary to evidence the authority and capacity of Buyer and the authority of the signatory for Buyer.

(v) Cash. Such amounts in Cash as required pursuant to Section 2 hereof and pursuant to any other provision of this Agreement.

(vi) Closing Statement. A Closing Statement, mutually acceptable to Buyer and Seller, duly executed by Buyer.

(vii) Other Documents. Any other documents which Buyer is obligated to deliver to Seller pursuant to this Agreement or that may be reasonably requested by the Escrow Holder in order for the Escrow Holder to close the transactions contemplated by this Agreement and as may be reasonably acceptable to Buyer.

(c) Closing Mechanics. When and only when (i) each of the conditions precedent set forth in Section 12(a) have been satisfied or waived by Buyer and (ii) each of the conditions precedent set forth in Section 12(b) have been satisfied or waived by Seller, Escrow Holder shall effect the Closing contemplated hereunder by (A) releasing from escrow the closing documents, (B) transferring to Seller an amount of funds equal to the Purchase Price plus any other reimbursements or payments to be made to Seller at Closing and any other adjustments in accordance with the terms of this Agreement, and (C) delivering one (1) set of each of the documents set forth in Section 13 herein to each of the parties (provided that either party may agree to accept electronic copies of any closing documents). The Closing shall be accomplished through an escrow closing with the Escrow Holder, such that Seller’s proceeds shall be received by Seller on the Closing Date.

14. Default.

(a) Buyer Default. IF BUYER DEFAULTS IN ITS OBLIGATIONS TO ACQUIRE THE MEMBERSHIP INTERESTS AT CLOSING UNDER THE TERMS OF THIS AGREEMENT IN A MANNER THAT WOULD CAUSE A CONDITION TO CLOSING UNDER SECTION 12(a)(vii) NOT TO OCCUR AND THE CLOSING DOES NOT IN FACT OCCUR DUE TO SUCH DEFAULT, THEN (i) SELLER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT, (ii) SUBJECT TO THE TERMS, CONDITIONS AND PROCEDURES OF THE ESCROW AGREEMENT, SELLER SHALL HAVE THE RIGHT TO IMMEDIATELY RECEIVE THE DEPOSIT, AND THE DEPOSIT SHALL BE DEEMED LIQUIDATED DAMAGES AS SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER (INCLUDING, WITHOUT LIMITATION, SELLER’S RIGHTS TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT AND TO RECEIVE DAMAGES) FOR BUYER’S FAILURE TO PURCHASE THE MEMBERSHIP INTERESTS, WHICH SUMS SHALL BE PRESUMED TO BE A REASONABLE ESTIMATE OF THE AMOUNT OF ACTUAL DAMAGES SUSTAINED BY SELLER BECAUSE OF BUYER’S BREACH OF ITS OBLIGATIONS TO PURCHASE THE MEMBERSHIP INTERESTS; AND (ii) BUYER SHALL BE RESPONSIBLE FOR ALL CANCELLATION CHARGES REQUIRED TO BE PAID TO ESCROW HOLDER AND ESCROW CHARGES. FROM

THE NATURE OF THIS TRANSACTION, IT IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES THAT SELLER WOULD SUSTAIN IF BUYER DEFAULTS HEREUNDER. THE IMPRACTICABILITY AND DIFFICULTY OF FIXING ACTUAL DAMAGES IS CAUSED BY, WITHOUT LIMITATION, THE FACT THAT THE MEMBERSHIP INTERESTS AND THE REAL PROPERTY ARE UNIQUE. GIVEN THE FOREGOING FACTS, AMONG OTHERS, BUYER AND SELLER AGREE THAT LIQUIDATED DAMAGES ARE PARTICULARLY APPROPRIATE FOR THIS TRANSACTION AND AGREE THAT SAID LIQUIDATED DAMAGES SHALL BE PAID IN THE EVENT OF BUYER’S BREACH OF ITS OBLIGATIONS HEREUNDER, DESPITE ANY WORDS OR CHARACTERIZATIONS PREVIOUSLY USED OR CONTAINED IN THIS AGREEMENT IMPLYING ANY CONTRARY INTENT. NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR (AND SUCH LIQUIDATED DAMAGES SHALL NOT APPLY TO) DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT, FOR ATTORNEY FEES AND COSTS PROVIDED IN SECTION 27(a) HEREOF, OR FOR ANY OBLIGATIONS OF BUYER THAT ACCRUE OR ARISE AFTER CLOSING.

(b) Seller Default. In the event of either (i) a material default by Seller of its obligations under this Agreement, or (ii) a default by Seller in its obligation to sell the Membership Interests at Closing in accordance with the terms herein (in either case, a “Material Default”), in each case where Buyer is ready, willing and able to proceed to Closing, then the following provisions shall apply. If the applicable Material Default pertains to a matter or condition that relates to the Property or the Acquired Companies as a whole or materially adversely affects the value of the Property or the Acquired Companies as a whole, then Buyer, as its sole and exclusive remedy, may either (i) terminate this Agreement by delivery of notice of termination to Seller, whereupon subject to the terms, conditions and procedures of the Escrow Agreement, the Deposit shall be immediately returned to Buyer and if such Material Default is due to the intentional default by Seller (but in no event due to failure of any condition to Closing not caused by a default by Seller), Seller shall reimburse Buyer for its documented reasonable out of pocket costs and expenses incurred by Buyer in the negotiation of this Agreement, conducting its diligence activities and otherwise in preparation for the Closing up to the amount of Seven Hundred Fifty Thousand Dollars ($750,000.00) (excluding indemnification obligations, and attorneys’ fees incurred in connection with a claim where a court of competent jurisdiction makes a final non-appealable judgment that Seller committed fraud under this Agreement) in the aggregate for all such costs and expenses (“Pursuit Costs”), or (ii) continue this Agreement and bring an action for specific performance hereunder provided appropriate proceedings are promptly commenced by Buyer and prosecuted with diligence and continuity; provided that if specific performance is not a remedy available to Buyer due to Seller’s sale or conveyance of the Membership Interests or any portion of the Property to a third party in violation of this Agreement, Buyer and its Affiliates shall have all remedies available to it at law or equity. Notwithstanding anything herein to the contrary, in no event shall Buyer have the right (and Buyer hereby waives any right to) file or assert any lis pendens against any Parcel of the Real Property. In the event of any termination of this entire Agreement by Buyer pursuant to this Section 14(b), then, upon the return of the Deposit to Buyer and, if applicable, reimbursement to Buyer of its out of pocket costs, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement). If the applicable Material Default pertains to a matter or condition that relates solely to one or more particular Parcels, then Buyer shall have the right, as its sole and exclusive remedy, to either (i) proceed to Closing with respect to the affected Parcel(s) without any reduction in Purchase Price, or (ii) designate the affected Parcel or Parcels as Excluded Parcels

pursuant to Section 5(a), subject to the Excluded Parcel Cap and in such event, Section 5(c) shall apply. If (1) the Excluded Parcel Cap has been met (and the parties do not mutually agree to increase the Excluded Parcel Cap), (2) neither party has designated the affected Parcel or Parcels as Excluded Parcels in accordance with the immediately preceding sentence, then such Material Default shall be deemed to affect the Properties or the Acquired Companies as a whole and the applicable remedies set forth above shall apply.

15. Notices; Computation of Periods.

(a) Notices. All notices given by either party to the other shall be in writing and shall be sent either: (i) by prepaid nationally recognized overnight courier service for next Business Day delivery, addressed to the other party at the following addresses listed below (with a concurrent copy by e-mail), or (ii) via e-mail to the e-mail address listed below; provided, however, that if such communication is given via e-mail, a counterpart of such communication shall concurrently be sent in the manner specified in Subsection (i) above. Addresses and e-mail addresses of the parties are set forth below.

As to Seller:

c/o Westport Capital Partners, LLC

Suite 1110

300 Atlantic Street,

Stamford CT 06901

Attn: Howard Fife

Email: hfife@westportcp.com

with copies at the same time to:

c/o Westport Capital Partners, LLC

Suite 1110

300 Atlantic Street,

Stamford CT 06901

Attn: General Counsel

Email: legaltrx@westportcp.com

-and-

Bessemer Investors

630 Fifth Avenue, 27^th Floor

New York, NY 10111

Attn: Andrew Mendelsohn

Email: Mendelsohn@bessemer.com

-and-

Morris, Manning & Martin, LLP

1401 Eye Street, NW, Suite 600

Washington, DC 20005

Attention: Elizabeth Karmin

Telephone: 202-971-4065

E-mail: bkarmin@mmmlaw.com

As to Buyer:

c/o Nexpoint Real Estate Advisors

300 Crescent Court, Suite 700

Dallas, Texas 75201

Attn: Brian Mitts

Email: bmitts@nexpointadvisors.com

c/o Nexpoint Real Estate Advisors

300 Crescent Court, Suite 700

Dallas, Texas 75201

Attn: D.C. Sauter

Email: dcauter@NexPointadvisors.com

c/o VineBrook Homes Operating Partnership, L.P.

3500 Park Center Drive, Suite 100

Dayton, Ohio, 45414

Attn: Dana Sprong

Email: dana.sprong@vinebrookhomes.com

with a copy at the same time to:

Wick Phillips Gould & Martin LLP

3131 McKinney Ave, Suite 100

Dallas, Texas 75204

Attn: Chris Fuller and Rachel Sam

Email: chris.fuller@wickphillips.com and rachel.sam@wickphillips.com

A party may change its respective notice address by giving notice in writing in the manner specified above.

(b) Computation of Periods. The term “Business Day” shall mean a date that is not a Saturday, Sunday or a holiday observed by federally insured banks in the State of Connecticut, the District of Columbia and/or the State of New York or by the United States Postal Service. If the final day of any period of time in any provision of this Agreement falls upon a day that is not a Business Day, then, the time of such period shall be extended to the next Business Day. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period is so computed is to be included, unless such last day is not a Business Day, in which event the period shall run until the end of the next Business Day.

16. Fire or Other Casualty.

(b) Casualty Damage. If any portion of any of the Parcels constituting part of the Real Property shall be damaged or destroyed by fire or other casualty between the Effective Date and the Closing Date, Seller shall give written notice thereof to Buyer promptly after Seller obtains knowledge thereof. The proceeds of all fire and extended coverage insurance policies attributable to the damaged Parcel received by Seller prior to the Closing Date and not used by Seller for the protection or emergency repairs to the damaged Parcel (and Buyer hereby authorizes Seller to use the proceeds for such purposes) shall be disbursed by Seller to Buyer at Closing; and all unpaid claims under such insurance policies attributable to the damaged Parcel shall be assigned by Seller to Buyer on the Closing Date and Seller shall give a credit to Buyer at Closing for any unpaid deductibles thereunder. The obligation of Buyer to complete Closing under this Agreement shall in no way be voided or impaired, and Buyer shall not be excused from performing its obligations up to and at Closing without abatement of the Purchase Price. In addition, for clarity, the occurrence of a casualty with respect to any Parcel shall not give the Buyer the right to exclude such Parcel from the Property for purposes of Section 5.

(d) Survival. Seller’s obligations under this Section 16 shall survive the Closing.

17. Condemnation. If at any time after the Effective Date, any part of any Parcel comprising part of the Real Property shall be taken by exercise of the power of eminent domain, or deed in lieu of eminent domain (a “Taking”), then Buyer shall have the right to designate the applicable Property an Excluded Parcel (subject to the Excluded Parcel Cap), by written notice to Seller within ten (10) days of Seller’s notice to Buyer of such Taking, and in such event, Section 5(c) shall apply. If Buyer does not timely give notice of termination, then Buyer’s obligations under this Agreement with respect to such Parcel shall remain in effect notwithstanding such condemnation, this Agreement shall continue in full force and effect and there shall be no abatement of the Purchase Price. Seller shall be relieved, however, of its duty to provide title to the portion of the Parcel so taken, but Seller shall, on the Closing Date, assign to Buyer all rights and claims to any awards arising therefrom as well as any money theretofore received by Seller on account thereof, net of any reasonable expenses actually incurred by Seller, including attorney’s fees of collecting the same.

18. Assignability.

19. Inspections.

(a) Right to Inspect. Buyer, and Buyer’s agents and representatives, shall have the right, from time to time, prior to the Closing Date or earlier termination of this Agreement, during normal business hours, to enter upon the Parcels for the purpose of conducting visual inspections of the Property (including interior physical inspections, provided that Buyer shall not have the right to conduct interior physical inspections of more than 20% of the Parcels and such interior physical inspections shall be subject to the rights of tenants under their respective Leases), review of the environmental status and structural aspects of the Real Property, making of surveys and generally for the reasonable ascertainment of matters relating to the Property; provided, however, that Buyer shall: (i) give Seller reasonable prior written notice of the time and place of such entry, and shall permit a representative of Seller to accompany Buyer if so elected by Seller (which notice shall be delivered by email to Seller (at the following email addresses: Eric Phillipps (ephillipps@con-rex.com) and Ralph Nacey (rnacey@con-rex.com) and shall include the proposed time and place of such entry, and subject to the rights of the tenants in possession); (ii) use commercially reasonable efforts not to interfere with the operations of the Parcel or any Tenant thereof; (iii) restore any damage to the Property or any adjacent property caused by such actions; (iv) indemnify, defend and save Seller, and the Seller Parties (herein, collectively, the “Indemnified Seller Parties”) harmless of and from any and all actual out-of-pocket claims and/or liabilities which any of the Indemnified Seller Parties suffers relating to such entry and such activities, including, without limitation, any claims by Tenants and/or invitees of the applicable Parcels; (v) not communicate with any Tenant, unless accompanied by Seller in each instance; (vi) prior to entry onto any Parcels, furnish Seller with a certificate of commercial general liability providing coverage for bodily injury and property damage liability maintained by Buyer (which may be part of an umbrella policy) with a limit of liability of $2,000,000 per occurrence and

$2,000,000 general aggregate and naming Seller as additional insureds for all activities arising out the performance of Buyer’s or its agents’ inspection of the Property; and (vii) not conduct any environmental investigations or testing other than a standard “Phase I” investigation. All inspection rights under this Section 19(a) shall be subject to the rights of Tenants under the Existing Leases.

(b) Release and Indemnity With Respect to Buyer’s Inspection.

(iii) Notwithstanding any provision to the contrary in this Section 19(b), Buyer shall have no obligation to indemnify any Seller Parties from any damages, claims, expenses, liabilities or costs arising from (i) the negligent acts or intentional misconduct of any of Seller Parties or (ii) Buyer’s or any Buyer Party’s discovery of existing conditions of the Parcels (except to the extent such conditions are exacerbated by Buyer or any Buyer Party). The release and indemnity provided in this Section 19(b) shall survive the termination of this Agreement indefinitely.

(c) Reports on Buyer’s Inspection of the Parcels. Should Seller provide Buyer with any information or reports with respect to the Parcels (herein, “Reports”), Buyer acknowledges that (i) neither Seller nor any of the Seller Parties has made or makes any representations or warranties to Buyer concerning the accuracy or completeness of the Reports, the scope of work on which the Reports are based, or the reasonableness or validity of any conclusions or recommendations set forth therein or whether or not Seller nor any of the Seller Parties has undertaken or performed any action based on any of the Reports, (ii) Seller shall have no obligation to share any internal analysis or assessment of the Reports or any conclusions that Seller may have drawn from its internal review of the Reports, and (iii) Seller shall be under no obligation or responsibility, express or implied, to update or supplement any Reports. Further Buyer understands such Reports would have been prepared solely for the benefit of the addressee or preparer of such Reports and Buyer is not entitled to rely on the Reports or the information they contain or distribute or disseminate the Reports or the information they contain to third parties. Buyer hereby agrees to waive and release Seller from any and all claims relating to Buyer’s review or other use of the Reports.

(i) If Buyer timely provides a Continuation Notice to Seller and Escrow Holder prior to the expiration of the Inspection Period (time being of the essence), the Inspection Period shall terminate and Buyer shall be deemed to have waived any right to terminate this Agreement pursuant to this Section 19(e).

(ii) If Buyer does not timely provide a Continuation Notice to Seller and Escrow Holder prior to the expiration of the Inspection Period, then this Agreement shall immediately terminate and neither party shall have any rights and obligations hereunder (except for (A) the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, and (B) the obligations of the parties under Section 14 of this Agreement, if any), and Escrow Holder shall deliver the Initial Deposit to Seller (and not Buyer) except in the event of a Seller default, in which event Section 14 shall apply.

(f) Survival. The provisions of this Section 19 shall survive termination of this Agreement and/or the Closing.

20. Brokers. Seller and Buyer each represents and warrants to the other that it has dealt with no broker or other intermediary in connection with this transaction other than Eastdil Secured (the “Disclosed Broker”). If any broker or other intermediary other than the Disclosed Broker claims to be entitled to a fee or commission by reason of having dealt with Seller or Buyer in connection with this transaction, or having introduced the Property (or any portion thereof) to Buyer for sale, or having been the inducing cause to the sale, the party with whom such broker claims to have dealt shall indemnify, defend and save harmless the other party of and from any claim for commission or compensation by such broker or other intermediary. Seller agrees to pay, pursuant to a separate agreement between Seller and the Disclosed Broker, any commission payable to the Disclosed Broker in connection herewith if, as and when the Closing occurs, and shall indemnify, defend and hold Buyer harmless with respect thereto. This Section 20 shall survive the termination of this Agreement and/or the Closing.

21. Condition of Property.

(a) NO WARRANTIES. THE ENTIRE AGREEMENT BETWEEN SELLER AND BUYER WITH RESPECT TO THE MEMBERSHIP INTERESTS AND THE PROPERTY IS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE DOCUMENTS EXECUTED AND DELIVERED BY THE PARTIES AT CLOSING AND THE PARTIES ARE NOT BOUND BY ANY OTHER AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY A PARTY HERETO, OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SUCH PARTY, OR ANY OTHER PARTY). WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES WILL BE AFFORDED AN ADEQUATE OPPORTUNITY TO INSPECT THE BOOKS AND RECORDS OF THE ACQUIRED COMPANIES, THE PROPERTY, THE LEASES AND THE CONTRACTS, WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO BECOME FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THE CONDITION OF THE ACQUIRED COMPANIES AND THE PROPERTY, AND THAT, AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS, THE MEMBERSHIP INTERESTS, THE ACQUIRED COMPANIES, THE PROPERTY, THE LEASES, THE CONTRACTS, AND PERSONAL PROPERTY, IF ANY, WILL BE PURCHASED BY BUYER IN AN “AS IS” AND “WHERE IS” CONDITION (SUBJECT TO FURTHER WORK OR MODIFICATIONS PERMITTED TO BE PERFORMED PRIOR TO CLOSING PER THE TERMS OF THIS AGREEMENT) AND, SUBJECT TO (I) THE SELLER’S REPRESENTATIONS, (II) THE SELLER INDEMNIFIED COVENANTS, OR (III) THE REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS IN THE DOCUMENTS DELIVERED AT CLOSING (COLLECTIVELY, “SELLER’S UNDERTAKINGS”), WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER, OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT FOR SELLER’S UNDERTAKINGS) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE FOREGOING, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, THE ACTUAL OR PROJECTED INCOME OR EXPENSE ARISING FROM OWNING OR OPERATING THE PROPERTY, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH. BUYER ACKNOWLEDGES THAT, EXCEPT FOR SELLER’S UNDERTAKINGS, NEITHER SELLER NOR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER, NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED. THIS SECTION SHALL SURVIVE CLOSING INDEFINITELY AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE CLOSING.

(b) CHANGE OF CONDITIONS. IN THE EVENT CLOSING OCCURS HEREUNDER, BUYER SHALL ACCEPT THE MEMBERSHIP INTERESTS, ACQUIRED COMPANIES, AND PROPERTY AT THE TIME OF CLOSING IN THE SAME CONDITION AS THE SAME ARE AS OF THE EFFECTIVE DATE, AS SUCH CONDITION SHALL HAVE CHANGED BY REASON OF (i) CHANGES OR MODIFICATIONS PERMITTED OR APPROVED BY THE TERMS OF THIS AGREEMENT, (ii) REASONABLE WEAR AND TEAR, (iii) ANY DEFAULT(S) UNDER ANY LEASES AND/OR ANY TERMINATION OF ANY LEASES, AND (iv) SUBJECT TO SECTION 16 HEREOF, DAMAGE BY FIRE OR OTHER CASUALTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER SPECIFICALLY ACKNOWLEDGES THAT, ANY DEFAULT UNDER OR TERMINATION OF ANY LEASE, AND EXCEPT AS PROVIDED IN SECTION 16, THE FACT THAT ANY PORTION OF THE PROPERTY OR ANY EQUIPMENT OR MACHINERY THEREIN OR ANY PART THEREOF MAY NOT BE IN WORKING ORDER OR CONDITION AT THE CLOSING DATE BY REASON OF WEAR AND TEAR OR DAMAGE BY FIRE OR OTHER CASUALTY, OR BY REASON OF ITS PRESENT CONDITION, SHALL NOT RELIEVE BUYER OF ITS OBLIGATION TO COMPLETE CLOSING UNDER THIS AGREEMENT AND PAY THE FULL PURCHASE PRICE. EXCEPT AS PROVIDED IN SECTION 16, 17 OR SUBSECTIONS (c) AND (e) BELOW OR AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER HAS NO OBLIGATION TO MAKE ANY REPAIRS OR REPLACEMENTS REQUIRED BY REASON OF WEAR AND TEAR OR FIRE OR OTHER CASUALTY, BUT MAY, AT ITS OPTION AND ITS COST, MAKE ANY SUCH REPAIRS AND REPLACEMENTS PRIOR TO THE CLOSING DATE.

(c) Condition of Delivery/Repairs. To the extent that the Tenants have the obligation to maintain, repair and/or restore their respective leased premises under their Leases, Buyer agrees to look solely to the Tenants to perform such maintenance and repairs and restoration, Seller shall not be obligated to perform any such maintenance, repairs or restoration to the Real Property between the Effective Date and the Closing and Buyer shall accept the Real Property in its “as-is” condition as of the Closing. To the extent of Seller’s maintenance and repair obligations under the Leases, between the Effective Date and the Closing Date, Seller shall perform all customary ordinary repairs to the Property as Seller has customarily previously performed to maintain them in substantially the same condition as they are as of the Effective Date, as said condition shall be changed by (i) changes or modifications permitted or allowed by the terms of the Leases, (ii) changes or modifications permitted or approved by the terms of this Agreement, (iii) reasonable wear and tear, or (iv) damage by fire or other casualty, subject however to the provisions of Section 16 hereof. Without limiting the generality of the foregoing, Seller shall have no obligation to make any structural or extraordinary repairs or capital improvements between the Effective Date and the Closing Date.

(d) Pre-Closing Notice Covenants. Provided this Agreement has not been terminated, if after the Effective Date but prior to the Closing Date, Seller shall (i) receive a written notice from a Tenant alleging a Contract Default by the landlord under a Lease, (ii) receive written notice of any violation of laws which would be Seller’s obligation to cure under the applicable Lease with respect to a Parcel and which would cost in excess of $2,000, (iii) receive written notice of any Litigation instituted against Seller and affecting the Property or any particular Parcel, (iv) obtain actual knowledge of any casualty or Taking affecting any portion of the Property, or (v) receive written notice from any governmental authority or third party of any violations of any Environmental Requirements) affecting the Property or any particular Parcel, then Seller shall deliver to Buyer a copy of any notice issued or received by Seller within three (3) days of delivery or receipt by Seller of any such notice.

(e) RELEASE.

(i) WITHOUT LIMITING THE PROVISIONS OF SUBSECTION (a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OTHER THAN SELLER’S UNDERTAKINGS, BUYER HEREBY RELEASES SELLER, AND ITS PARENT, AFFILIATED AND SUBSIDIARY ENTITIES AND ALL OF THEIR RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEY’S FEES WHETHER THE SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE “CLAIMS”) ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE REAL PROPERTY, WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, (ii) ANY PROVISIONS OF THE LEASES AND THE INCLUDED CONTRACTS, (iii) ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, AND (iv) SOLELY TO THE EXTENT ARISING FROM AND AFTER THE CLOSING DATE, ANY LIABILITIES, CLAIMS OR CONDITIONS OCCURRING WITH RESPECT TO THE ACQUIRED COMPANIES. THE RELEASE SET FORTH IN THIS SUBSECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER ANY ENVIRONMENTAL REQUIREMENTS OF THE UNITED STATES, THE STATE IN WHICH THE REAL PROPERTY IS LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE EFFECTIVE DATE, AND ANY LOSSES, LIABILITIES OR CLAIMS OF ANY TYPE ARISING FROM AND AFTER THE CLOSING DATE. BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER’S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER’S COUNSEL. BUYER EXPRESSLY WAIVES ITS RIGHTS GRANTED UNDER ANY PROVISION OF LAW THAT PROVIDES THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT BUYER DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS AGREEMENT TO RELEASE SELLER. IN ORDER TO CONFIRM SUCH WAIVER, BUYER HAS INITIALED THIS SUBSECTION IN THE SPACE PROVIDED BELOW.


Buyer’s Initials:		/s/ DS

LIMITING THE GENERALITY OF THE PROVISIONS OF THIS SECTION 21(e)(ii), SELLER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL CLAIMS AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER IT MAY NOW OR HEREAFTER HAVE AGAINST THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN), AND HEREBY UNCONDITIONALLY AND IRREVOCABLY RELEASE AND DISCHARGE THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN) FROM ANY AND ALL LIABILITY WHATSOEVER WHICH MAY NOW OR HEREAFTER ACCRUE IN FAVOR SELLER AGAINST THE BUYER PARTIES (OTHER THAN BUYER AS PROVIDED HEREIN), IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. IN ORDER TO CONFIRM SUCH WAIVER, SELLER HAS INITIALED THIS SUBSECTION IN THE SPACE PROVIDED BELOW.


Seller’s Initials:		/s/ JS


Buyer’s Initials:		/s/ DS

22. Survival of Provisions; Indemnification.

(b) Notwithstanding any provision to the contrary set forth in this Agreement (except as provided in this Section 22(b)), Seller’s Express Representations shall survive Closing under this Agreement for a period of 270 days following the Closing (the “Survival Period”), subject however to the provisions of the remainder of this Section 22; provided that the representations and warranties set forth in Sections 10(a)(i)-(v) (the “Fundamental Representations”) shall survive indefinitely.

(c) Following the Closing, subject to the other provisions of this Section 22, Seller shall indemnify and hold Buyer and Buyer Parties harmless from and against any and all actual out of pocket costs, losses, liabilities, fees, expenses, damages, deficiencies, interest and penalties (including, without limitation, reasonable attorneys’ fees and disbursements, but excluding any consequential (including lost profits), punitive, or speculative damages (collectively, “Losses”), incurred by Buyer and any such Buyer Party to the extent resulting from (i) any breach of any of Seller’s Representations hereunder or representations and warranties of Seller under the documents executed and delivered by Seller at Closing (collectively, the “Express Representations”), (ii) any breach of the covenants of Seller contained in this Agreement or in any Closing documents executed and delivered by Seller at Closing solely to the extent such covenant is expressly provided herein to survive the Closing, and any third-party claims made against any Acquired Company to the extent arising or accruing prior to the Closing Date (collectively, the “Seller Indemnified Covenants”), and (iii) any Excluded Parcel and related Excluded Property, and the liabilities related to any Excluded Parcel and related Excluded Property, in each case except for any Loss resulting from the action or inaction of any Buyer Party.

(e) Survival Periods. Notwithstanding any provision to the contrary set forth in this Agreement, (i) the indemnification for any breach of the Express Representations shall survive Closing under this Agreement for a period of 270 days, (ii) the indemnification with respect to the Seller Indemnified Covenants (other than Seller Tax Covenants and the adjustments pursuant to Section 7(f)) shall survive Closing under this Agreement for a period of 270 days, (iii) the indemnification with respect to the Seller Tax Covenants and the adjustments pursuant to Section 7(f) shall survive Closing under this Agreement for a period of one (1) year; and (iv) the indemnification

with respect to the Seller Excluded Property Liabilities shall survive Closing under this Agreement indefinitely (as applicable, the “Seller Indemnity Survival Period”); provided that, in the event that any Seller Indemnified Covenant is expressly stated to survive for any shorter period as set forth in this Agreement, then the applicable Seller Indemnity Survival Period for such Seller Indemnified Covenant shall be such shorter period as expressly stated herein. All other provisions of this Agreement shall not survive Closing. After Closing, the only remedies Buyer shall have with respect to breaches of this Agreement are as set forth in this Section 22.

(f) Seller Indemnity Limitations. Seller’s liability with respect to any claims made under this Agreement shall be subject to the following limitations:

(i) Notwithstanding anything set forth herein to the contrary, if Buyer has actual knowledge of any breach of any representations, warranties and/or covenants of Seller hereunder, including, without limitation, any breach of the Express Representations and any claims with respect to the Seller Indemnified Covenants, prior to the Closing Date, Buyer’s sole right and remedy shall be as set forth in Section 14(b) above. If Buyer has actual knowledge of such breach and fails to exercise its remedies set forth in Section 14(b) on or prior to the Closing Date, Buyer shall be deemed to have waived such breach and any right or remedy by reason of such breach to the extent Buyer had actual knowledge of such breach prior to Closing, such matter thereafter shall not be construed as a breach of a covenant of Seller hereunder. In addition, if Buyer issues a Continuation Notice during the Inspection Period pursuant to Section 19(e), Buyer shall be deemed to have waived any right or remedy (including, without limitation, any right under this Agreement to terminate this Agreement) by reason of any breach of the Express Representations and the Seller Indemnified Covenants, to the extent Buyer had knowledge of such breach prior to the expiration of the Inspection Period, and thereafter such matter shall not be construed as a breach of a covenant of Seller hereunder. If Buyer shall notify Seller of any breach of any representation prior to the Closing (other than a breach of representation or warranty or covenant deemed waived by Buyer during the Inspection Period pursuant to the immediately preceding sentence) and exercises its right to terminate this Agreement by virtue thereof, Seller shall have the right to either (a) extend the Closing to attempt to cure such breach as provided in (and subject to the limitations set forth in) Section 12(d) hereof, or (b) if such breach pertains solely to one or more Parcels but not the Property or Acquired Companies as a whole, to designate the affected Parcels as Excluded Parcels (subject to the Seller Excluded Parcel Cap) in order to cure such breach, in which event the parties shall be obligated to proceed to Closing with respect to the remaining Property. In the event of any termination by Buyer pursuant to Section 14(b), then upon the return of the Deposit as provided for in this Agreement, this Agreement shall be and become null and void, neither party shall have any further rights or obligations hereunder (except for the obligations of Buyer and Seller that expressly survive termination as set forth in this Agreement, which shall survive the cancellation of this Agreement) and all executed counterparts of this Agreement shall be returned to Seller.

(ii) Seller shall have no liability on account of any breach or default unless Buyer shall have given to Seller written notice (“Warranty Notice”) describing such breach or default with reasonable specificity within the applicable Seller Indemnity Survival Period, and shall have given to Seller an opportunity to cure any such breach or default within thirty (30) days after Buyer’s Warranty Notice is delivered to Seller.

(iii) No claim shall be actionable or payable unless the valid Losses for all such breaches collectively aggregate more than Fifty Thousand Dollars ($50,000.00) (the “Deductible”), and in such event only Losses in excess of the Deductible shall be payable. Except for express indemnification obligations hereunder that survive Closing, attorneys’ fees incurred in connection with a claim where a court of competent jurisdiction makes a final non-appealable judgment that Seller committed fraud under this Agreement, in no event shall the aggregate liability of Seller to Buyer by reason of a breach, claim or default exceed SIX MILLION and No/DOLLARS ($6,000,000.00) (the “Liability Cap”); provided that the Deductible and Liability Cap shall not apply with respect to a breach or default of a Fundamental Representation. Seller’s liability shall be limited to actual damages to the extent actually caused by Seller’s breach and in no event shall Seller or any Seller Party be liable for any consequential (including lost profits), punitive, or speculative damages under this Agreement.

(iv) Following delivery of a Warranty Notice, the parties shall proceed for a period of thirty (30) days after Seller’s receipt of the Warranty Notice to attempt to resolve and settle Buyer’s claim pursuant to such Warranty Notice in good faith, and if the parties are unable to resolve and settle such claim within such thirty (30) day period, then any litigation with respect to any Seller’s Representations must be commenced within thirty (30) days after the date of the Warranty Notice (herein the “Warranty Claim Period”), and if not commenced within the Warranty Claim Period, then Buyer shall be deemed to have waived its claims for such breach or default. Any proceeding or litigation based upon a claim of fraud or similar theory shall be subject to Buyer similarly giving Seller a Warranty Notice as provided above and an action commenced by Buyer within the Warranty Claim Period and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

(g) Holdback Escrow Account. For the purpose of securing Seller’s obligations pursuant to this Agreement, including with respect to Seller’s Representations, and without limiting Seller’s obligations hereunder, at the Closing, Buyer shall deliver to the Escrow Holder by wire transfer of immediately available funds to an interest-bearing account administered by the Escrow Holder the amount of the Liability Cap (the “Holdback Escrow Amount”), pursuant to the Holdback Escrow Agreement.

(h) Survival. The provisions of this Section 22 shall survive Closing.

23. Miscellaneous.

(b) Entire Agreement; Binding Effect. This Agreement and, upon execution and delivery in accordance with the terms herein, the documents delivered by Seller at Closing, constitute the entire agreement between the parties with respect to the sale of the Property, supersedes all other writings and communications between the parties and there are no other representations, warranties or agreements, written or oral, between Seller and Buyer relating to the transactions contemplated herein. The parties acknowledge and affirm that they did not rely on any statement, oral or written, not contained in this Agreement in making their respective decisions to enter into this Agreement. Subject to the provisions of Section 18, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, representatives, successors and permitted assigns.

(d) Counterparts. This Agreement may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one agreement.

(e) Applicable Law. This Agreement shall be governed and construed according to the laws of the State of Delaware.

(g) Partial Invalidity. If any term, covenant, condition or provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable, in whole or in part, at any time or to any extent, the remainder of this Agreement, or the applicable enforceable portion of such term or provision, shall not be affected thereby, unless such invalidity or unenforceability materially frustrates the intent of the parties as set forth herein. Each term, covenant, condition and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

(h) Confidentiality. Subject to Section 24(j), Seller and Buyer agree to treat all information received with respect to the Property or the other party, whether such information is obtained from Seller or from Buyer’s own due diligence investigations, in a confidential manner, except to the extent such information is in the public domain or readily available to the public. Seller and Buyer shall not disclose any such information to any third parties, other than such disclosure to such party’s counsel, consultants, accountants, lenders, investors, separate accounts and funds and advisers, in each case, as may be required in connection with the transactions contemplated hereby (such disclosure to be made expressly subject to this confidentiality requirement) and any such disclosure that is required by law. The foregoing shall not apply to Buyer following Closing in respect of information with respect to the Property. Seller and Buyer agree to keep this Agreement confidential and not make any public announcements, press releases or disclosures with respect to the subject matter of this Agreement prior to Closing without the written consent of the other party.

(i) Agreement Not To Be Recorded. This Agreement shall not be filed of record by or on behalf of Buyer in any office or place of public record other than by Buyer in connection with an action for specific performance hereunder. If Buyer fails to comply with the terms hereof by recording or attempting to record this Agreement or a notice thereof, such act shall not operate to bind or cloud the title to the Property. Seller shall, nevertheless, have the right forthwith to institute appropriate legal proceedings to have the same removed from record. If Buyer shall cause or permit this Agreement or a copy thereof to be filed in an office or place of public record, Seller, at its option, and in addition to Seller’s other rights and remedies, may treat such act as a material default of this Agreement on the part of Buyer entitling Seller to retain the Deposit. However, the filing of this Agreement in any lawsuit or other proceedings between the parties in which such document is relevant or material shall not be deemed to be a violation of this Section.

(j) Tax Treatment. Notwithstanding anything to the contrary, any understanding or agreement among the parties as to confidentiality in relation to the transactions contemplated by this and any other related agreements (the “Transaction”) shall not apply to the U.S. federal tax treatment or U.S. federal tax structure of the Transaction and each party hereto (and any employee, representative, or agent of any party) may disclose to any and all persons, without limitation of any kind, the U.S. federal tax treatment and U.S. federal tax structure of the Transaction and all other materials of any kind (including opinions or other U.S. federal tax analysis) that are provided to any party hereto relating to such U.S. federal tax treatment and U.S. federal tax structure. However, any such information relating to such U.S. federal tax treatment and U.S. federal tax structure is required to be kept confidential to the extent necessary to comply with any applicable securities laws. The preceding sentences are intended to cause the Transaction not to be treated as having been offered under conditions of confidentiality for purposes of Sections 1.6011-4(b)(3) and 301.6111-2(a)(2)(ii) (or any successor provisions) of the Treasury Regulations issued under the Internal Revenue Code of 1986, as amended, and shall be construed in a manner consistent with such purpose.

(k) Further Assurances. Seller and Buyer each agree to take such further steps, and deliver such further documents, as are reasonably necessary in order to implement the transactions contemplated hereby, including the execution and delivery of supplemental escrow instructions to the extent reasonably requested by the Escrow Holder. Notwithstanding the foregoing, neither party shall have any obligation to take and such steps or execute or deliver any such further documents if the same would be inconsistent in any material respect with the rights and obligations of the parties contemplated by this Agreement.

24. Sophistication of the Parties. Each party hereto hereby acknowledges and agrees that it is experienced in the consummation of transactions of the type governed by this Agreement, that it has consulted legal counsel in connection with the negotiation of this Agreement and that it has bargaining power equal to that of the other parties hereto in connection with the negotiation and execution of this Agreement. Accordingly, the parties hereto agree the rule of contract construction to the effect that an agreement shall be construed against the draftsman shall have no application in the construction or interpretation of this Agreement.

25. Limited Liability. The obligations of Seller under this Agreement or directly or indirectly arising out of this Agreement shall be limited solely to Seller’s collective interest in the Membership Interests and the Property, and neither Buyer nor anyone else claiming by or through Buyer shall have any claim against any other asset of Seller, any of Seller Parties or any other person. The provisions of this Section 25 are in addition to, and not in substitution of, any other limitations on the liability of Seller set forth in this Agreement.

26. Joint and Several Obligations. If Buyer consists of more than one person or entity, each such person and entity shall have joint and several liability for the obligations of Buyer hereunder.

27. Enforcement.

(b) Each of the Indemnified Seller Parties shall be deemed intended third-party beneficiaries of those provisions of this Agreement and all agreements delivered pursuant to this Agreement which may provide that Buyer shall release and/or indemnify Seller and/or other Indemnified Seller Parties against any obligation set forth herein. Each of the Indemnified Seller Parties may enforce such provisions directly against Buyer. The provisions of Section 25, Section 26, and Section 27 shall similarly inure to the benefit of each of the Indemnified Seller Parties.

28. Schedules and Exhibits. This Exhibits identified on the List of Exhibits on the Table of Contents annexed hereto (or otherwise referenced in this Agreement) are a material part of this Agreement and are incorporated in this Agreement by reference.

29. Tax Matters. Seller and Buyer hereby agree to the following covenants with respect to Tax matters (the “Tax Covenants”), which shall survive the Closing.

(a) Tax Return Filing.

(i) Seller shall prepare or cause to be prepared all Tax Returns for the Acquired Companies for any taxable periods ending on or before the Closing Date (“Pre-Closing Tax Period”), which returns shall be prepared in a manner consistent with past practice. Seller shall submit each Tax Return for a Pre-Closing Tax Period that has not yet been filed as of the Effective Date (a “Pre-Closing Tax Return”) to Buyer at least 20 Business Days prior to the due date (taking into account any extensions) for the Buyer’s review and comment, and Seller shall consider any such comments in good faith. Seller shall pay all Taxes of the Acquired Companies reflected on such Pre-Closing Tax Return.

(ii) Buyer or the Acquired Companies shall prepare or cause to be prepared all Tax Returns for the Acquired Companies for any taxable period that includes (but does not start on) the Closing Date (a “Straddle Period”) in a manner consistent with past practice (except to the extent past practice is affected by the transactions contemplated by this Agreement). Buyer or the Acquired Companies shall submit each Tax Return for a Straddle Period (a “Straddle Return”) to Seller at least twenty (20) Business Days prior to the due date (taking into account any extensions) for Seller’s review, comment and approval. Seller shall pay all Taxes (other than Taxes covered by Section 7(f) and Section 8(c)) attributable to a pre-closing period that are reflected on a Straddle Return (“Pre-Closing Straddle Tax”); provided that any estimated Pre-Closing Straddle Tax payment made by the Acquired Companies during a Straddle Period but prior to the Closing Date shall be credited against such Pre-Closing Straddle Tax liability and any overpayment of estimated Pre-Closing Straddle Tax shall be promptly refunded to Seller. For purposes of the preceding sentence, the amount of any Taxes based on or measured by income, receipts, sales, use or payroll of the Acquired Companies (other than Taxes covered by Section 7(a)(v) and Section 8(c)) reflected on a Straddle Return that are attributable to a pre-closing period shall be determined based on an interim closing of the books as of the close of business on the day preceding the Closing Date (and for such purpose, the taxable period of any partnership or other entity in which the Company holds a beneficial interest shall be deemed to terminate at such time) and the amount of other Taxes of the Acquired Companies (other than Taxes covered by Section 7(f) and Section 8(c)) reflected on a Straddle Return that are attributable to a pre-closing period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the date preceding the Closing Date and the denominator of which is the number of days in such Straddle Period. Seller’s obligation to pay Taxes reflected on a Straddle

Return that are attributable to a pre-closing period shall not cover Taxes resulting from any action taken on or after the Closing Date by the Buyer, any of its affiliates, or any transferees of the Buyer or their Affiliates. Buyer shall not amend a Tax Return that is attributable to a Pre-Closing Tax Period or Straddle Return or make any tax election with an effective date prior to the Closing Date without Seller’s consent (which consent shall not be unreasonably withheld).

(iii) In the event that Buyer or the Acquired Companies, on the one hand, and Seller, on the other hand, are unable to agree on any comments to any Tax Returns prepared pursuant to Section 29(a)(ii) for which agreement is required, within ten (10) Business Days after Seller has delivered its comments, the parties shall refer such dispute to a nationally-recognized accounting firm mutually agreed upon by Buyer and Seller (the “Accountants”) for final determination; the fees and expenses of the Accountants shall be paid fifty percent (50%) to Buyer and fifty percent (50%) to Seller.

(b) Tax Audits. Seller shall be permitted to control any audit or examination of Tax Returns, and any claim or administrative or judicial proceeding related thereto, for any Pre-Closing or Straddle Period of the Acquired Companies. Notwithstanding any other provision of this Agreement, Buyer shall have the right to participate in all aspects of such audit or examination that relates primarily to a Pre-Closing or Straddle Period, and the Acquired Companies and Seller shall not settle or compromise any such audit or examination that relates primarily to a Pre-Closing or Straddle Period without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed, if such action would have the effect of increasing the present or future Tax liability or decreasing any present or future Tax asset of the Acquired Companies or any beneficial owners thereof.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

IN WITHNESS WHEREOF, the parties hereto, intending legally to be bound hereby, have executed this Agreement as of the date first above written.


SELLER:

REX RESIDENTIAL PROPERTY HOLDINGS, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY HOLDINGS A, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

[Signatures continued on following page]

Signature Page to

Agreement of Purchase and Sale


REX RESIDENTIAL PROPERTY HOLDINGS II, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY HOLDINGS III, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

[Signatures continued on following page]

Signature Page to

Agreement of Purchase and Sale


REX RESIDENTIAL PROPERTY HOLDINGS IV, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY HOLDINGS V, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY HOLDINGS VI, LLC, a Delaware limited liability company

By:		/s/ Jordan Socaransky
Name:		Jordan Socaransky
Title:		Authorized Signatory

By:		/s/ Marc Porosoff
Name:		Marc Porosoff
Title:		Authorized Signatory

[Signatures continued on following page]


BUYER:

VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership

By:		/s/ Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

Signature Page to

Agreement of Purchase and Sale

AGREEMENT OF ESCROW HOLDER


CHICAGO TITLE INSURANCE COMPANY

By:		/s/ Susan Vander Meer
Name:		Susan Vander Meer
Title:		Escrow Manager

Signature Page to

Agreement of Purchase and Sale

Exhibit A

Chart Showing Acquired Companies

[Omitted]

Exhibit B

List of Properties

[Omitted]

Exhibit C

List of Existing Leases

[Omitted]

Exhibit D-1

List of Existing Contracts

[Omitted]

Exhibit D-2

List of Management Agreements

[Omitted]

Exhibit E

Escrow Agreement

[Omitted]

Exhibit F

Allocation of Purchase Price

[Omitted]

Exhibit G

List of Pending Litigation

[Omitted]

Exhibit H

Assignment of Membership Interests

[Omitted]

Exhibit I

FIRPTA Certification

[Omitted]

Exhibit J

List of Tenant Charge Arrearages

[Omitted]

Exhibit K

Rent Roll

[Omitted]

Exhibit L

List of Insurance Policies

[Omitted]

Exhibit M

Existing Loans

[Omitted]

Exhibit N

List of Parcels Subject to an HOA

With Regular HOA Payments

[Omitted]

Exhibit O

Escrow Holdback Agreement

[Omitted]

Schedule 10

Construction Projects; Fires or Other Casualties

[Omitted]

Exhibit 3.3

Adopted June 10, 2021

AMENDED AND RESTATED BYLAWS OF VINEBROOK HOMES TRUST, INC.

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE. The principal office of VineBrook Homes Trust, Inc., a Maryland corporation (the “Corporation”), in the State of Maryland shall be located at such place as the Board of Directors of the Corporation (the “Board or the “Board of Directors”) may designate.

Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Amended and Restated Bylaws (the “Bylaws”) and stated in the notice of the meeting.

Section 2. ANNUAL MEETING. An annual meeting of stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors.

Section 3. SPECIAL MEETINGS.

(a) General. Each of the chairman of the board, chief executive officer, president and Board of Directors may call a special meeting of stockholders. Except as provided in subsection (b)(4) of this Section 3, a special meeting of stockholders shall be held on the date and at the time and place set by the chairman of the board, chief executive officer, president or Board of Directors, whoever has called the meeting. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

(b) Stockholder-Requested Special Meetings. (1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection

with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which a Record Date Request Notice is received by the secretary.

(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the Special Meeting Request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

(4) In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m., local time, on the 90^th day after the Meeting Record Date or, if such 90^th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such

meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder-Requested Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30^th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).

(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (i) if the notice of meeting has not already been mailed or delivered, the secretary shall refrain from mailing or delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

(6) The chairman of the board, chief executive officer, president or a majority of the Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Texas or New York are authorized or obligated by law or executive order to close.

Section 4. NOTICE. Not less than 10 nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business, by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless such stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than 10 days prior to such date and otherwise in the manner set forth in this section.

Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment or appointed individual, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary, or, in the secretary’s absence, an assistant secretary, or, in the absence of both the secretary and assistant secretaries, an individual appointed by the Board of Directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments;

(e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum is present, to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 6. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “Charter”) for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.

Section 7. VOTING. A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share entitles the holder thereof to vote for as many individuals as there are directors to be elected and for whose election the holder is entitled to vote. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardless of class, entitles the holder thereof to cast one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.

Section 8. PROXIES. A holder of record of shares of stock of the Corporation may cast votes in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, limited liability company, partnership, joint venture, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, managing member, manager, general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or fiduciary, in such capacity, may vote stock registered in such trustee’s or fiduciary’s name, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt by the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. Except as otherwise provided by the chairman of the meeting, the inspectors, if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairman of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

(a) Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a).

(2) For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and

shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150^th day nor later than 5:00 p.m., Eastern Time, on the 120^th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article II) (or other meeting materials) for the preceding year’s annual meeting; provided, however, that in connection with the Corporation’s first annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 150^th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120^th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(3) Such stockholder’s notice shall set forth:

(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act;

(ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

(A) the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

(B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

(C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of

changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest in the Company Securities, and

(D) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

(iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee,

(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee, and

(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;

(v) the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal prior to the date of such stockholder’s notice; and

(vi) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

(4) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder.

(5) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) provided that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraphs (a)(3) and (4) of this Section 11, is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120^th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90^th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(c) General. (1) If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11, and (B) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11.

(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.

(3) For purposes of this Section 11, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure (A) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (B) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act, if applicable.

(4) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder, if applicable, with respect to the matters set forth in this Section 11.

Section 12. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (a) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders or (b) if the action is advised, and submitted to the stockholders for approval, by the Board of Directors and a consent in writing or by electronic transmission of stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders is delivered to the Corporation in accordance with the MGCL. The Corporation shall give notice of any action taken by less than unanimous consent to each stockholder not later than 10 days after the effective time of such action.

Section 13. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

ARTICLE III

DIRECTORS

Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 2. NUMBER, TENURE AND RESIGNATION. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time, or on the occurrence of an event, specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place of regular meetings of the Board of Directors without other notice than such resolution.

Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the time and place of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than such resolution.

Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such other percentage of such group.

The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board or lead director, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.

Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

Section 11. VACANCIES. If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, or as may otherwise be set forth in the Charter, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies.

Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

Section 13. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

Section 14. RATIFICATION. The Board of Directors or the stockholders may ratify any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter, and if so ratified, shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 15. CERTAIN RIGHTS OF DIRECTORS. Any director, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.

Section 16. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV

COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Except as may be otherwise provided by the Board of Directors, any committee may delegate some or all of its power and authority to one or more subcommittees, composed of one or more directors, as the committee deems appropriate in its sole and absolute discretion.

Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide.

Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 4. CHAIRMAN OF THE BOARD. The Board of Directors may designate from among its members a chairman of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The Board of Directors may designate the chairman of the board as an executive or non-executive chairman. The chairman of the board shall preside over the meetings of the Board of Directors. The chairman of the board shall perform such other duties as may be assigned to him or her by these Bylaws or the Board of Directors.

Section 5. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

Section 6. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 7. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 8. PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the chief executive officer, the president or the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.

Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors.

Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.

Section 13. COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS, CHECKS AND DEPOSITS

Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors and executed by an authorized person.

Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of Directors may determine.

ARTICLE VII

STOCK

Section 1. CERTIFICATES. Except as may be otherwise provided by the Board of Directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of any uncertificated shares, the Corporation shall provide to the record holders of such shares, to the extent then required by the MGCL, a written statement of the information required by the MGCL to be included on stock certificates.

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein; provided, however, the Corporation’s Series A Cumulative Redeemable Preferred Stock, and any Transfer (as defined in the Charter) of shares thereof, will not be subject to the limitations set forth in Section 7.6 of the Charter.

Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than 10 days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting shall be determined as set forth herein.

Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may authorize the Corporation to issue fractional shares of stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may authorize the issuance of units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII

ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

INVESTMENT POLICY

Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

ARTICLE XI

SEAL

Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the Charter and these Bylaws shall vest immediately upon election of a director or officer. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, resolution, insurance, agreement or otherwise.

Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Charter or these Bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XIII

WAIVER OF NOTICE

Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

ARTICLE XIV

EXCLUSIVE FORUM FOR CERTAIN LITIGATION

Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation other than actions arising under the federal securities laws, (b) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL, the Charter or these Bylaws, or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine.

ARTICLE XV

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

Exhibit 10.1

Execution Version

AMENDED AND RESTATED

ADVISORY AGREEMENT

BY AND BETWEEN

VINEBROOK HOMES TRUST, INC.

AND

NEXPOINT REAL ESTATE ADVISORS V, L.P.

TABLE OF CONTENTS


		Page
1.	Definitions		1
2.	Appointment		4
3.	Duties of the Adviser		4
4.	Authority of Adviser		7
5.	No Partnership or Joint Venture		7
6.	Bank Accounts		7
7.	Records; Access; Confidentiality		7
8.	Limitations on Activities		7
9.	Compensation		8
10.	Expenses		8
11.	Other Services		9
12.	Other Activities of the Adviser		9
13.	Term and Termination		9
14.	Payments and Duties Upon Termination		10
15.	Board Nominations		10
16.	Internalization		10
17.	Limitation of Liability, Exculpation and Indemnification by the Company and its Subsidiaries		11
18.	Indemnification by the Adviser		12
19.	Notices		12
20.	Modification		13
21.	Severability		13
22.	Governing Law; Exclusive Jurisdiction; Waiver of Jury Trial		13
23.	Entire Agreement		13
24.	No Waiver		13
25.	Pronouns and Plurals		14
26.	Headings		14
27.	Execution in Counterparts		14

AMENDED AND RESTATED

ADVISORY AGREEMENT

THIS AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”), dated as of May 4, 2020, is entered into by and between VineBrook Homes Trust, Inc., a Maryland corporation (the “Company”) and NexPoint Real Estate Advisors V, L.P., a Delaware limited partnership (the “Adviser”).

RECITALS

A. The Company is a Maryland corporation created in accordance with the Maryland General Corporation Law and elected to qualify as a REIT for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2018.

B. The Company is a limited partner of VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), and, as of the effective date of this Agreement, owns a majority of the partnership interests of the Operating Partnership.

C. The Company desires to continue to avail itself of the experience, sources of information, advice, assistance and certain facilities of the Adviser and its Affiliates and to have the Adviser undertake the duties and responsibilities set forth in this Agreement, on behalf of and subject to, the supervision of the Board of Directors, all as provided in this Agreement.

D. The Adviser is willing to continue to render such services, subject to the supervision of the Board of Directors, on the terms and conditions set forth in this Agreement.

E. The parties hereto desire to amend and restate the Advisory Agreement, dated November 1, 2018, in its entirety to revise the fees payable to the Adviser, among other things.

F. The Board of Directors have approved this Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Definitions. The following terms shall have the meanings set forth in this Section 1 for purposes of this Agreement. Other terms are defined in the text of this Agreement.

“1940 Act” means the Investment Company Act of 1940, as amended.

“Advisory Fee” means an annual fee, payable monthly, in an amount equal to 0.75% of the Gross Asset Value.

“Affiliate” or “Affiliated” means with respect to any Person, (a) any Person directly or indirectly controlling, controlled by or under common control with such other Person, (b) any executive officer, director, trustee or general partner of such other Person, and (c) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. For purposes of this definition, the terms “controls,” “is controlled by,” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership or voting rights, by contract or otherwise.

“Articles of Incorporation” means the Articles of Amendment and Restatement of the Company, as hereafter amended and/or restated from time to time.

“Average Total Gross Asset Value” means the average of the Total Gross Asset Value at the end of each month (or partial month) (i) for which any fee under this Agreement is calculated or (ii) during the year for which any Expense reimbursement under this Agreement is calculated.

“Board of Directors” or “Board” means the Board of Directors of the Company.

“Bylaws” means the bylaws of the Company, as hereafter amended and/or restated from time to time.

“Cause Event” means (a) a final judgment by any court or governmental body of competent jurisdiction not stayed or vacated within 30 days that the Adviser, any of its agents or any of its assignees has committed a felony or a material violation of applicable securities laws that has a material adverse effect on the business of the Company or the ability of the Adviser to perform its duties under the terms of this Agreement, (b) an order for relief in an involuntary bankruptcy case relating solely to the Adviser or the Adviser authorizing or filing a voluntary bankruptcy petition on its own behalf, (c) the dissolution of the Adviser, or (d) a determination that the Adviser has (i) committed fraud against the Company, (ii) misappropriated or embezzled funds of the Company, (iii) acted in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement, (iv) failed to act, where such failure to act constituted bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement, or (v) defaulted in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall have continued for a period of 30 days after the Company had given written notice to the Adviser of such default; provided, however, that if any of the actions or omissions described in this clause (d) are caused by an employee and/or officer of the Adviser or one of its Affiliates and the Adviser takes all necessary action against such person and cures the damage caused by such actions or omissions within 30 days of such determination, then such event shall not constitute a Cause Event.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

“Director” means a member of the Board of Directors.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means the U.S. generally accepted accounting principles.

“Gross Asset Value” means the value of the Company’s total assets, as determined in accordance with GAAP on an unconsolidated basis plus the Company’s pro rata share of leverage at the Operating Partnership.

“Internalization Fee” means an internalization fee equal to three times the sum of the annual Advisory Fee for the trailing 12-month period as of the month end immediately preceding the date the Company and the Adviser agree to the Internalization; provided, however, the Internalization Fee shall be capped at 2.5% of the combined equity value of the Company and the Operating Partnership on a consolidated basis, as of the Internalization Closing, as calculated by multiplying the aggregate number of outstanding Shares and OP Units (excluding OP Units held by the Company) by the then-current Net Asset Value.

“Investments” means any investments by the Company or its subsidiaries in Real Estate Assets or any other asset.

“Joint Ventures” means any joint venture or partnership arrangements (other than between the Company and the Operating Partnership) in which the Company or any of its subsidiaries is a co-venturer, member or partner, which are established to own Investments.

“Loans” means any indebtedness or obligations in respect of borrowed money or evidenced by bonds, notes, debentures, deeds of trust, letters of credit or similar instruments, including mortgages and mezzanine loans.

“Management Agreement” means (a) that certain Management Agreement, dated November 1, 2018, by and among the Manager and other parties thereto, as may be amended, restated, modified, supplemented or replaced from time to time and (b) any additional Management Agreements that may be entered into from time to time by any subsidiary of the Company and the Manager, as may be amended, restated, modified, supplemented or replaced from time to time.

“Manager” means VineBrook Homes, LLC, a Delaware limited liability company, and any successor or permitted assigns thereof.

“Net Asset Value” means the total assets of the Company minus the total liabilities of the Company, in each case, as determined in accordance with GAAP, other than the periodic valuations of the Company’s Real Estate Assets.

“NexPoint” means NexPoint Advisors, L.P., a Delaware limited partnership.

“Offering” means any public or private offering of equity or debt securities of the Company that is consummated as of or at a time following the date of this Agreement, excluding Shares (or securities convertible into Shares) offered under any employee benefit plan of the Company or its Affiliates.

“Offering Expenses” means any and all expenses (other than underwriters’ discounts) paid or to be paid by the Company in connection with an Offering, including, without limitation, the Company’s legal, accounting, printing, mailing and filing fees and other documented offering expenses.

“Operating Expenses” means all out-of-pocket expenses of the Adviser in performing services for the Company, including the expenses incurred by the Adviser in connection with any provision by the Adviser of legal, accounting, financial and due diligence services performed by the Adviser that outside professionals or outside consultants would otherwise perform. Operating Expenses also include compensation expenses under the REIT 2018 Long Term Incentive Plan and the Company’s pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Adviser required for the Company’s operations. Operating Expenses do not include expenses for the administrative services described on Exhibit A to this Agreement.

“OP Units” means common units of limited partnership interests in the Operating Partnership.

“Person” means an individual, corporation, partnership, joint venture, association, company (whether of limited liability or otherwise), trust, bank or other entity, or government or any agency or political subdivision of a government.

“PPM” means the Company’s Confidential Private Placement Memorandum, dated January 31, 2020, as amended, restated and/or supplemented from time to time.

“Real Estate Assets” means any investment by the Company or its subsidiaries (including, without limitation, reserves for capital expenditures) in unimproved and improved Real Property (including, without limitation, fee or leasehold interests, options and leases) either directly, through a direct or indirect subsidiary of the Company or through a Joint Venture.

“Real Property” means real property owned from time to time by the Company, either directly, through a direct or indirect subsidiary of the Company or through a Joint Venture, which consists of (a) land only, (b) land, including the single-family and multi-family residences located thereon, (c) single-family and multi-family residences only, (d) real estate-related securities (including preferred stock), mortgage, bridge or mezzanine loans, or (e) such Investments the Board or the Adviser designate as Real Property to the extent such Investments could be classified as Real Property.

“REIT” means a “real estate investment trust” within the meaning of Sections 856 through 860 of the Code.

“REIT 2018 Long Term Incentive Plan” means the 2018 Long Term Incentive Plan of the Company, as hereafter amended and/or restated from time to time.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” means the shares of the Company’s common stock, par value $0.01 per share.

“Side Letter” means that certain amended and restated side letter, dated July 31, 2020, by and among VineBrook Homes OP GP, LLC, the Manager, the Company, the Operating Partnership and the other parties thereto, as amended, restated and/or supplemented from time to time.

“Stockholders” means the registered holders of the Shares.

“Termination Fee” means a termination fee equal to three times the annual Advisory Fee earned by the Adviser for the trailing 12-month period.

“Total Gross Asset Value” means the total assets of the Company and the Operating Partnership, as determined in accordance with GAAP on a consolidated basis.

“Value Per Share” means the most recent price paid for a Share in connection with an Offering or, if there is no current Offering, the last monthly Net Asset Value calculated by the Company.

2. Appointment. The Company hereby appoints the Adviser to serve as its adviser to perform the services set forth herein on the terms and conditions set forth in this Agreement, and the Adviser hereby accepts such appointment. Except as otherwise provided in this Agreement, the Adviser hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein. The appointment of the Adviser shall be exclusive to the Adviser, except to the extent that the Adviser elects, in its sole and absolute discretion, subject to the terms of this Agreement, to cause the duties of the Adviser as set forth herein to be provided by third parties and/or its Affiliates.

3. Duties of the Adviser. The Adviser, in its capacity as manager of the assets and the day-to-day operations of the Company, at all times will be subject to the supervision of the Company’s Board of Directors and will have only such functions and authority as the Company may delegate to it including, without limitation, the functions and authority identified herein and delegated to the Adviser hereby. The Adviser will be responsible for the day-to-day operations of the Company and will perform (or cause to be performed through one or more of its Affiliates or subsidiaries) such services and activities relating to the assets and operations of the Company as may be appropriate, including, without limitation:

(a) serve as the Company’s investment and financial advisor;

(b) vote on behalf of the Company all equity securities of the Operating Partnership and any other equity securities owned, directly or indirectly, by the Company;

(c) provide the daily management for the Company and perform and supervise the various administrative functions necessary for the day-to-day management of the operations of the Company, including the administrative services described on Exhibit A to this Agreement;

(d) investigate, select, and, on behalf of the Company, engage and conduct business with such Persons as the Adviser deems necessary to the proper performance of its obligations hereunder, including, but not limited to, consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, real estate management companies, real estate operating companies, securities investment advisors, mortgagors, the registrar and the transfer agent and any and all agents for any of the foregoing, including Affiliates of the Adviser, and Persons acting in any other capacity deemed by the Adviser necessary or desirable for the performance of any of the foregoing services, including, but not limited to, entering into contracts in the name of the Company with any of the foregoing;

(e) consult with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s (including, as it relates to any of its subsidiaries) financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company (including, as it relates to any of its subsidiaries) and in connection with any borrowings proposed to be undertaken by the Company and its subsidiaries;

(f) subject to the provisions of Section 4 hereof, (i) participate in formulating an investment strategy and asset allocation framework, (ii) locate, analyze and select potential Investments, (iii) structure and negotiate the terms and conditions of transactions pursuant to which acquisitions and dispositions of Investments will be made, (iv) research, identify, review and recommend acquisitions and dispositions of Investments to the Board and make Investments on behalf of the Company in compliance with the investment objectives and policies of the Company, (v) negotiate the terms of and arrange for financing and refinancing and make other changes in the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with, Investments, (vi) negotiate and enter into leases and service contracts for Real Estate Assets and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Real Estate Assets, (vii) actively oversee and manage Investments for purposes of meeting the Company’s investment objectives and reviewing and analyzing financial information for each of the Investments and the overall portfolio, (viii) select Joint Venture partners, structure and negotiate corresponding agreements and oversee and monitor these relationships, (ix) engage, oversee, supervise and evaluate property managers who perform services for the Company, (x) engage, oversee, supervise and evaluate Persons with whom the Adviser contracts to perform certain of the services required to be performed under this Agreement, (xi) manage accounting and other record keeping functions for the Company, including reviewing and analyzing the capital and operating budgets for the Real Estate Assets and generating an annual budget for the Company, and if requested, its subsidiaries, and (xii) recommend various liquidity events to the Board when appropriate;

(g) upon request, provide the Board with periodic reports regarding prospective Investments that are actively being considered by the investment committee of the Operating Partnership (the “Investment Committee”) or by the Adviser;

(h) negotiate the terms of and make investments in, and dispositions of, Investments within the discretionary limits and authority as granted by the Board;

(i) within the discretionary limits and authority as granted by the Board, negotiate on behalf of the Company with banks or other lenders for Loans to be made to or guaranteed by the Company, and negotiate on behalf of the Company with investment banking firms and broker-dealers or negotiate private sales of Shares or obtain Loans for the Company, but in no event in such a manner so that the Adviser shall be acting as broker-dealer or underwriter; provided, further, that any fees and costs payable to third parties incurred by the Adviser in connection with the foregoing shall be the responsibility of the Company or, in the case of any guarantee of any obligations of the Operating Partnership, the Operating Partnership;

(j) at least monthly, and at any other time reasonably requested by the Board, obtain reports (which may, but are not required to, be prepared by the Adviser or its Affiliates), where appropriate, concerning the value of Investments or contemplated Investments of the Company or the Investment Committee of the Operating Partnership;

(k) at least quarterly, and at any other time reasonably requested by the Board, make reports to the Board of its performance of services to the Company under this Agreement (including reports with respect to potential conflicts of interest involving the Adviser or any of its Affiliates), the composition and characteristics of the Company’s portfolio, and compliance with the Company’s investment guidelines and other policies approved from time to time by the Board;

(l) provide the Company with all necessary cash management services;

(m) deliver to, or maintain on behalf of, the Company copies of all appraisals obtained in connection with the Investments in any Real Estate Assets as may be required to be obtained by the Board or the Investment Committee of the Operating Partnership;

(n) notify the Board of all proposed transactions outside of the Adviser’s delegated authority before they are completed and obtain Board approval of same;

(o) negotiate and effect any interests in Investments as may be approved by the Board;

(p) perform investor-relations and Stockholder communications functions for the Company;

(q) render such services as may be reasonably determined by the Board of Directors consistent with the terms and conditions herein;

(r) maintain the Company’s accounting and other records and assist the Company in filing all reports required to be filed by it with the SEC, the Internal Revenue Service and other regulatory agencies, to the extent applicable;

(s) advise the Company regarding the maintenance of the Company’s qualification as a REIT and monitor the Company’s compliance with the various REIT qualification requirements and other rules set forth in the Code and any applicable treasury regulations promulgated under the Code, as amended from time to time, and use its commercially reasonable efforts to cause the Company to qualify as a REIT and maintain its qualification as a REIT for U.S. federal income tax purposes;

(t) advise the Company regarding the maintenance of its exemptions from the status of an investment company required to register under the 1940 Act, and monitor compliance with the requirements for maintaining such exemptions and using commercially reasonable efforts to cause it to maintain such exemptions from such status;

(u) assist the Company in qualifying to do business in all applicable jurisdictions in which the Company or its subsidiaries do business, and ensure that the Company and its subsidiaries obtain and maintain all applicable licenses;

(v) assist the Company in complying with all regulatory requirements applicable to them with respect to their business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act;

(w) if requested by the Company, provide, or cause another qualified third party to provide, such internal audit, compliance and control services as may be required for the Company and its subsidiaries to comply with applicable law (including the Securities Act and the Exchange Act), regulation (including SEC regulations), and as otherwise requested by the Board;

(x) handle and resolve on behalf of the Company and, if requested, its subsidiaries all routine claims, disputes or controversies, including all routine litigation, arbitration, settlement or other proceedings or negotiations, in which the Company or its subsidiaries may be involved or to which they may become subject, subject to such limitations or parameters as may be imposed from time to time by the Board;

(y) perform and do all things necessary on behalf of the Company in its role as the tax matter partner of the Operating Partnership;

(z) elect to and exercise any call or similar rights that are in favor of the Company or its subsidiaries, including the call rights set forth in the Side Letter;

(aa) designate the member of the Investment Committee of the Operating Partnership that the Company is entitled to appoint pursuant to the terms of the Agreement of Limited Partnership of the Operating Partnership, as the same is in effect from time to time;

(bb) do all things necessary to assure its ability to render the services described in this Agreement; and

(cc) use commercially reasonable efforts to cause the Company and its subsidiaries to comply with all applicable laws.

Notwithstanding the foregoing, the Adviser may delegate any of the foregoing duties to any Person so long as the Adviser remains responsible for the performance of the duties set forth in this Section 3; provided, however, that the delegation by the Adviser of any of the foregoing duties to another Person shall not result in an increased Advisory Fee or additional expenses payable by the Company hereunder.

4. Authority of Adviser.

(a) Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 8), and subject to the continuing and exclusive authority of the Board over the management of the Company, the Company, acting on the authority of the Board of Directors, hereby delegates to the Adviser the authority to perform the services described in Section 3.

(b) For the period and on the terms and conditions set forth in this Agreement, the Company and its subsidiaries hereby constitute, appoint and authorize the Adviser as its true and lawful agent and attorney-in-fact, in its name, place and stead, to negotiate, execute, deliver and enter into agreements, instruments and authorizations on their behalf, on such terms and conditions as the Adviser, acting in its sole and absolute discretion, deems necessary or appropriate (subject to any limitations imposed by the Board). This power of attorney is deemed to be coupled with an interest.

5. No Partnership or Joint Venture. The parties to this Agreement are not partners or joint venturers with each other and nothing herein shall be construed to make them partners or joint venturers or impose any liability as such on either of them.

6. Bank Accounts. The Adviser may establish and maintain one or more bank accounts in its own name for the account of the Company and any of its subsidiaries or in the name of the Company and its subsidiaries and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or its subsidiaries, consistent with the authority granted under Section 4 and in such other circumstances as the Board may approve, provided that no funds shall be commingled with the funds of the Adviser; and the Adviser shall upon request by the Board render appropriate accountings of such collections and payments to the Board and to the auditors of the Company.

7. Records; Access; Confidentiality. The Adviser shall maintain appropriate books of accounts and records of all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time and from time to time. The Adviser shall at all reasonable times have access to the books and records of the Company and its subsidiaries. The Adviser shall keep confidential any and all information obtained in connection with the services rendered under this Agreement and shall not disclose any such information (or use the same except in furtherance of its duties under this Agreement) to unaffiliated third parties except (a) with the prior written consent of the Board, (b) to legal counsel, accountants or other professional advisors or consultants engaged by the Company, (c) to appraisers, financing sources and others in the ordinary course of the Company’s business, (d) to governmental officials having jurisdiction over the Company and its subsidiaries, (e) in connection with any governmental or regulatory filings of the Company or its subsidiaries, or disclosure or presentations to Company investors, (f) as required by law or legal process to which the Adviser or any Person to whom disclosure is permitted hereunder is a party, (g) to the Manager or members of the Operating Partnership’s Investment Committee, or (h) to the extent such information is otherwise publicly available through the actions of a Person other than the Adviser not resulting from the Adviser’s violation of this Section 7. The confidentiality provisions of this Section 7 shall survive for a period of one year after the expiration or earlier termination of this Agreement.

8. Limitations on Activities. Notwithstanding anything herein to the contrary, the Adviser shall not intentionally or with gross negligence, reckless disregard or bad faith take any action that, would (a) adversely affect the maintenance of the Company’s qualification as a REIT under the Code, unless the Board has determined that the maintenance of the Company’s REIT qualification is not in the best

interest of the Company and its Stockholders, (b) subject the Company to regulation under the 1940 Act, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company or its Shares, or otherwise not be permitted by the Articles of Incorporation or Bylaws, except if such action shall be ordered by the Board, in which case the Adviser shall notify promptly the Board of the Adviser’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Adviser shall have no liability for acting in accordance with the specific instructions of the Board so given. The Adviser shall comply in all material respects with all applicable law and regulations.

9. Compensation.

(a) During the term hereof, as the same may be extended from time to time, the Company shall pay the Adviser the Advisory Fee. The Adviser shall compute each installment of the Advisory Fee as promptly as possible after the end of the month with respect to which such installment is payable. The accrued fees will be payable monthly as promptly as possible after the end of each month during which this Agreement is in effect. A copy of the computations made by the Adviser to calculate such installment shall thereafter, for informational purposes only, promptly be delivered to the Board. The Advisory Fee shall be paid in cash unless the Adviser elects, in its sole discretion, to receive all or a portion of the Advisory Fee in OP Units; provided, that such election to receive all or a portion of the fee in OP Units shall be made by notice to the Board (the “Election Notice”) at the time the Adviser delivers to the Board the computation of the Advisory Fee for such month. To the extent that the Adviser elects to receive OP Units in payment of all or a portion of the Advisory Fee for any particular month, the number of OP Units payable to the Adviser for such month shall equal (i) the dollar amount of the portion of the monthly installment of the Advisory Fee payable in OP Units (as set forth in the Election Notice) divided by (ii) the Value Per Share. The Advisory Fee shall be payable independent of the performance of the Company or the Investments. The Adviser’s ability to receive OP Units in payment of all or a portion of the Advisory Fee due to the Adviser under this Agreement shall be subject to complying with all U.S. federal and state securities laws.

(b) The Adviser may waive a portion of its fees. If this Agreement becomes effective subsequent to the first day of a month or shall terminate before the last day of a month, compensation for such month shall be computed in a manner consistent with the calculation of the fees payable on a monthly basis.

10. Expenses.

(a) In addition to the compensation paid to the Adviser pursuant to Section 9, the Company shall pay directly or reimburse the Adviser for all of the documented Operating Expenses and Offering Expenses (together, “Expenses”) paid or incurred by the Adviser or its Affiliates in connection with the services it provides to the Company and its subsidiaries pursuant to this Agreement. Any Expenses payable by the Company or reimbursable to the Adviser pursuant to this Agreement shall not be in amounts greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s length basis. Reimbursement of Operating Expenses under this Section 10, plus Advisory Fees under Section 9, may not exceed 1.5% of the Average Total Gross Asset Value for any calendar year or portion thereof, provided, however, that this limitation will not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with extraordinary litigation, an initial public offering of equity securities of the Company, an Internalization, mergers and acquisitions and other events outside the Company’s ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of Real Estate Assets.

(b) The Adviser shall prepare a statement documenting all Expenses incurred during each month, and shall deliver such statement to the Company within 15 business days after the end of each month. Expenses incurred by the Adviser on behalf of the Company and its subsidiaries and payable pursuant to this Section 10 shall be reimbursed no later than the 15th business day immediately following the date of delivery of such statement of Expenses to the Company.

11. Other Services. Should the Board request that the Adviser or any director, officer or employee thereof render services for the Company and its subsidiaries other than set forth in Section 3, such services shall be separately compensated at such customary rates and in such customary amounts as are agreed upon by the Adviser and the Board, including a majority of any directors independent of the Adviser, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.

12. Other Activities of the Adviser. Except as set forth in this Section 12, nothing herein contained shall prevent the Adviser or any of its Affiliates from engaging in or earning fees from other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by NexPoint or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, member, partner, employee, or stockholder of the Adviser or its Affiliates to engage in or earn fees from any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association and earn fees for rendering such services; provided, however, that the Adviser must devote sufficient resources to the Company’s business to discharge its obligations to the Company under this Agreement. The Adviser may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein, and earn fees for rendering such advice and service. Specifically, it is contemplated that the Company may enter into Joint Ventures or other similar co-investment arrangements with certain Persons, and pursuant to the agreements governing such Joint Ventures or arrangements, the Adviser may be engaged to provide advice and service to such Persons, in which case the Adviser will earn fees for rendering such advice and service.

The Board acknowledges that the Adviser and its Affiliates are subject to various conflicts of interest, including without limitation, those set forth in the PPM. The Adviser shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or is reasonably likely to create a conflict of interest between the Adviser’s obligations to the Company and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association.

13. Term and Termination.

(a) Duration. This Agreement shall become effective on the date first set forth above. Unless terminated as herein provided, this Agreement shall remain in full force and effect until November 1, 2021 (the “Initial Term”). Subsequent to the Initial Term, this Agreement shall be deemed to be automatically renewed for an additional one-year period (an “Automatic Renewal Term”), unless the Company or the Adviser elects not to renew this Agreement in accordance with Section 13(c) below.

(b) Amendment. No provision of this Agreement may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the amendment, waiver, discharge or termination is sought. Any amendment of this Agreement shall be approved by either (i) the Company’s Board of Directors or (ii) a vote of the Company’s Stockholders.

(c) Termination. Notwithstanding any other provision of this Agreement to the contrary, (i) upon written notice given 180 days’ prior to the expiration of the Initial Term or any Automatic Renewal Term to the Adviser, the Company may, without cause, in connection with the expiration of the Initial Term or the then-current Automatic Renewal Term, decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice, (ii) no later than 180 days prior to the expiration of the Initial Term or the then-current Automatic Renewal Term, the Adviser may deliver written notice to the Company informing it of the Adviser’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice, (iii) the Company may terminate this Agreement upon the occurrence of a Cause Event by giving written notice to the Adviser of the occurrence of a Cause Event, whereupon this Agreement shall terminate 30 days after delivery of such written notice, (iv) the Adviser may terminate this Agreement by giving written notice to the Company in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall have continued for a

period of 30 days before the Adviser had given written notice to the Company of such default, whereupon this Agreement shall terminate 30 days after delivery of such written notice, (v) the Adviser may terminate this Agreement by giving written notice to the Company in the event that any of the Adviser Designees are not elected or appointed to the Board as set forth in Section 15, whereupon this Agreement shall terminate 30 days after delivery of such written notice and (vi) this Agreement will automatically terminate on the Internalization Closing.

14. Payments and Duties Upon Termination.

(a) Amounts Owed. The Company shall pay the Adviser the Termination Fee before or on the last day of the Initial Term, the Automatic Renewal Term or the end of the 30-day period, as the case may be, provided that the Company is not required to pay the Adviser the Termination Fee if this Agreement is terminated by the Company as a result of a Cause Event.

(b) Adviser’s Duties. The Adviser shall promptly upon termination of this Agreement:

(i) pay over to the Company all money collected and held for the account of the Company and its subsidiaries pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

(ii) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;

(iii) deliver to the Board all assets, including all Investments, and documents of the Company and its subsidiaries then in the custody of the Adviser; and

(iv) reasonably cooperate with the Company and its subsidiaries, at the Company’s expense, to provide an orderly management transition.

15. Board Nominations. So long as this Agreement is in effect, (a) the Adviser shall have the right to designate individuals (the “Adviser Designees”) to be nominated for election (or re-election) to the Board such that, if elected, there shall be two Adviser Designees serving on the Board, and the Company will take all reasonably necessary action to nominate and include the Adviser Designees in the slate of nominees recommended by the Board for election as directors at each applicable annual meeting of Stockholders or special meeting of Stockholders at which directors are to be elected, including, without limitation, at every adjournment or postponement thereof, or in a written consent of Stockholders relating to the election of directors, and the Company will recommend each such individual be elected as a director and will solicit proxies or consents in favor thereof, and (b) in the event that a vacancy on the Board is created at any time by the death, disability, retirement, resignation or removal of any of the Adviser Designees, the Company will take all reasonably necessary action (whether by Board or Stockholder action) to cause the vacancy created thereby to be filled as soon as reasonably practicable by a new designee of the Adviser.

16. Internalization. At any time at which the Company and the Adviser mutually agree to internalize the Adviser, pursuant to which the Company will purchase all, but not less than all, of the outstanding and issued partnership interests of the Adviser (the “Adviser Equity”) from the Adviser (the “Internalization”) and its general partner, NexPoint Real Estate Advisors GP, LLC (the “Adviser GP”), the purchase price for the Adviser Equity shall be equal to the Internalization Fee. At the closing of the Internalization (the “Internalization Closing”), the Company shall pay the Internalization Fee to the Adviser in stock of the Company. At the Internalization Closing, the Adviser and the Adviser GP shall transfer the Adviser Equity, free and clear of any lien or encumbrance, and shall deliver to the Company certificates evidencing the Adviser Equity, duly endorsed in blank and accompanied by a duly executed instrument of assignment separate from the certificate, together with any other documentation reasonably requested by the Company to evidence the transfer. For the avoidance of doubt, if the Internalization occurs pursuant to this Section 16, the Adviser shall not be entitled to the Termination Fee provided under Section 13.

17. Limitation of Liability, Exculpation and Indemnification by the Company and its Subsidiaries.

(a) Whether or not expressly provided in this Agreement, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Adviser or any of its respective Affiliates and their respective partners, members, officers, directors, employees and agents (including parties acting as agents for the execution of transactions) (each, a “Covered Person” and collectively, “Covered Persons”) shall be subject to the provisions of this Section 17.

(b) To the fullest extent permitted by law, no Covered Person shall be liable to the Company and its subsidiaries for any act or omission (including but not limited to (i) any act or omission by any Covered Person in connection with the conduct of the business of the Company or its subsidiaries, that is determined by such Covered Person in good faith to be in or not opposed to the best interest of the Company or its subsidiaries, (ii) any act or omission by any Covered Person based on the suggestions of any professional advisor of the Company or its subsidiaries whom such Covered Person believes is authorized to make such suggestions on behalf of the Company or its subsidiaries, (iii) any act or omission by the Company or its subsidiaries, or (iv) any mistake, negligence, misconduct or bad faith of any broker or other agent of the Company or its subsidiaries selected by the Covered Person with reasonable care), unless any such act or omission by such Covered Person constitutes bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties (as determined by a non-appealable judgment of a court or arbitration proceeding of competent jurisdiction).

(c) A Covered Person may consult with legal counsel or accountants selected by such Covered Person and any act or omission by such Covered Person on behalf of the Company or its subsidiaries or in furtherance of the business of the Company or its subsidiaries in good faith in reliance on and in accordance with the advice of such counsel or accountants shall be full justification for the act or omission, and such Covered Person shall be fully protected in so acting or omitting to act if the counsel or accountants were selected with reasonable care.

(d) To the fullest extent permitted by law, the Company or its applicable subsidiaries shall indemnify and save harmless Covered Persons, from and against any and all claims, liabilities, damages, losses, costs and expenses, including amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and expenses of investigating or defending against any claim or alleged claim, of any nature whatsoever, known or unknown, liquidated or unliquidated, that are incurred by any Covered Person and arise out of or in connection with the business or Investments of the Company or its subsidiaries, or the performance by the Covered Person of its responsibilities hereunder, provided that the Covered Person shall not be entitled to indemnification hereunder to the extent the Covered Person’s conduct constitutes bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties (as determined by a non-appealable judgment of a court or arbitration proceeding of competent jurisdiction). The termination of any proceeding by settlement, judgment, order or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Covered Person’s conduct constituted bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties.

(e) Expenses incurred by a Covered Person in defense or settlement of any claim that shall be subject to a right of indemnification hereunder, shall be advanced by the Company or its applicable subsidiaries prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the Covered Person to repay the amount advanced to the extent that it shall be determined ultimately that the Covered Person is not entitled to be indemnified hereunder.

(f) The right of any Covered Person to the indemnification provided herein shall be cumulative of, and in addition to, any and all rights to which the Covered Person may otherwise be entitled by contract or as a matter of law or equity and shall be extended to the Covered Person’s successors, assigns and legal representatives.

(g) The provisions of this Section 17 are expressly intended to confer benefits upon Covered Persons and such provisions shall remain operative and in full force and effect regardless of the expiration or any termination of this Agreement.

(h) No Covered Person shall be liable hereunder for any settlement of any action or claim effected without its written consent thereto.

18. Indemnification by the Adviser.

(a) The Adviser shall indemnify and hold harmless the Company from all claims, liabilities, damages, losses, costs and expenses, including amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and expenses of investigating or defending against any claim or alleged claim, of any nature whatsoever, known or unknown, liquidated or unliquidated, that are incurred by reason of the Adviser’s bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties; provided, however, that the Adviser shall not be held responsible for any action of the Board in following or declining to follow any written advice or written recommendation given by the Adviser.

(b) Notwithstanding anything in this Agreement to the contrary, the aggregate maximum amount that the Adviser may be liable to the Company pursuant to this Agreement shall, to the extent not prohibited by law, never exceed the amount of the Advisory Fees received by the Adviser under this Agreement prior to the date that the acts or omissions giving rise to a claim for indemnification or liability shall have occurred. In no event shall the Adviser be liable for special, exemplary, punitive, indirect, or consequential loss, or damage of any kind whatsoever, including without limitation lost profits. The foregoing limitations shall not apply to the extent such damages are determined in a final binding non-appealable court or arbitration proceeding to result from the bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties of the Adviser.

(c) The provisions of this Section 18 are expressly intended to confer benefits upon the Company and such provisions shall remain operative and in full force and effect regardless of the expiration or any termination of this Agreement.

19. Notices. All notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly received (a) if given by electronic mail transmitted delivery receipt requested, upon receipt of a delivery receipt, (b) if given by certified or registered mail, return receipt requested, postage prepaid, three business days after being deposited in the U.S. mails and (c) if given by courier or other means, when received or personally delivered, and, in any such case, addressed as follows:

To the Company:

VineBrook Homes Trust, Inc.

300 Crescent Court

Suite 700

Dallas, Texas 75201

Attention: Brian Mitts

Email: BMitts@nexpointsecurities.com

with a copy to:

Winston & Strawn LLP

2121 North Pearl Street

9^th Floor

Dallas, Texas 75201

Attention: Charles T. Haag

Email: chaag@winston.com

To the Adviser:

NexPoint Real Estate Advisors V, L.P.

300 Crescent Court

Suite 700

Dallas, Texas 75201

Attention: Brian Mitts

Email: BMitts@nexpointsecurities.com

with a copy to:

NexPoint Advisors, L.P.

300 Crescent Court

Suite 700

Dallas, Texas 75201

Attention: Thomas Surgent

Email: TSurgent@Highlandfunds.com

Any party may at any time give notice in writing to the other parties of a change in its address for the purposes of this Section 19.

20. Modification. This Agreement shall not be amended, supplemented, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.

21. Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

22. Governing Law; Exclusive Jurisdiction; Waiver of Jury Trial. THE PROVISIONS OF THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AS AT THE TIME IN EFFECT, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF DELAWARE, INCLUDING ANY APPELLATE COURTS THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

23. Entire Agreement. This Agreement, including the Exhibits attached hereto, contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.

24. No Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

25. Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

26. Headings. The titles of Sections and Subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

27. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.


VINEBROOK HOMES TRUST, INC.

By:		/s/Matt McGraner
		Name: Matt McGraner Title: Executive Vice President, Chief Investment Officer and Secretary


NEXPOINT REAL ESTATE ADVISORS V, L.P. By: NexPoint Real Estate Advisors GP, LLC

By:		/s/Brian Mitts
		Name: Brian Mitts Title: Authorized Signatory

[Signature Page to Amended and Restated Advisory Agreement]

EXHIBIT A

Description of Advisory Services.

Adviser will perform the following services:

(i)	Prepare monthly transaction listings;

(ii)	Supply various normal and customary portfolio and Company statistical data as requested on an ongoing basis;

(iii)

Prepare for execution and file the Company’s Federal and state tax returns: prepare a fiscal tax provision in coordination with the annual audit; prepare an excise tax provision; and prepare all relevant 1099 calculations;

(iv)	Coordinate contractual relationships and communications between the Company and its contractual service providers;

(v)	Oversee the relationships with any property or asset manager, including pursuant to the Management Agreement or any other asset and/or property management agreement that may be entered into from time to time, if applicable;

(vi)	Prepare income and capital gain distributions;

(vii)

Prepare the quarterly and annual financial statements;

(viii)

Monitor the Company’s compliance with the Internal Revenue Code of 1986, as amended, and particularly compliance with EBIT rules and if applicable, SEC reporting requirements;

(ix)	Assist in the preparation of notices of meetings of shareholders, coordinate preparation of proxy statements, including obtaining information required to be disclosed by applicable regulations and the engagement of proxy solicitors on behalf of the Company;

(x)	Assist in obtaining directors’ and officers’/errors and omissions insurance policies for the Company, including evaluation of insurance carriers, recommending appropriate coverage levels and evaluating the costs thereof, as such policies are approved by the Company’s Board of Directors;

(xi)	Draft agendas and resolutions for quarterly and special board meetings;

(xii)

Coordinate the preparation, assembly and posting of board materials;

(xiii)

Attend board meetings and draft minutes thereof;

(xiv)

Prepare REIT level and consolidated accounting;

(xv)	Arrange and manage audit;

(xvi)

Raise additional equity and manage the process relating therto, including updating and revising as necessary the Confidential Private Placement Memorandum and working with Raymond James and other broker dealers to negotiate and secure debt financing;

(xvii)

Maintain the Company’s calendar to assure compliance with various filing and board approval deadlines;

A-1

(xviii)

Prepare and coordinate the Company’s state notice filings;

(xix)

Furnish the Company office space in the offices of Adviser, or in such other place or places as may be agreed from time to time, and all necessary office facilities, simple business equipment, supplies, utilities and telephone service for managing the affairs of the Company;

(xx)	Perform clerical, bookkeeping and other administrative services not provided by the Company’s other service providers;

(xxi)

Oversee the maintenance by the Company’s transfer agent and dividend disbursing agent of certain books and records of the Company and maintain (or oversee maintenance by such other persons as approved by the Board of Directors) such other books and records required by law or for the proper operation of the Company;

(xxii)

Determine the amounts available for distribution as dividends and distributions to be paid by the Company to its shareholders; calculate, analyze and prepare a detailed income analysis and forecast future earnings for presentation to the Board of Directors; prepare and arrange for dividend notices to shareholders, as applicable, and provide the Company’s dividend disbursing agent and custodian with such information as is required for such parties to effect the payment of dividends and distributions and to implement the Company’s dividend reinvestment plan, if any;

(xxiii)

Serve as liaison between the Company and each of its service providers;

(xxiv)

Assist in monitoring and tracking the daily cash flows of the individual assets of the Company;

(xxv)

Monitor compliance with leverage tests under the Company’s credit facility and other debt facilities, if any, and communicate with leverage providers and rating agencies;

(xxvi)

Coordinate negotiation and renewal of credit agreements for presentation to the Board of Directors;

(xxvii)

Coordinate negotiations of agreements with counterparties for derivatives and similar transactions, as applicable;

(xxviii)

Provide assistance with the closing of Real Estate Asset purchases and dispositions;

(xxix)

Coordinate and oversee the provision of legal services to the Company;

(xxx)

Cooperate with the Company’s independent registered public accounting firm in connection with audits and reviews of the Company’s financial statements, including interviews and other meetings, as necessary;

(xxxi)

Provide Secretary and any Assistant Secretaries, Treasurer and any Assistant Treasurers and other officers for the Company as requested;

(xxxii)

Develop or assist in developing guidelines and procedures to improve overall compliance by the Company;

(xxxiii)

Determine and monitor expense accruals for the Company;

(xxxiv)

Authorize expenditures and approve bills for payment on behalf of the Company;

(xxxv)

Monitor the number of shares of the Company registered and assist in the registration of additional shares, as necessary;

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(xxxvi)

Exercise or procure the exercise of any rights of the Company with respect to any class action proceedings or other legal action concerning investments of the Company;

(xxxvii)

Prepare such reports as the Board of Directors may request from time to time;

(xxxviii)

Perform such additional administrative duties relating to the administration of the Company as may subsequently be agreed upon in writing between the Company and Adviser;

(xxxix)

Process sales and redemptions of shares of the Company;

(xl)	Determine, on behalf of the Company, whether a proposed transfer of shares of common stock or preferred stock should be permitted under the Company’s Articles of Incorporation and provide the necessary documentation required under the Articles of Incorporation to allow such a transfer;

(xli)

Prepare monthly Net Asset Value calculations;

(xlii)

If applicable, prepare, coordinate with the Company’s counsel and coordinate the filing with the SEC: quarterly reports on Form 10-Q; annual reports on Form 10-K, in each case based upon information provided by the Company; assist in the preparation of Forms 3, 4 and 5 pursuant to Section 16 of the 1934 Act for the officers and directors of the Company, such filings to be based on information provided by those persons;

(xliii)

Assist the Company, if applicable, in the handling of SEC examinations and responses thereto;

(xliv)

Determine or oversee the determination of the Company’s Net Asset Value in accordance with the Company’s policies as adopted from time to time by the Board of Directors;

(xlv)

Design, implement, maintain and update internal accounting controls;

(xlvi)

Manage any long-term incentive plan that is in place at the Company-level or the Operating Partnership-level; and

(xlvii)

Manage any distribution reinvestment plan that is in place from time to time.

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Exhibit 10.2

Execution Version

MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”), dated November 1, 2018, is made and entered into by and among NREA VB I, LLC, a Delaware limited liability company (“NREA I”), NREA VB II, LLC, a Delaware limited liability company (“NREA II”), NREA VB III, LLC, a Delaware limited liability company (“NREA III”), NREA VB IV, LLC, a Delaware limited liability company (“NREA IV”), NREA VB V, LLC, a Delaware limited liability company (“NREA V”), NREA VB VI, LLC, a Delaware limited liability company (“NREA VI”), NREA VB VII, LLC, a Delaware limited liability company (“NREA VII”; NREA I, NREA II, NREA III, NREA IV, NREA V, NREA VI, and NREA VII individually and collectively, “Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”).

RECITALS

WHEREAS, certain subsidiaries of VineBrook Homes Trust, Inc., a Delaware corporation (the “REIT”), and Affiliates of Manager entered into (a) those certain Partnership Interest Purchase and Sale and Contribution Agreements, dated July 18, 2018, to acquire all of the issued and outstanding partnership interests of VineBrook Annex I, L.P. (“Annex I”), and VineBrook Annex B, L.P. (“Annex B”), (b) those certain Partnership Merger Agreements, dated July 18, 2018 to merge VineBrook Partners, L.P. (“VB Partners”) and VineBrook Partners II, L.P. (“VB Partners II”) into subsidiaries of VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership (“OP”), and (c) those certain Membership Interest Purchase and Sale and Contribution Agreements, dated July 18, 2018, to acquire all of the issued and outstanding membership interests of VineBrook Properties, LLC (“VB Properties”) and Huber Funding, LLC (“Huber” and, together with VB Properties, VB Partners, VB Partners II, Annex I, and Annex B, the “Acquired Entities”) (collectively, the agreements contemplated in by (a), (b), and (c), the “Purchase Agreements”);

WHEREAS, on June 13, 2018, VBAnnex C Ohio, LLC, a Delaware limited liability company, or its Affiliate VBAnnex C, LP, a Delaware limited partnership (collectively, “Annex C”), acquired 270 parcels and 315 residential units in Cincinnati, Ohio pursuant to the terms of that certain Purchase and Sale Agreement, dated December 15, 2017 (as amended from time to time, the “Cincinnati Agreement”), by and among Elissa K. Miller, Trustee and affiliated entities that are signatories thereto;

WHEREAS, upon the consummation of the transactions contemplated by the Purchase Agreements (which shall include the direct or indirect transfer of the Annex C properties that are the subject of the Cincinnati Agreement to the OP or one or more of its subsidiaries), Owner will own or otherwise have the right to collect rents from, and contract for managerial services for, the single-family and multi-family rental properties identified and described in Schedule A attached hereto, plus any additional properties acquired by Owner or subsidiaries of the OP in accordance with this Agreement, minus any properties sold by Owner or subsidiaries of the OP from time to time in accordance with this Agreement (collectively, such properties owned by Owner or subsidiaries of the OP from time to time during the term of this Agreement, the “Properties” and each, a “Property”); and

WHEREAS, the parties desire to enter into this Agreement, pursuant to which Manager will undertake certain management, acquisition, disposition and oversight functions with respect to the Properties as provided herein, subject to the limitations set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

SECTION 1.01 Appointment of Manager. Owner hereby appoints Manager the sole and exclusive manager for the Properties upon the terms and conditions set forth herein. Manager hereby accepts such appointment on the terms and conditions set forth herein and shall furnish the services of its organization for the management of the Properties.

SECTION 1.02 Independent Contractor Status. Manager is hereby engaged to manage the Properties as an independent contractor.

ARTICLE II

TERM OF AGREEMENT

SECTION 2.01 Term of Agreement. This Agreement shall commence upon the Owner’s acquisition or control of the Properties (the “Effective Date”) and shall continue until the last day of the calendar month following the three year anniversary of the Effective Date (the “Term”). Upon expiration of the Term, this Agreement will automatically renew for additional one-year periods until terminated as provided in Article VIII.

ARTICLE III

MANAGER’S DUTIES AND RESPONSIBILITIES

SECTION 3.01 General Scope. Manager shall devote such efforts as are consistent with the Standard of Care (as defined below) in managing, coordinating and supervising the ordinary and usual business and affairs pertaining to the identification, acquisition, operation, maintenance, leasing, licensing, rehabilitation, construction, disposition and management of the Properties and in compliance with the directives of Owner or the Investment Committee (as hereinafter defined), all pursuant to the terms, conditions and limitations of this Agreement. Manager shall have such responsibilities, and shall perform and take, or cause to be performed or taken, all such services and

actions customarily taken by managing agents of property of similar nature, location, and character to that of the Properties consistent with the duties set forth in this Article III. Unless otherwise specifically provided in this Agreement, the written directives of Owner or the Investment Committee, the Approved Guidelines, or the Approved Operating Budget (collectively, the “Guiding Documents”), all services and actions that Manager is required or permitted to perform or take, or cause to be performed or taken in connection with the management of the Properties shall be performed or taken, as the case may be, on behalf of Owner and at Owner’s sole cost, expense, and risk. Manager’s authority is limited to performing the services set forth herein and the other Guiding Documents. Except as provided in the Guiding Documents, Manager shall have no authority (a) to execute any contract or agreement for or on behalf of Owner, (b) to provide additional services or modify existing services to tenants, or (c) to assume or create any obligation or liability or to make any representation, covenant, agreement or warranty for or on behalf of Owner.

SECTION 3.02 Standard of Care. Manager shall perform its duties and obligations hereunder in a commercially reasonable manner, consistent with the degree of care, skill, prudence, diligence and good faith that a property manager would use in managing other properties or performing similar services in the same geographic location (the “Standard of Care”), including, but not limited to, those obligations as specified in the attached Schedule D. Without limiting the generality of the foregoing, Manager shall employ such efforts as are consistent with the Standard of Care to comply with all applicable requirements of federal, state and local laws, ordinances, rules, regulations and orders governing the leasing, promotion, management, use, operation, repair and maintenance of the Properties and the terms of any leases, mortgages or other agreements to which Properties are subject (collectively, the “Requirements” or individually a “Requirement”). Manager shall have in its employ at all times a sufficient number of capable employees to properly, adequately, safely and economically perform the duties hereunder. Further, Manager shall carry out its duties set forth herein in a manner that is consistent with Owner’s written instructions concerning its election to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended.

submitted to Owner sixty (60) days prior to the beginning of the next Fiscal Year. All proposed Management Plans and Operating Budgets shall include, without limitation, leasing objectives for the next annual budget period, a marketing plan for the next annual budget period including the estimated costs of the marketing and promotional plans, a market analysis of the leasing market in which the Properties are located, and if requested by Owner, a review of the real estate taxes and assessed valuation and a recommendation concerning the merits of a tax appeal for the Properties. Owner will review the proposed Management Plan and Operating Budget and will consult with Manager prior to the commencement of the forthcoming fiscal year in order to agree on an approved Management Plan and an approved Operating Budget (collectively, the “Approved Operating Budget”). Until such time as the Management Plan and Operating Budget shall be approved by Owner as aforesaid, Manager shall, unless otherwise directed in writing by Owner and subject to the terms of this Agreement, make only those expenditures necessary to (1) maintain the physical integrity of the Properties, preserve the security of the Properties (including without limitation taxes, insurance and utilities borne by Owner), or prevent any lien or other encumbrances on the Properties, (2) comply with the Requirements, (3) comply with Owner’s obligations hereunder, as landlord under the terms of any Leases, and under any Loan Documents (as defined in Schedule D), and (4) remedy an emergency situation. Manager agrees to use such efforts as are consistent with the Standard of Care to ensure the actual costs of all Operating Expenditures and capital expenditures for the Properties shall not exceed the Approved Operating Budget, both in the aggregate and in respect of the specific budget category pertaining thereto (taking into account any variance allowances permitted in the Guiding Documents).

SECTION 3.04 Approved Operating Budget. The Approved Operating Budget shall constitute an authorization for Manager to establish rental rates and implement marketing strategies in accordance therewith. Manager shall supervise the preparation of all advertising layouts, brochures, and campaigns. Advertising and promotional materials shall be prepared in accordance with the Approved Operating Budget and full compliance with federal, state, and municipal fair housing laws, and Manager shall not use Owner’s name (or any Affiliate of Owner) without Owner’s express written approval.

Owner or the Investment Committee, and Manager is hereby authorized to contact the NexPoint Real Estate Advisors V, L.P. (the “Advisor”) and any Lender to obtain additional information reasonably necessary for the preparation of such reports, analyses, or studies. The approved guidelines for the acquisition, disposition and leasing of existing and future Properties are attached hereto as Schedule F (the “Approved Guidelines”). The Approved Guidelines shall be applicable to the markets within which the Properties are located, and before acquiring Properties in new markets, Manager shall propose updated guidelines for properties in that market for the approval of the Investment Committee. Provided that Manager has obtained the Investment Committee’s prior written approval, Manager shall be authorized to cause Owner or an Affiliate thereof to acquire, dispose of, and lease Properties consistent with this Agreement, the Approved Guidelines and the other Guiding Documents. For purposes of clarification, Properties acquired by Owner or any subsidiaries of the OP will be deemed Properties under this Agreement, and Properties sold by Owner or any subsidiaries of the OP shall no longer be deemed Properties under this Agreement, in either case regardless of whether this Agreement or any exhibit or schedule is formally amended to reflect the new or former Properties.

SECTION 3.06 Leasing. Manager shall exercise such efforts as are consistent with the Standard of Care to obtain and keep residents and will cooperate with any broker in any reasonable manner likely to aid in filling any vacancy. Manager is authorized, subject to the Approved Operating Budget and consistent with the Standard of Care and Guiding Documents, to negotiate, prepare, and execute all leases on Owner’s approved lease form, including all renewals and extensions of leases and to cancel and modify existing leases, provided such actions are taken in accordance with all Requirements.

SECTION 3.07 Security Deposits. Manager is authorized to establish accounts on behalf of Owner for holding security deposits in accordance with the Approved Operating Budget and all Requirements, and shall collect and refund security deposits in accordance with the terms of each resident’s lease and as may be required by applicable law. If required by statute, Manager will deposit security deposits into a separate interest-bearing account and pay residents the interest earned on such deposit; otherwise, Manager will deposit security deposits into the Operating Account (as defined in Schedule B). When Manager reasonably deems appropriate, Manager may offset resident charges with forfeited security deposit amounts and disburse any surplus security deposits from the Operating Account.

SECTION 3.08 Collection of Rents and Enforcement of Leases. Manager shall exercise such efforts as are consistent with the Standard of Care to promptly collect all rents and other charges for services provided in connection with the use of the Properties. All monies collected shall be promptly deposited into the Operating Account unless otherwise directed by Owner. When necessary and permissible by applicable Requirements, Manager is authorized to institute the following actions: (a) terminate tenancies; (b) sign and serve such notices as are deemed reasonably necessary or expedient by Manager; (c) institute and prosecute actions and evict residents; (d) recover rents and other sums due by legal proceedings; and (e) settle, compromise, and release such actions or suits, or reinstitute such tenancies. Attorney’s fees, filing fees, court costs, and other reasonable and necessary expenses incurred in connection with such actions and not recovered from residents shall be paid out of the Operating Account.

SECTION 3.09 Operating Expenditures.

(a) The term “Operating Expenditures” shall mean the aggregate of all actual, reasonable expenses incurred by Manager in accordance with this Agreement in connection with or arising from the identification, acquisition, financing, ownership, operation, management, repair, disposition, replacement, maintenance, and use or occupancy of the Properties including, without limitation, expenditures for: (i) license and permit fees, landowner association fees and assessments, and all other charges of any kind and nature by any governmental or public authority; (ii) management fees and any other reasonable expenses incurred by Manager consistent with the Guiding Documents; (iii) advertising and marketing expenses, and third-party leasing fees and commissions; (iv) legal, accounting, engineering, and other professional and consulting fees and disbursements; (v) accounts payable to independent contractors providing labor, material, services and equipment to the Properties; (vi) premiums for insurance paid with respect to the Properties or the operations thereof; (vii) resident improvements and replacement and segregated reserves therefor; (viii) maintenance and repair of the Properties and all property and equipment used in connection with the operation thereof; (ix) renovation, improvement and development of the Properties and all property and equipment used in connection with the operation thereof; (x) refunds or security or other deposits to resident and contracting parties; (xi) funds reserved for contingent or contested liabilities, real estate taxes, insurance premiums, or other amounts not payable on a monthly basis; (xii) service contracts and public utility charges and assessments; (xiii) personnel administration charges and pre-employment screening and testing costs; (xiv) cost of third party revenue management programs (such as Yardi); and (xv) costs of credit reports, bank charges, and like matters. Operating Expenditures may include (A) payroll, benefits and overhead expenses approved by Owner pursuant to the Approved Operating Budget, and (B) other costs and expenses of Manager’s or its Affiliates’ personnel engaged in any Additional Services; provided, however, that Manager shall be responsible for paying, and shall not be reimbursed for, its general administrative overhead costs and expenses, including without limitation the costs and expenses of renting its offices, employing its general administrative staff, purchasing or renting its office equipment and supplies, and maintaining phone and internet connections.

(b) For purposes of clarification, Manager may perform (or cause its Affiliates to perform) certain services (including without limitation services related to leasing, onboarding, fit-up, inspecting, renovation, improvement, development, construction, maintenance, repair, cleaning, painting or decorating the Properties any of the Properties) that could be contracted or subcontracted out to third parties hereunder, and, for performing such services, Manager (or its Affiliates) shall be entitled to reimbursement for the costs and expenses incurred performing such services (in addition to the Management Fees contemplated under Article VI) at rates commensurate with rates that would be payable to unrelated third parties if Manager engaged such unrelated third parties to perform such services (collectively, the “Additional Services”).

(c) The Approved Operating Budget shall constitute an authorization for Manager to expend the amounts approved as long as the expenses are incurred in connection with the operation and management of the Properties. Manager shall employ such efforts as are consistent with the Standard of Care to insure that the actual costs of maintaining and operating the Properties shall not exceed the Approved Operating Budget and significant year-to-date budget variances will be explained to Owner each month. In cases of emergency, Manager may make expenditures which exceed the aforementioned spending limit without prior approval, if such expenditures are necessary in the reasonable judgment of Manager to effectively protect the Properties or to prevent personal injury and is not in excess of $5,000 with respect to any individual Property or $250,000 collectively among all Properties during any calendar year. Manager will promptly notify Owner of any such emergency.

SECTION 3.10 Capital Expenditures. Any capital expenditures set forth in the Approved Operating Budget shall constitute an authorization for Manager to expend the amounts approved; however, any capital expenditure (excluding expenditures related to acquisition activities and rehabilitation of newly acquired Properties) over $10,000.00 per Property shall be awarded on the basis of competitive bidding, solicited in the following manner: (a) a minimum of two (2) written bids shall be obtained for each purchase where possible and practical to obtain such bids; (b) each bid will be solicited in a form so that uniformity will exist in the bid quotes; (c) Manager shall provide the Investment Committee with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid; and (d) the Investment Committee shall be free to accept or reject any and all bids, provided that if the Investment Committee fails to do so within three (3) Business Days, Manager shall provide written notice to the Investment Committee that a failure to respond within one (1) Business Day shall constitute a deemed approval, and the Investment Committee fails to do so within such one (1) Business Day, such failure shall be deemed acceptance. Owner shall be responsible for capital expenditures set forth in the Approved Operating Budget and may pay some from its own resources or may authorize payment by Manager out of available funds in the Operating Account.

SECTION 3.11 Public Utility and Service Contracts. To the extent applicable, Manager shall negotiate and execute, in its capacity as Owner’s agent, contracts for water, electricity, gas, vermin or pest extermination, and any other services which are necessary to properly maintain the Properties. All required utility deposits will be the responsibility of Owner and each contract shall: (a) be in the name of, and expense of, Owner; and (b) include a provision for cancellation thereof by Owner or Manager upon not more than thirty (30) days written notice.

funds to pay (to the extent of such surplus funds) the debt service and taxes due pursuant to any federal, state, county, or municipal authority, or other similar body having jurisdiction thereover. If Owner notifies Manager to make such payments after the beginning of the Term of this Agreement, Manager shall have the authority to name a new contingency reserve amount pursuant to Section 5.01 of this Agreement, and Owner authorizes Manager to maintain this new contingency reserve amount at all times in the Operating Account. Manager shall not take any action under this Section 3.12 so long as Owner is contesting, or has notified Manager of its intention to contest, any such order or requirement. Owner will supply all information necessary for Manager to comply promptly with these requirements.

SECTION 3.13 Compliance with Regulations. Manager shall employ such efforts as are consistent with the Standard of Care to cause the Properties to be in compliance with all Requirements. Manager shall promptly give written notice to Owner of Manager’s receipt of any oral or written notice of the possible or actual existence of a material violation of any material Requirement or as otherwise required by the Standard of Care (a “Violation”), and Manager shall promptly cure at Owner’s expense any such Violation applicable to any Property, other than a Violation that is required to be cured by the respective tenants under the leases in effect at the Property. Expenses incurred in curing any Violation applicable to any Property may be paid from the Operating Account to the extent such expenses have been budgeted for in the Approved Operating Budget, and provided such expenses do not exceed $2,500.00 in any one instance. If (1) such expenses have not been so budgeted, (2) more than $2,500.00 is required to remedy a Violation, or (3) a Violation is one for which Owner may be subject to penalty, Manager shall immediately notify Owner of such Violation and advise Owner regarding a course of action for curing such Violation.

SECTION 3.14 Environmental Risk Management. Owner acknowledges and understands that Manager, except with respect to the obligations set forth in Section 3.05 and Schedule D, is not responsible for (1) evaluating the presence or absence of hazardous or toxic substances, mold, waste, materials, electromagnetic field, radon, or radioactive materials upon, within, above, or beneath the Properties; (2) maintaining or evaluating compliance with environmental, hazardous or solid materials or waste laws, rules and regulations except for any operating and maintenance plan applicable to the Properties or in connection with Manager’s construction management duties; or (3) conducting or ensuring clean-up or remediation of existing or identified hazardous material spills or contamination unless the parties otherwise agree in writing or as expressly provided herein.

(a) Accordingly, Manager’s obligations to Owner with respect to the presence of Hazardous Materials and/or with the compliance and enforcement of Hazardous Materials Laws shall be subject to, conditioned upon, and limited by the following:

(i) Owner may from time to time, at Owner’s sole discretion and expense, obtain from an independent environmental consultant retained by Owner, an environmental assessment report on the Properties (or any of them) and may have such assessment report periodically updated.

(ii) Except as provided by Section 3.14(a)(iii), Section 3.05, Schedule D, or as otherwise expressly agreed in writing by the parties, Manager shall not be obligated to make an independent determination as to the presence or absence of Hazardous Materials, or whether the Properties are in violation or compliance with any Hazardous Materials Laws. Manager may seek, on Owner’s behalf and at Owner’s expense, to enforce a resident’s compliance with any Hazardous Materials Laws in accordance with an environmental consultant’s recommendations contained in any environmental assessment report. Manager shall not have any obligation to determine whether or not Owner, any residents, the Properties, or any portion thereof is in compliance with Hazardous Materials Laws; provided, Manager shall promptly notify Owner of any violations or potential violations of Hazardous Materials Laws observed on the Properties.

(iii) Manager shall be responsible for any Hazardous Materials which it uses or introduces to the Properties, including storage, containment, removal, or remediation as required by applicable law. To the extent Hazardous Materials (such as cleaning supplies or fuel) are required by Manager in the discharge of its duties under this Agreement, Manager shall only use and store quantities of such Hazardous Materials as are permitted under applicable law and Schedule D, and shall store, use and dispose of such Hazardous Materials in accordance with applicable laws. In connection with the foregoing, Manager hereby agrees to and shall indemnify, protect, defend, save, and hold harmless Owner, its principals and employees, and their respective successors and assigns from any claim, cause of action, liability, loss, demand, damages (including damages associated with any environmental law), fine, penalty, injury, cost, or expense (including attorney’s fees and expenses) arising out of or relating in any way to Manager’s violation of this Section 3.14(a)(iii).

(iv) Manager shall not be responsible for the abatement, clean-up or remediation of any spill of or contamination from any Hazardous Materials upon, beneath, or within all, or any portion, of the Properties (other than Hazardous Materials introduced, used or stored by Manager in violation of Section 3.14(a)(iii)), and the entire responsibility for such clean-up, abatement, or remediation shall lie with Owner and Owner’s environmental consultation. However, Manager shall cooperate with Owner in coordinating and supervising any abatement, clean-up, monitoring or remedial action on a Property site. Owner agrees that, with respect to any abatement, clean-up, or remedial action, Owner shall employ a qualified and licensed environmental clean-up company to undertake such clean-up and remediation, and Owner’s environmental consultant shall oversee the entire abatement, clean-up and remediation process and the obtaining of any required governmental approvals. If the clean-up or remediation is the responsibility of any resident of the Properties and/or Owner’s environmental consultant, Manager shall, on Owner’s behalf, require the resident to utilize qualified and licensed environmental clean-up companies and ensure that the clean-up and remediation is conducted to Owner’s satisfaction and in accordance with all Hazardous Materials Laws, governmental laws and approvals of which Manager is aware.

(v) In connection with the foregoing, Owner hereby agrees to and shall indemnify, protect, defend, save, and hold harmless Manager, its principals and employees, and their respective successors and assigns from any claim, cause of action, liability, loss, demand, damages (including damages associated with any environmental law), fine, penalty, injury, cost or expense (including attorney’s fees and expenses) arising out of or relating in any way to (1) the actions, or failure to act, by Manager in following Owner’s and Owner’s environmental consultant’s directions, (2) Owner’s failure or refusal to employ an environmental consultant with respect to the Properties, (3) the acts, omissions, or negligence of Owner, Owner’s environmental consultant, or the failure of such environmental consultant, to fulfill its obligations with respect to the Properties, (4) any violation of Hazardous Materials Laws applicable to the Properties, (5) the designation of Manager as an “operator” or the Properties as a “regulated facility” under Hazardous Materials Laws, or otherwise liable as a party under any Hazardous Materials Laws, or as a party in any claim for contribution, cost recovery or indemnity against Manager, or its insurer arising out of the foregoing, and (6) any condition or circumstance arising initially prior to the date of this Agreement (regardless of whether such condition or circumstance continues). The foregoing indemnity shall not apply to any claim, cause of action, liability, loss, demand, damages (including damages associated with any environmental law), fine, penalty, injury, cost, or expense (including attorney’s fees and expenses) resulting from an indemnified party’s sole or gross negligence or willful misconduct.

(b) The indemnities herein shall be immediately vested and shall survive the expiration or termination of this Agreement.

SECTION 3.15 Disclaimer of Certain Liabilities. Manager assumes no liability for any acts or omissions of Owner. Manager assumes no liability for any failure of, or default by, any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owed by any tenant to Owner pursuant to any lease or otherwise.

SECTION 3.16 No Requirement to Advance Funds. In no event shall Manager advance any monies on behalf of Owner, lend its credit to the Properties, or incur any liability in Manager’s own name.

SECTION 3.17 Representations. Manager represents and warrants to Owner as follows:

(a) Manager (i) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, (ii) has qualified or will qualify to do business as a foreign corporation and will remain so qualified, and is and will remain in good standing, in each jurisdiction where the character of its property or the nature of its activities makes such qualification necessary and in which failure to so qualify would have a material adverse effect upon Manager or its ability to perform its obligations hereunder, (iii) has and will have full limited liability company power to own its property, carry on its business as presently conducted, and to enter into and perform it obligations under this Agreement and (iv) has and will have all licenses or other governmental approvals necessary to perform it obligations hereunder.

(b) The execution and delivery by Manager of this Agreement has been duly authorized by all necessary limited liability company action on the part of Manager. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on Manager or its property or the certificate of formation of Manager, or any of the provisions of any indenture, mortgage, contract or other instrument to which Manager is a party or by which it is bound or result in the creation or imposition of any lien, charge or encumbrance upon any of its property pursuant to the terms of any such indenture, mortgage, contract or other instrument.

(c) The execution and delivery by Manager of this Agreement does not require the consent or approval of, the giving of notice to, the registration or filing with, or the taking of any other action in respect of any state, federal or other governmental authority or agency.

(d) This Agreement has been duly executed and delivered by Manager and, assuming due authorization, execution and delivery by Owner, constitutes a valid and binding obligation of Manager enforceable against it in accordance with its terms (subject to applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally and general principles of equity).

(e) There are no actions, suits, or proceedings pending, or, to the knowledge of Manager, threatened or likely to be asserted against or affecting Manager before or by any court, administrative agency, arbitrator, or governmental body (i) with respect to any of the transactions contemplated by this Agreement or (ii) with respect to any other matter which in the judgment of Manager will be determined adversely to Manager or if determined adversely to Manager, will materially and adversely affect it or its business, assets, operations or condition, financial or otherwise, or adversely affect Manager’s ability to perform its obligations under this Agreement. Manager is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the transactions contemplated by the above mentioned documents.

(f) No consents, approvals, waivers or notifications of members, creditors, lessors or other nongovernmental persons are required to be obtained by Manager in connection with the execution and delivery of this Agreement and the consummation of all the transactions herein contemplated.

statutes, codes, ordinances, orders, decrees, rules or regulations (“Laws”) relating to terrorism or money laundering, including, without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”). Neither Manager nor any person or entity owning a beneficial interest equal to or greater than twenty percent (20%) in Manager is a “Prohibited Person,” which term is defined as: (i) a person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Manager is prohibited from dealing or otherwise engaging in any transaction by any terrorism or anti-money laundering Law, including the Executive Order and the Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website, http://www.treas.gov/ofac/tllusdn.pdf or any replacement website or other replacement official publication of such list.

(h) As of the Effective Date, Manager has no actual knowledge of any illegal activities relating to controlled substances on any Property.

(i) As of the Effective Date, to Manager’s actual knowledge, (i) each Property is being used exclusively as a residential rental property and (ii) no illegal activity is taking place at any Property.

SECTION 3.18 Investment Committee. Notwithstanding anything to the contrary herein, the duties and responsibilities of Manager set forth herein are subject in all respects to the authority of the investment committee established by Owner (the “Investment Committee”) pursuant to the terms set forth in Section 7.12 of the Amended and Restated Agreement of Limited Partnership of the OP (the “LPA”).

SECTION 3.19 Additional Covenants. Manager shall exercise such efforts as are consistent with the Standard of Care to comply with the terms and conditions of Schedule D attached hereto and agrees not to knowingly or intentionally take any action in material contravention thereof.

ARTICLE IV

BANKING AND FINANCIAL RECORDS

other bank acceptable to Owner (the “Acquisition Account”), and each will be named in the Account Agency Agreement. Owner shall retain the ability to change the platform banks at its discretion with reasonable notice to Manager. It is understood that the bank account contemplated and authorized by the Account Agency Agreement shall be a non-interest bearing checking account.

SECTION 4.02 Financial Recordkeeping. Financial records include, but is not limited to, general ledgers for each account, journal entries, all supporting documentation and calculations used to create journal entries, trial balances, financial statements, bank statements, bank reconciliations, tax reports, accounts payable and receivable records, rent rolls, tenant information, portfolio analysis routinely created or created at the request of Owner, ad hoc reports requested by Owner from time to time and any other financial records and reports listed on Schedule C. At Owner’s cost, Manager shall maintain, at Manager’s premises and electronically in a centralized location designated and accessible by Owner, and maintain in a manner customary and consistent with generally accepted accounting principles, financial records based on Owner’s fiscal year-end. Manager shall not delete, destroy, relocate or otherwise make any historical record inaccessible to Owner without Owner’s prior written consent. Manager shall use its own chart of accounts and monthly financial statements may be cut-off approximately five (5) days prior to month-end. Owner shall bear the expense of maintaining financial records electronically and the expense of storing historical financial records that are more than 36 months old.

SECTION 4.03 Internal Controls Environment. Manager shall continuously maintain an internal control environment that is customary and consistent with the size and complexity of Owner’s business. At Owner’s expense, Owner may hire consultants and other advisors to further develop and refine Manager’s internal controls. Manager agrees, at Owner’s expense, to implement all reasonable suggestions Owner makes to modify internal controls and agrees to periodic testing and remediation of any identified deficiencies. Manager also agrees to assist in an audit of the internal controls if requested by Owner, to be completed at Owner’s expense and in accordance with Section 4.05 herein.

SECTION 4.04 Required Financial Reports. Manager shall furnish as listed on Schedule C monthly reports of collections, disbursements, and other accounting matters. These reports will be received by Owner not later than the 15^th day of the first month in which these reports are due and the 10^th day of each month thereafter. To support the monthly financial reports, Manager shall maintain at Manager’s premises copies of the following: (a) bank statements, bank deposit slips, and cancelled checks; (b) comprehensive bank reconciliations; (c) detailed cash receipt records; (d) summaries of adjusting journal entries, and (e) supporting documentation for payroll, payroll taxes, and employee benefits.

accurately recorded with regard to each Property. Such books and records shall be maintained in accordance with Owner’s financial information requirements and shall at all times be the property of Owner. Manager shall maintain such books and records for a period of not less than 12 months after the date of expiration or earlier termination of this Agreement, except that upon any termination of this Agreement by Owner, Manager shall immediately deliver to Owner all such books and records. Owner reserves the right to conduct an examination of the books and records maintained by Manager for Owner or that relate to the calculation of the fees, expenses, or other compensation paid or payable pursuant to this Agreement, and to perform any and all audit tests (whether conducted by the external auditors or Owner’s internal audit team) relating to Manager’s activities, either at the Properties, or at the office of Manager; provided such examination and tests are related to those activities performed by Manager for Owner or the calculation of the fees, expenses, or other compensation paid or payable pursuant to this Agreement. Owner may also conduct periodic testing of Manager’s internal controls. For purposes of clarity and not limitation, Owner shall have the right to exam and audit Manager’s books and records in order to verify the accuracy of the Profit Cap, as defined in Section 6.03. Owner shall give Manager not less than forty-eight (48) hours written notice of any such audit, examination or testing. Any and all such audits conducted either by Owner’s employees or appointees will be at the sole expense of Owner.

SECTION 4.06 Disbursement of Deposits. If requested by Owner, Manager shall remit to Owner with the monthly financial report all unexpended operating funds, except for a reserve of contingencies, as provided in Section 5.01 below, which shall remain in the Operating Account.

ARTICLE V

OWNER’S DUTIES AND RESPONSIBILITIES

SECTION 5.01 Initial Deposits and Contingency Reserves. Immediately upon the commencement of this Agreement, Owner shall deposit into the Operating Account the following amounts: (a) the sum of $500,000 to be deposited in the Operating Account as an initial deposit representing the estimated disbursements for Operating Expenditures to be made in the first month following the commencement of this Agreement, and (b) the sum of $2,000,000 to be deposited in the Acquisition Account as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement for the acquisition and rehabilitation of additional Properties. Furthermore, Owner authorizes Manager to maintain a contingency reserve of $250 per Property at all times in the Operating Account to enable Manager to pay obligations of Owner under this Agreement as they become due and in the Acquisition Account to enable Manager to acquire new Properties in accordance with this Agreement and the Approved Operating Budget.

contingency reserves. In the event that funds in the Operating Account become insufficient to cover all Operating Expenditures and approved contingency reserves, Owner agrees to, within three (3) days of notice, remit to Manager sufficient funds to cover the deficiency and replenish the contingency reserves. Notwithstanding any provision hereof to the contrary, Manager’s performance under this Agreement shall be excused and shall in no event be in default in the event there are insufficient funds in the Operating Account to perform its services described hereunder unless due to the gross negligence or willful misconduct of Manager.

SECTION 5.03 Manager’s Compensation. Owner agrees to pay Manager, as compensation for services rendered in managing and leasing the Properties in accordance with the terms of this Agreement, the compensation as specified in Article VI below. Manager’s compensation may be paid to itself by Manager, on behalf of Owner when due hereunder from the Operating Account.

SECTION 5.04 Manager’s Costs to be Reimbursed. Owner agrees to reimburse Manager for all direct costs incurred in managing and leasing the Properties in accordance with the terms of this Agreement and the Approved Operating Budget. Manager’s reimbursement may be paid to itself by Manager, on behalf of Owner, from the Operating Account as incurred by Manager.

SECTION 5.05 Representations. As of the Effective Date, Owner represents and warrants to Manager as follows:

(a) Each Owner (i) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, (ii) has qualified or will qualify to do business as a foreign corporation and will remain so qualified, and is and will remain in good standing, in each jurisdiction where the character of its Properties or the nature of its activities makes such qualification necessary and in which failure to so qualify would have a material adverse effect upon Owner or its ability to perform its obligations hereunder, (iii) has and will have full limited liability company power to own the Properties, carry on its business as presently conducted, and to enter into and perform it obligations under this Agreement and (iv) has and will have all licenses or other governmental approvals necessary to perform it obligations hereunder.

(b) The execution and delivery by Owner of this Agreement has been duly authorized by all necessary limited liability company action on the part of Owner. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on Owner or its Properties or the certificate of formation of Owner, or any of the provisions of any indenture, mortgage, contract or other instrument to which Owner is a party or by which it is bound or result in the creation or imposition of any lien, charge or encumbrance upon any of the Properties pursuant to the terms of any such indenture, mortgage, contract or other instrument.

(c) The execution and delivery by Owner of this Agreement does not require the consent or approval of, the giving of notice to, the registration or filing with, or the taking of any other action in respect of any state, federal or other governmental authority or agency.

(d) This Agreement has been duly executed and delivered by Owner and, assuming due authorization, execution and delivery by Manager, constitutes a valid and binding obligation of Owner enforceable against it in accordance with its terms (subject to applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally and general principles of equity).

(e) There are no actions, suits, or proceedings pending, or, to the knowledge of Owner, threatened or likely to be asserted against or affecting Owner before or by any court, administrative agency, arbitrator, or governmental body (i) with respect to any of the transactions contemplated by this Agreement or (ii) with respect to any other matter which in the judgment of Owner will be determined adversely to Owner or if determined adversely to Owner, will materially and adversely affect it or its business, assets, operations or condition, financial or otherwise, or adversely affect Owner’s ability to perform its obligations under this Agreement. Owner is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the transactions contemplated by the above mentioned documents.

(f) No consents, approvals, waivers or notifications of members, creditors, lessors or other nongovernmental persons are required to be obtained by Owner in connection with the execution and delivery of this Agreement and the consummation of all the transactions herein contemplated.

(g) Owner is not (and no person or entity owning a beneficial interest equal to or greater than twenty percent (20%) in Owner shall be) subject to sanctions of the United States government or in violation of any Laws relating to terrorism or money laundering, including, without limitation, the Executive Order and the Patriot Act. Neither Owner nor any person or entity owning a beneficial interest equal to or greater than twenty percent (20%) in Owner is a Prohibited Person.

ARTICLE VI

COMPENSATION OF MANAGER

SECTION 6.01 Acquisition and Construction Fees. Owner shall pay to Manager (a) a fee in the amount of 1.0% of the gross purchase price paid by Owner for the acquisition of any Property (the “Acquisition Fee”), and (b) a fee when its direct personnel manage the repair, renovation, rehabilitation, improvement, or development of any Property, provided that, such fee per Property shall be equal to the greater of 10% of construction costs or $1,000 per Property (the “Construction Fee”), regardless of whether such costs are payable to a third party or to Manager or its Affiliate pursuant to Section 3.09 above. Notwithstanding the foregoing, in no event shall Manager be entitled to any compensation in connection with debt placement.

SECTION 6.02 Property Management Fee. Owner shall pay to Manager on a monthly basis in arrears, fees for services provided by Manager to manage each Property equal to 8% of the Collected Rental Revenues for all Properties up to $45,000,000.00, 7% of the Collected Rental Revenues for all Properties in excess of $45,000,000.00 up to $65,000,000.00, 6% of the Collected Rental Revenues for all Properties in excess of $65,000,000.00 up to $85,000,000.00, 5% of the Collected Rental Revenues for all Properties in excess of $85,000,000.00 (the “Property Management Fee”, and collectively with the Acquisition Fee and the Construction Fee, the “Management Fees”).

SECTION 6.03 Reserved.

SECTION 6.04 Definitions. “Collected Rental Revenues” shall mean the amount of rental revenue actually collected for each Property per the terms of the lease pertaining to each Property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by Manager, including but not limited to: application fees, forced place insurance, late fees, security deposits (except to the extent applied to rent per the terms of the lease pertaining to any Property), and bad check fees. “EBITDA” means Manager’s profit, based upon Manager’s earnings before deductions for interest expenses, taxes, depreciation, and amortization. “Net Asset Value” has the meaning ascribed to such term in that certain advisory agreement between the Adivsor and the REIT. “OP Units” means common units of limited partnership interest in the OP.

SECTION 6.05 Additional Services; No Other Compensation. The Management Fees are in addition to the reimbursements otherwise due to Manager under this Agreement, including for the Additional Services as described in Section 3.09. Manager expressly agrees that Manager shall not be entitled to receive any other compensation or other payments from Owner for services provided in respect of the Property (including, without limitation, for construction management, legal, tenant coordination, design, engineering, consulting or any other services performed by Manager or its Affiliates) unless expressly provided for in this Agreement or pursuant to a separate written agreement between Owner and Manager.

ARTICLE VII

INSURANCE AND INDEMNIFICATION

primary coverage over Manager’s general liability insurance and must cover claims asserted by reason of alleged wrongful actions, fault, or negligence on the part of third-parties and independent contractors, including persons employed by or acting on behalf of the Properties and Owner. Such insurance shall include Manager as an “Additional Insured” and provide for the payment of all costs of defense of any claims. Any deductible required under such insurance policies shall be Owner’s expense. Liability insurance shall be written by a nationally recognized and reputable carrier licensed to do business in the state in which such Property is located. Manager shall furnish Owner with certificates evidencing such insurance and duplicate copies of such policies. The certificates evidencing insurance shall have attached thereto an endorsement from the actual policy that Manager, Owner, and any Lender shall be given at least thirty (30) days prior written notice (by certified mail) of cancellation, non-renewal, or any material change in the subject policy. Without limiting the generality of the foregoing, the parties acknowledge that as of the date of this Agreement, Manager has procured the foregoing policies of insurance on behalf of Owner.

SECTION 7.02 Workers’ Compensation Insurance. Manager shall, at Owner’s expense, maintain workers’ compensation insurance covering all employees of Manager employed in, on, or about the Properties so as to provide statutory benefits required by state and federal laws. Manager shall be reimbursed by Owner for the cost of providing workers’ compensation insurance according to the Approved Operating Budget.

SECTION 7.03 Fidelity Bond. Manager will maintain, at Manager’s expense, a comprehensive fidelity bond covering all employees of Manager who handle or are responsible for the safekeeping of any monies of Owner.

SECTION 7.04 Indemnification. Owner shall indemnify, defend, and hold harmless Manager and its agents and employees from and against all claims, liabilities, losses, damages, and/or expenses arising out of (i) Manager’s performance under this Agreement, or (ii) facts, occurrences, or matters first arising prior to the date of this Agreement. Owner, at its own cost and expense, shall defend any action or proceeding against Manager arising therefrom. Notwithstanding the foregoing, Owner shall not be required to indemnify Manager against damages or expenses suffered as a result of the gross negligence, willful misconduct, or fraud on the part of Manager, its agents or employees. Manager shall indemnify, defend and hold harmless Owner and its agents from and against all claims, liabilities, losses, damages and/or expenses arising out of the gross negligence, willful misconduct, or fraud on the part of Manager, its agents, or employees, and shall at its own cost and expense defend any action or proceeding against Owner arising therefrom.

ARTICLE VIII

TERMINATION

SECTION 8.01 Termination. Notwithstanding the provisions of Article II above, this Agreement may also be terminated as follows:

(a) Automatically, in the event (i) Owner sells or otherwise disposes of all or substantially all of the Properties (which for purposes of clarification may include the sale of all or substantially all of the REIT’s or the OP’s direct or indirect ownership interests in Owner), (ii) of an initial public offering of the REIT, or (iii) a Bankruptcy Event occurs with respect to Manager; or

(b) by Manager, in the event Owner defaults in the performance of any of its obligations under this Agreement and fails to cure such default within fifteen (15) days after its receipt from Manager of a notice of default (specifying in reasonable detail the nature of the default complained of); provided, however, with respect to any non-monetary default that cannot be cured within fifteen (15) days, Owner shall have such additional period as shall be reasonable, provided that Owner has commenced to cure such default within such fifteen (15) day period, has proceeded to prosecute such cure with due diligence, and such cure is completed within sixty (60) days after Owner’s receipt of the notice of default (provided, however, that the extended cure period shall not be applicable in the event of a failure to deliver the OP Units timely); or

(c) by Owner, in the event Manager defaults in the performance of any of its obligations under this Agreement and fails to cure such default within fifteen (15) days after its receipt from Owner of a notice of default (specifying in reasonable detail the nature of the default complained of); provided, however, that if such default cannot be cured within fifteen (15) days, then such additional period as shall be reasonable, provided that Manager has commenced to cure such default within such fifteen (15) day period, has proceeded to prosecute such cure with due diligence and such cure is completed within sixty (60) days after Manager’s receipt of the notice of default; or

(d) by either Owner or Manager, if a Bankruptcy Event occurs with respect to the other party, or if any involuntary bankruptcy petition shall be filed against the other party and is not dismissed within sixty (60) days of the date of such filing, or in the event the other party shall make an assignment for the benefit of creditors, or take advantage of any insolvency statute or similar law, in any such event, termination to become effective upon written notice to the other party;

(e) by Owner, (i) in the event Owner sells or otherwise disposes of all or substantially all of the Properties, or (ii) without cause upon not less than ninety (90) days prior written notice to Manager;

(f) by Owner, in the event that either Dana Sprong or Ryan McGarry ceases to lead the activities of Manager or provide day-to-day management services to Owner (each, a “Key-Man Event”), unless within thirty (30) days thereafter Manager presents one or more substitute key persons in the place of Messrs. Sprong and McGarry who are acceptable to Owner, in its sole discretion. Owner shall have the right to terminate this Agreement immediately and for cause after the expiration of the foregoing cure period following the occurrence of a Key-Man Event if Manager does not present a replacement acceptable to Owner, in its sole discretion; or

Any amounts accruing to Manager prior to such termination shall be due and payable upon termination of this Agreement; provided, however, that in the event this Agreement is terminated pursuant to Section 8.01(c), no further fees or expenses shall be payable to Manager thereafter, other than reimbursement of expenses properly documented and supported by invoices or receipts .

SECTION 8.02 Termination Fee. If Owner terminates this Agreement pursuant to Section 8.01(a)(ii) or Section 8.01(e) before the end of the Term or any subsequent term year, then Owner shall be obligated to pay Manager an amount equal to three times the sum of the annual Property Management Fee for the trailing 12-month period; provided, however, if this Agreement is terminated prior to the one year anniversary of the date of this Agreement, (a) Owner shall pay Manager $1,000,000.00, in addition to the amount otherwise payable under this paragraph, and (b) the Property Management Fee will be annualized for such 12-month period based on such Property Management Fee earned by Manager during such period. Any amounts accruing to Manager prior to such termination, shall be due and payable upon termination of this Agreement. To the extent funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager upon demand. For the avoidance of doubt, Acquisition Fees, Construction Fees, and fees attributable to Additional Services are not considered in the calculation of the Termination Fee.

SECTION 8.03 Owner Responsible for Payments. Owner will be responsible for the direct handling and payment of invoices received after notice of termination. Upon notice of termination, Manager will submit to Owner written notice of all obligations payable with respect to the Properties through the termination date.

SECTION 8.04 Final Accounting. Within sixty (60) days after termination, Manager shall deliver to Owner: (a) a final accounting, reflecting the balance of income and expenses on the Properties as of the date of termination; (b) all records, contracts, leases, receipts, deposits, unpaid bills, and other papers or documents which pertain to the Properties; and (c) all remaining funds held by Manager with respect to the Properties. In consideration of performing the services contemplated under the preceding sentence during such post-termination period, provided this Agreement is not terminated pursuant to Section 8.01(c), Owner shall pay Manager an accounting fee equal to $75,000.00 per month.

SECTION 8.05 Manager’s Retention of Copies. Manager shall be entitled to retain copies of all documents referred to in Section 8.04.

SECTION 8.06 Survival of Obligations. All obligations of the parties hereunder, as to which performance is contemplated to occur after termination, shall survive termination of this Agreement. Without limiting the generality of the foregoing, all representations and warranties of the parties contained herein and all provisions of this Agreement that require Owner to have insured or to defend, reimburse, or indemnify Manager shall survive the termination of this Agreement; and if Manager is or becomes involved in any proceeding or litigation by reason of having been Owner’s agent, such provisions shall apply as if this Agreement were still in effect.

ARTICLE IX

RESERVED

ARTICLE X

MANAGER RESTRUCTURING

SECTION 10.01 Subcontracting. Manager is authorized to subcontract or delegate any of its responsibilities hereunder to any of Vinebrook Development Corporation, a Massachusetts corporation, Vinebrook Homes Property Management Company, Inc., an Ohio corporation, Vinebrook Homes Realty Company, Inc., an Ohio corporation, and Vinebrook Homes Services Company, Inc., an Ohio corporation (each a “VineBrook Entity” and collectively, the “VineBrook Entities”); provided, that such VineBrook Entity executes a joinder to this Agreement, in form and substance satisfactory to Owner.

ARTICLE XI

MISCELLANEOUS

SECTION 11.01 Notices. All notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly received (i) if given by electronic mail transmitted delivery receipt requested, upon receipt of a delivery receipt, (ii) if given by certified or registered mail, return receipt requested, postage prepaid, three (3) Business Days after being deposited in the U.S. mails and (iii) if given by courier or other means, when received or personally delivered, and, in any such case, addressed as follows:

If to Owner:

c/o VineBrook Homes Trust, Inc.

300 Crescent Court

Suite 700

Dallas, Texas 75201

Attention: Brian Mitts

Email: BMitts@Highlandfunds.com

with a copy to:

Winston & Strawn LLP

2121 North Pearl Street

Suite 900

Dallas, Texas 75201

Attention: Charles T. Haag

Email: chaag@winston.com

and

Wick Phillips Gould & Martin, LLP

3131 McKinney Ave.

Suite 100

Dallas, Texas 75201

Attention: D.C. Sauter

Email: dcsauter@wickphillips.com

If to Manager:

c/o VineBrook Homes

561 Virginia Road

Concord, Massachusetts 01742

Attn: Messrs. Sprong and McGarry

Email: dana.sprong@vinebrookhomes.com and ryan.mcgarry@vinebrookhomes.com

and

King & Spalding LLP

300 South Tryon Street, Suite 1700

Charlotte, North Carolina 28202

Attn: Christopher D. McCoy

Email: cmccoy@kslaw.com

or to such other addresses as may be specified by any such person to the other person pursuant to notice given by such person in accordance with the provisions of this Section 11.01.

SECTION 11.02 Governing Law; Waiver of Jury Trial. THE PROVISIONS OF THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AS AT THE TIME IN EFFECT, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF DELAWARE, INCLUDING ANY APPELLATE COURTS THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

SECTION 11.03 Entire Agreement. This Agreement sets forth the final, entire agreement among the parties hereto with respect to the subject matter hereof and

supersedes any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to amend, modify, limit, or supersede the terms and conditions of the Purchase Agreements nor the rights of the purchasers thereunder or that certain Side Letter dated November 1, 2018 by and among the OP, the REIT, the Manager, VineBrook Homes OP GP, LLC, a Delaware limited liability company, VineBrook Management, LLC, a Delaware limited liability company, and the VineBrook Entities.

SECTION 11.04 Amendment; Modification. This Agreement shall not be amended, supplemented, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees; provided, that upon the acquisition or disposition of any Property, Schedule A shall be automatically and without any further action by the parties hereto amended to reflect such acquisition or disposition of Property; provided further, that Owner shall deliver a revised Schedule A to Manager as soon as reasonably practicable and in accordance with Section 11.01 above that reflects such acquisition or disposition of Property.

SECTION 11.05 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

SECTION 11.06 Construction. Each of the parties hereto has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel. This Agreement shall be construed as if jointly drafted by Owner and Manager. Headings for sections, subsections, and other parts of this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

SECTION 11.07 Counterparts. This Agreement and any amendments, waivers, consents, or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile, scanned pages or electronic signature shall be effective as delivery of a manually executed counterpart to this Agreement

SECTION 11.08 Transferability; Successors and Assigns. This Agreement is not transferable by Manager. The rights of Owner hereunder are transferable to any of its respective Affiliates upon no less than ten (10) days’ prior written notice to Manager. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

SECTION 11.09 Confidentiality. No party to this Agreement will disclose the terms of this Agreement to any third party without the consent of the other parties

hereto, except as required by securities or other applicable laws. Notwithstanding the above provisions, each party may disclose the terms of this Agreement (i) in connection with the requirements of a public offering or securities filing, (ii) to accountants, banks, and financing sources (both debt and equity) and their advisors, (iii) in connection with the enforcement of this Agreement or rights under this Agreement, or (iv) in connection with a merger or acquisition (whether by an equity or asset transfer), or the like.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed and delivered this MANAGEMENT AGREEMENT as of the date first written above.


NREA VB I, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

NREA VB II, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

NREA VB III, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

NREA VB IV, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

[Signature Page to Management Agreement]


NREA VB V, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

NREA VB VI, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

NREA VB VII, LLC
a Delaware limited liability company

By:		/s/Brian Mitts
Name:
Title:

[Signature Page to Management Agreement]


VINEBROOK HOMES, LLC, a Delaware limited liability company

By: VineBrook Management, LLC, a Delaware limited liability company, its managing member

By:		/s/Dana Sprong
Name:		Dana W. Sprong
Title:		Managing Partner

[Signature Page to Management Agreement]

Schedule A

The Properties

[Omitted]

Schedule B

Account Agency Agreement

[Omitted]

Schedule C

Financial Records and Reports

[Omitted]

Schedule D

Standard of Care

[Omitted]

Schedule E

Approved Operating Budget

[Omitted]

Schedule F

Approved Guidelines

[Omitted]

Schedule G

Defined Terms

Capitalized terms used in this Agreement but not otherwise defined herein have the following definitions:

“Affiliate” of any Person means (i) any other individual or entity that is, directly or indirectly, (A) in Control of the applicable Person, (B) under the Control of the applicable Person or (C) under common Control with the applicable Person; (ii) any individual that is a director or officer of the applicable Person or (iii) any individual that is a director or officer of any entity described in clause (i) of this definition.

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. 1956 and 1957, as amended.

“Assignment of Management Agreement” means each Assignment of Management Agreement and Subordination of Management Fees among Manager, Owner and Lender.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time.

“Bankruptcy Event” with respect to any Person, means the occurrence of any of the following:

(a)

Such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(b)

Such Person voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights.

(c)

Any Property becomes an asset in a voluntary bankruptcy or becomes subject to any voluntary reorganization, receivership, insolvency proceeding, or other similar voluntary proceeding pursuant to any other federal or state law affecting debtor and creditor rights.

(d)

An order of relief is entered against such Person pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a Related Party. If such Person, any general partner of such person if such Person is a general partnership, or any Related Party has solicited creditors to initiate or participate in such a proceeding, regardless of whether any of the creditors solicited actually initiates or participates in the proceeding, then such proceeding will be considered as having been initiated by a Related Party.

(e)

An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against such Person (by a party other than Owner) but only if such Person has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding. “Commercially reasonable efforts” will not require any direct or indirect interest holders in such Person to contribute or cause the contribution of additional capital to such Person.

(f)

If such Person is a general partnership, any of the following occur:

(i)

Any general partner of such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(ii)

Any general partner of such Person voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights.

(iii)

An order of relief is entered against any general partner of such Person pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a Related Party.

(viii)

An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against any general partner of such Person (by a party other than Owner) but only if such Person or such general partner of such Person has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding. “Commercially reasonable efforts” will not require any direct or indirect interest holders in such Person or such general partner of such Person to contribute or cause the contribution of additional capital to such Person.

“Books and Records” is defined in Section 1.07(a) of Schedule D.

“Business Day” means any day other than a Saturday, a Sunday, or any other day on which Owner or the national banking associations are not open for business.

“Control” means to possess, directly or indirectly through one or more intermediate entities, the power to direct or cause the direction of the management, operation, or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.

For example, a trustee of a trust is a Person that Controls that trust; a general partner in a limited partnership is a Person that Controls that limited partnership; a managing member or a non-member manager of a limited liability company is a Person that Controls that limited liability company; members of a limited liability company with a voting interest that permits them (individually or collectively) to direct or control the decisions of the limited liability company are Persons that Control that limited liability company; every general partner in a general partnership or member in a joint venture is a Person that Controls that entity; a shareholder of a corporation that holds 50% or more of the shares in the corporation (whether individually or in the aggregate with its Affiliates) is a Person that Controls that corporation.

“Economic Sanctions Laws” means the foreign assets control regulations, 31 C.F.R. Chapter V, as amended, and any amending federal legislation or executive order relating thereto, as administered by OFAC.

“Eligible Lease” means, unless otherwise approved by Owner, a written Lease that satisfies all of the following characteristics:

(i)

It is on a form approved by Owner.

(ii)

It is executed by an Eligible Tenant and Owner, or Manager on behalf of Owner (or, in the case of a Lease existing on the Effective Date, such Lease has been assigned to Owner).

(iii)

It has a rental rate and terms consistent with existing local market rates and terms.

(iv)

As of the date the Lease was executed, the Lease had an initial term of at least 6 months and not more than 2 years.

(v)

It complies with all applicable law in all material respects and includes all disclosures required by applicable law.

(vi)

It covers 100% of the square footage of the applicable Property or Unit.

(vii)

It does not include any purchase option, right of refusal, right of first offer or other similar interest in any Property in favor of any Tenant or other Person.

“Eligible Tenant” means a bona fide third-party lessee of a Property who satisfies each of the following criteria:

(i)

Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Property.

(ii)

The tenant is not subject to an ongoing Bankruptcy Event as such date of initial screening (or if not so initially screened, as of the Effective Date).

(iii)

The tenant is not an Affiliate of Manager or any Immediate Family Member of any of the foregoing.

“Event of Default” means an event of default under the Loan Documents of which Manager has received written notice or has actual knowledge.

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

“FHFA” means the Federal Housing Finance Authority.

“FHFA SCP List” means the Suspended Counterparty List maintained by the FHFA which is currently published at https://www.fhfa.gov/SupervisionRegulation/LegalDocuments/suspendedcounterpartyprogram.

“Governmental Authority” means any board, commission, department, agency or body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, which has or acquires jurisdiction over any Property, or the use, operation or improvement of any Property, or over Manager.

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

“Hazardous Materials Law” and “Hazardous Materials Laws” means any and all federal, state and local laws, ordinances, regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future, including all amendments, that relate to Hazardous Materials or the protection of human health or the environment and apply to Manager or to any Property. Hazardous Materials Laws include the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., and their state analogs.

“Immediate Family Members” means a Person’s spouse, parent (including step-parent), child (including stepchild), grandchild (including step-grandchild) or sibling (including step-siblings).

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

“Indebtedness” means (i) the principal of, (ii) interest at the fixed or variable rate set forth in the Note on the principal of, and (iii) all other amounts due at any time under a Note or any other Loan Document.

“Insurance” means Property Insurance, liability insurance and all other insurance that Owner requires Manager to maintain pursuant to this Agreement.

“Land” means the land described in Exhibit A to the Security Instrument(s).

“Leases” means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Property, or any portion of the Property, and all modifications, extensions or renewals.

“Lender” means any lender providing a loan to Owner which is secured by a mortgage or deed of trust on any Property.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance on any Property or any direct or indirect ownership interest in Borrower.

“Loan” means any loan provided by any Lender to Owner.

“Loan Documents” means all documents now or in the future executed by Owner in connection with any Loan.

“Manager Principal” means any of the following: (i) any general partner of Manager (if Manager is a partnership), (ii) any manager or managing member of Manager (if Manager is a limited liability company), (iii) any Person (limited partner, member or shareholder) with a collective direct or indirect equity interest in Manager equal to or greater than 25% (if Manager is an entity), or (iv) any trustee of Manager (if Manager is a trust).

“Material Adverse Effect” means a significant detrimental effect on: (i) the Properties taken as a whole, (ii) the business, prospects, profits, operations or condition (financial or otherwise) of Manager, (iii) the enforceability, validity, perfection or priority of the Lien of any Loan Document, or (iv) the ability of Manager to perform any obligations under this Agreement.

“Mold” means mold, fungus, microbial contamination or pathogenic organisms.

“Property” means, individually, and “Properties” means, collectively, the residential real properties encumbered by the Security Instruments.

“Non-U.S. Equity Holder” means any Person with a collective equity interest (whether direct or indirect) of 10% or more in Manager, and which is either (a) an individual who is not a citizen of the United States, or (b) an entity formed outside the United States.

“Note” means the Note (including any Amended and Restated Note, Consolidated, Amended and Restated Note, or Extended and Restated Note) evidencing the Indebtedness executed by Owner in favor of Lender, including all schedules, riders, allonges and addenda.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“OFAC Lists” means either one of the following:

(i)

The OFAC Specially Designated Nationals and Blocked Persons List.

(a)

(ii)

The OFAC Consolidated Sanctions List.

“Person” means any natural person, sole proprietorship, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, limited liability limited partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or any other form of entity.

“Personalty” means all of the following:

(a)

Accounts (including deposit accounts) of Owner related to any Property.

(b)

Equipment and inventory owned by Owner, which are used now or in the future in connection with the ownership, management or operation of the Land or Improvements or are located on the Land or Improvements, including furniture, furnishings, machinery, building materials, goods, supplies, tools, books, records (whether in written or electronic form) and computer equipment (hardware and software).

(c)

Other tangible personal property owned by Owner which is used now or in the future in connection with the ownership, management or operation of the Land or Improvements or is located on the Land or in the Improvements, including ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances (other than Fixtures).

(d)

Any service contracts relating to the Land or the Improvements.

(e)

Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements.

(f)

All other intangible property, general intangibles and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land and including subsidy or similar payments received from any sources, including a Governmental Authority.

(g)

Any rights of Owner in or under letters of credit.

“Priority Repairs” means those repairs required to be performed under any Loan which are set forth on Schedule H attached hereto or of which Manager has been given written notice by Owner.

“Prohibited Activity or Condition” means each of the following:

(i)

The presence, use, generation, release, treatment, processing, storage (including storage in above-ground and underground storage tanks), handling or disposal of any Hazardous Materials on or under a Property.

(ii)

The transportation of any Hazardous Materials to, from or across a Property.

(iii)

Any occurrence or condition on a Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws.

The term “Prohibited Activity or Condition” excludes the safe and lawful use and storage of each of the following materials, so long as the materials are used, stored, handled, transported, and disposed of in compliance with Hazardous Materials Laws:

(A)

Prepackaged supplies, cleaning materials, and petroleum products customarily used in the operation and maintenance of comparable properties.

(B)

Cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential units in the Properties.

(C)

Petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Property’s parking areas.

“Prohibited Parties List” means any one or more of the following:

(i)

The OFAC Lists.

(ii)

The FHFA SCP List.

“Property Document” means each agreement relating to a Property and each other instrument binding on any Property, including any reciprocal easement agreement, declaration of covenants, conditions and restrictions and any condominium or home owner’s association governing documents, rules and regulations.

“Property Improvement” is defined in Section 1.08(e)(v) of Schedule D.

“Property Jurisdiction” means the jurisdiction in which the Land is located for any particular Property.

“Regulatory Agreement” means any recorded or unrecorded agreement with a Regulatory Agreement Agency that encumbers any Property and which imposes use, occupancy and/or rent restrictions on any Property and/or its operation.

“Regulatory Agreement Agency” means a Governmental Authority, acting through any authorized representative, or any quasi-governmental authority, that is entitled to enforce the provisions of a Regulatory Agreement that encumbers any Property.

“Related Party” means all the following:

(i)

Manager.

(ii)

Any general partner of Manager if Manager is a general partnership.

(iii)

Any Person that holds, directly or indirectly, any ownership interest (including any shareholder, member or partner) in Manager, any general partner of Manager if Manager is a general partnership, or any Person that has a right to manage Manager or any general partner of Manager if Manager is a general partnership.

(iv)

Any Person in which Manager or any general partner of Manager if Manager is a general partnership.

(v)

Any Person in which any partner, shareholder, or member of Manager or any general partner of Manager if Manager is a general partnership.

(vi)

Any Person in which any Person holding an interest in Manager or any general partner of Manager if Manager is a general partnership.

(vii)

Any creditor of Manager that is related by blood, marriage or adoption to Manager.

(viii)

Any creditor of Manager or any general partner of Manager if Manager is a general partnership that is related to any partner, shareholder or member of, or any other Person holding an interest in, Manager or any general partner of Manager if Manager is a general partnership.

“Rent(s)” means all rents (whether from residential or non-residential space), revenues and other income of the Land or the Improvements, parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Property, whether now due, past due or to become due, and deposits forfeited by tenants.

“Rent Schedule” means a written schedule for the Properties showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Owner. The Rent Schedule should be prepared using the template available from Owner, which may be revised from time to time, or in a format otherwise acceptable to Owner.

“Repairs” means all repairs made to the Properties, including all Priority Repairs.

“Restoration” is defined in Section 1.09(i) of Schedule D.

“Security Instrument” means the mortgage(s), deed(s) of trust, deed(s) to secure debt or other similar security instrument(s) encumbering one or more Properties and securing Owner’s performance of its Loan obligations.

“Taxes” means all taxes, assessments, vault rentals and other charges, if any, whether general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a Lien on the Land or the Improvements, including any payments made in lieu of Taxes.

“Transfer” means any of the following: (i) a sale, assignment, transfer or other disposition or divestment of any direct or indirect interest in Manager, a Person that Controls Manager, or a Property (whether voluntary, involuntary or by operation of law), (ii) the granting, creating or attachment of a Lien, encumbrance or security interest (whether voluntary, involuntary or by operation of law), (iii) the issuance or other creation of an ownership interest in a legal entity, including a partnership interest, interest in a limited liability company or corporate stock, (iv) the withdrawal, retirement, removal or involuntary resignation of a partner in a partnership or a member or Manager in a limited liability company, (v) the merger, dissolution, liquidation, or consolidation of a legal entity or the reconstitution of one type of legal entity into another type of legal entity.

For purposes of defining the term “Transfer,” the term “partnership” means a general partnership, a limited partnership, a joint venture, a limited liability partnership, or a limited liability limited partnership and the term “partner” means a general partner, a limited partner, or a joint venturer.

“Transfer” does not include any of the following: (i) a conveyance of a Property at a judicial or non-judicial foreclosure sale under the Security Instrument, (ii) a Property becoming part of a bankruptcy estate by operation of law under the Bankruptcy Code, (iii) the filing or recording of a Lien against a Property for local taxes and/or assessments not then due and payable, or (iv) a sale, assignment, transfer or other disposition or divestment of any direct or indirect interest in Manager or any owner of direct or indirect ownership interests in Manager.

“Unit” means each separate legal address comprising all or part of a Property.

Schedule H

Priority Repairs

[Omitted]

Exhibit 10.3

Execution Version

FIRST AMENDMENT

MANAGEMENT AGREEMENT

This First Amendment to Management Agreement (this “Amendment”), is entered into as of May 4, 2020 by and among NREA VB I, LLC, a Delaware limited liability company, NREA VB II, LLC, a Delaware limited liability company, NREA VB III, LLC, a Delaware limited liability company, NREA VB IV, LLC, a Delaware limited liability company, NREA VB V, LLC, a Delaware limited liability company, NREA VB VI, LLC, a Delaware limited liability company, NREA VB VII, LLC, a Delaware limited liability company, and VineBrook Homes, LLC, a Delaware limited liability company. All capitalized terms used herein and not otherwise defined have the respective meaning given to such terms in the Management Agreement (as defined below).

RECITALS

A. The parties hereto previously entered into that certain Management Agreement, dated November 1, 2018 (the “Management Agreement”).

B. In accordance with Section 11.04 of the Management Agreement, the parties hereto desire to amend certain provisions of the Management Agreement as set forth herein.

AGREEMENTS

Section 1. Termination. Section 8.01(a) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“Automatically, in the event (i) Owner sells or otherwise disposes of all or substantially all of the Properties (which for purposes of clarification may include the sale of all or substantially all of the REIT’s or the OP’s direct or indirect ownership interests in Owner) or (ii) a Bankruptcy Event occurs with respect to Manager; or”

Section 2. Termination Fee. Section 8.02 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

prior to such termination, shall be due and payable upon termination of this Agreement. To the extent funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager upon demand. For the avoidance of doubt, Acquisition Fees, Construction Fees, and fees attributable to Additional Services are not considered in the calculation of the Termination Fee.”

Section 3. Miscellaneous.

(a) Effect of Amendment. This Amendment is limited as specified herein and shall not constitute a modification, amendment or waiver of any other provision of the Management Agreement. Except as specifically amended by this Amendment, all other provisions of the Management Agreement are hereby ratified and remain in full force and effect.

(b) Single Document. From and after the date hereof, all references to the Management Agreement shall be deemed to be references to the Management Agreement as amended by this Amendment.

(c) Severability. In the event that any provision of this Amendment or the application of any provision of this Amendment is declared to be invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Amendment shall not be affected.

(d) Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

(e) Headings. The headings in this Amendment are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed and delivered this FIRST AMENDMENT TO MANAGEMENT AGREEMENT as of the date first written above.


NREA VB I, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


NREA VB II, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


NREA VB III, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


NREA VB IV, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


NREA VB V, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


NREA VB VI, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


NREA VB VII, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


VINEBROOK HOMES, LLC a Delaware limited liability company By: VineBrook Management, LLC,its managing member

By:		/s/Dana W. Sprong
Name: Dana W. Sprong Title: Managing Partner

[Signature Page to First Amendment to Management Agreement]

Exhibit 10.4

MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”), dated September 30, 2019, is made and entered into by and among VB One, LLC, a Delaware limited liability company (“VB One”), TI Pennsylvania Holdings, LLC, a Delaware limited liability company (“Pennsylvania”), True JACK2017-2, LLC, a Delaware limited liability company (“Jack2017-2”), True JACK2017-1, LLC, a Delaware limited liability company (“Jack2017-1”), True OM2016-1, LLC, a Delaware limited liability company (“OM2016”), True KC2016-1, LLC, a Delaware limited liability company (“KC2016”), True PIT2017-1, LLC, a Delaware limited liability company (“PIT2017-1”), True PIT2017-2, LLC, a Delaware limited liability company (“PIT2017-2”), True MEM2016-1, LLC, a Delaware limited liability company (“MEM2016”), TI KC Bravo, LLC, a Delaware limited liability company (“Bravo”; Pennsylvania, Jack2017-2, Jack2017-1, OM2016, KC2016, PIT2017-1, PIT2017-2, and MEM2016, individually and collectively, “True Owner”, together with VB One, “Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

SECTION 1.01 Appointment of Manager. Owner hereby appoints Manager the sole and exclusive manager for the single-family rental properties identified and described in Schedule A attached hereto, plus any additional properties acquired by Owner or subsidiaries of VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership (“OP”), in accordance with this Agreement, minus any properties sold by Owner or subsidiaries of the OP from time to time in accordance with this Agreement (collectively, such properties owned by Owner or subsidiaries of the OP from time to time during the term of this Agreement, the “Properties” and each, a “Property”) upon the terms and conditions set forth herein. Manager hereby accepts such appointment on the terms and conditions set forth herein and shall furnish the services of its organization for the management of the Properties.

SECTION 1.02 Independent Contractor Status. Manager is hereby engaged to manage the Properties as an independent contractor.

ARTICLE II

TERM OF AGREEMENT

SECTION 2.01 Term of Agreement. Subject to Section 9.01 below, this Agreement shall commence upon the Owner’s acquisition or control of the Properties (the “Effective Date”) and shall continue until the last day of the calendar month following the three year anniversary of the Effective Date (the “Term”). Upon expiration of the Term, this Agreement will automatically renew for additional one-year periods until terminated as provided in Article VIII.

ARTICLE III

MANAGER’S DUTIES AND RESPONSIBILITIES

SECTION 3.01 General Scope. Manager shall devote such efforts as are consistent with the Standard of Care (as defined below) in managing, coordinating and supervising the ordinary and usual business and affairs pertaining to the identification, acquisition, operation, maintenance, leasing, licensing, rehabilitation, construction, disposition and management of the Properties and in compliance with the directives of Owner or the Investment Committee (as hereinafter defined), all pursuant to the terms, conditions and limitations of this Agreement. Manager shall have such responsibilities, and shall perform and take, or cause to be performed or taken, all such services and actions customarily taken by managing agents of property of similar nature, location, and character to that of the Properties consistent with the duties set forth in this Article III. Unless otherwise specifically provided in this Agreement, the written directives of Owner or the Investment Committee, the Approved Guidelines, or the Approved Operating Budget (collectively, the “Guiding Documents”), all services and actions that Manager is required or permitted to perform or take, or cause to be performed or taken in connection with the management of the Properties shall be performed or taken, as the case may be, on behalf of Owner and at Owner’s sole cost, expense, and risk. Manager’s authority is limited to performing the services set forth herein and the other Guiding Documents. Except as provided in the Guiding Documents, Manager shall have no authority (a) to execute any contract or agreement for or on behalf of Owner, (b) to provide additional services or modify existing services to tenants, or (c) to assume or create any obligation or liability or to make any representation, covenant, agreement or warranty for or on behalf of Owner.

SECTION 3.03 Proposed Management Plans. Manager shall prepare and submit to Owner a proposed “Management Plan” and “Operating Budget,” which include an annual business plan and budget of proposed Operating Expenditures and capital expenditures with respect to the leasing, management, identification, acquisition, promotion, operation, disposition, and repair and maintenance of the Properties for each calendar year (the “Fiscal Year”); provided, that if the effective date of this Agreement occurs on a date other than the first day of a calendar year, or if the day on which the term of this Agreement expires or is terminated occurs on a day other than the last day of a calendar year, then the first and last Fiscal Years, as applicable, shall be prorated according to the number of days in the applicable Fiscal Year. The initial Approved Operating Budget for the period between the effective date and December 31, 2019 is attached hereto as Schedule E. The proposed Management Plans and Operating Budgets for Fiscal Year 2020 shall be submitted to Owner on or before November 15, 2019, and subsequent proposed Management Plans and Operating Budgets shall be submitted to Owner sixty (60) days prior to the beginning of the next Fiscal Year. All proposed Management Plans and Operating Budgets shall include, without limitation, leasing objectives for the next annual budget period, a marketing plan for the next annual budget period including the estimated costs of the marketing and promotional plans, a market analysis of the leasing market in which the Properties are located, and if requested by Owner, a review of the real estate taxes and assessed valuation and a recommendation concerning the merits of a tax appeal for the Properties. Owner will review the proposed Management Plan and Operating Budget and will consult with Manager prior to the commencement of the forthcoming fiscal year in order to agree on an approved Management Plan and an approved Operating Budget (collectively, the “Approved Operating Budget”). Until such time as the Management Plan and Operating Budget shall be approved by Owner as aforesaid, Manager shall, unless otherwise directed in writing by Owner and subject to the terms of this Agreement, make only those expenditures necessary to (1) maintain the physical integrity of the Properties, preserve the security of the Properties (including without limitation taxes, insurance and utilities borne by Owner), or prevent any lien or other encumbrances on the Properties, (2) comply with the Requirements, (3) comply with Owner’s obligations hereunder, as landlord under the terms of any Leases, and under any Loan Documents (as defined in Schedule D), and (4) remedy an emergency situation. Manager agrees to use such efforts as are consistent with the Standard of Care to ensure the actual costs of all Operating Expenditures and capital expenditures for the Properties shall not exceed the Approved Operating Budget, both in the aggregate and in respect of the specific budget category pertaining thereto (taking into account any variance allowances permitted in the Guiding Documents).

SECTION 3.05 Acquisition and Disposition. Manager shall provide management, supervisory, administrative and logistical services and support to Owner consistent with the Standard of Care and the Guiding Documents in connection with (i) the identification and evaluation of Properties that might be suitable for purchase or other acquisition, (ii) the purchase or other acquisition of Properties, (iii) the financing or refinancing of Properties, and (iv) the sale or other disposition of Properties (including, without limitation, the structuring and negotiation of such transactions and the management of Owner’s dealings with brokers, appraisers, bankers and other professionals engaged by Owner in connection with such transactions). Manager shall be responsible for the preparation of all diligence reports and the initial underwriting proposal for any new acquisition, disposition or financing. Upon the request of Owner or any member of the Investment Committee, Manager shall deliver such reports to the Investment Committee prior to any meeting of the Investment Committee. Further, Manager will be responsible for all other reports, analysis or studies as requested by Owner or the Investment Committee, and Manager is hereby authorized to contact the NexPoint Real Estate Advisors V, L.P. (the “Advisor”) and any Lender to obtain additional information reasonably necessary for the preparation of such reports, analyses, or studies. The approved guidelines for the acquisition, disposition and leasing of existing and future Properties are attached hereto as Schedule F (the “Approved Guidelines”). The Approved Guidelines shall be applicable to the markets within which the Properties are located, and before acquiring Properties in new markets, Manager shall propose updated guidelines for properties in that market for the approval of the Investment Committee. Provided that Manager has obtained the Investment Committee’s prior written approval, Manager shall be authorized to cause Owner or an Affiliate thereof to acquire, dispose of, and lease Properties consistent with this Agreement, the Approved Guidelines and the other Guiding Documents. For purposes of clarification, Properties acquired by Owner or any subsidiaries of the OP will be deemed Properties under this Agreement, and Properties sold by Owner or any subsidiaries of the OP shall no longer be deemed Properties under this Agreement, in either case regardless of whether this Agreement or any exhibit or schedule is formally amended to reflect the new or former Properties.

SECTION 3.09 Operating Expenditures.

Services; provided, however, that Manager shall be responsible for paying, and shall not be reimbursed for, its general administrative overhead costs and expenses, including without limitation the costs and expenses of renting its offices, employing its general administrative staff, purchasing or renting its office equipment and supplies, and maintaining phone and internet connections.

SECTION 3.12 Debt Service and Tax Payments. If requested by Owner, and sufficient funds are available in the Operating Account to satisfy all outstanding Operating Expenditures of the Properties, Manager will apply any surplus operating funds to pay (to the extent of such surplus funds) the debt service and taxes due pursuant to any federal, state, county, or municipal authority, or other similar body having jurisdiction thereover. If Owner notifies Manager to make such payments after the beginning of the Term of this Agreement, Manager shall have the authority to name a new contingency reserve amount pursuant to Section 5.01 of this Agreement, and Owner authorizes Manager to maintain this new contingency reserve amount at all times in the Operating Account. Manager shall not take any action under this Section 3.12 so long as Owner is contesting, or has notified Manager of its intention to contest, any such order or requirement. Owner will supply all information necessary for Manager to comply promptly with these requirements.

rules and regulations except for any operating and maintenance plan applicable to the Properties or in connection with Manager’s construction management duties; or (3) conducting or ensuring clean-up or remediation of existing or identified hazardous material spills or contamination unless the parties otherwise agree in writing or as expressly provided herein.

and the entire responsibility for such clean-up, abatement, or remediation shall lie with Owner and Owner’s environmental consultation. However, Manager shall cooperate with Owner in coordinating and supervising any abatement, clean-up, monitoring or remedial action on a Property site. Owner agrees that, with respect to any abatement, clean-up, or remedial action, Owner shall employ a qualified and licensed environmental clean-up company to undertake such clean-up and remediation, and Owner’s environmental consultant shall oversee the entire abatement, clean-up and remediation process and the obtaining of any required governmental approvals. If the clean-up or remediation is the responsibility of any resident of the Properties and/or Owner’s environmental consultant, Manager shall, on Owner’s behalf, require the resident to utilize qualified and licensed environmental clean-up companies and ensure that the clean-up and remediation is conducted to Owner’s satisfaction and in accordance with all Hazardous Materials Laws, governmental laws and approvals of which Manager is aware.

(b) The indemnities herein shall be immediately vested and shall survive the expiration or termination of this Agreement.

SECTION 3.17 Representations. Manager represents and warrants to Owner as follows:

any of the transactions contemplated by this Agreement or (ii) with respect to any other matter which in the judgment of Manager will be determined adversely to Manager or if determined adversely to Manager, will materially and adversely affect it or its business, assets, operations or condition, financial or otherwise, or adversely affect Manager’s ability to perform its obligations under this Agreement. Manager is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the transactions contemplated by the above mentioned documents.

(g) Manager is not (and no person or entity owning a beneficial interest equal to or greater than twenty percent (20%) in Manager shall be) subject to sanctions of the United States government or in violation of any federal, state, municipal or local laws, statutes, codes, ordinances, orders, decrees, rules or regulations (“Laws”) relating to terrorism or money laundering, including, without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”). Neither Manager nor any person or entity owning a beneficial interest equal to or greater than twenty percent (20%) in Manager is a “Prohibited Person,” which term is defined as: (i) a person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Manager is prohibited from dealing or otherwise engaging in any transaction by any terrorism or anti-money laundering Law, including the Executive Order and the Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website, http://www.treas.gov/ofac/tllusdn.pdf or any replacement website or other replacement official publication of such list.

(h) As of the Effective Date, Manager has no actual knowledge of any illegal activities relating to controlled substances on any Property.

ARTICLE IV

BANKING AND FINANCIAL RECORDS

SECTION 4.01 Account Agency Agreement & Bank Accounts. Concurrent with the commencement of this Agreement, Owner and Manager shall enter into the Account Agency Agreement, attached as Schedule B. Manager is responsible for providing effective internal controls and efficiencies. Owner will maintain a separate operating account at Owner’s platform bank or other bank acceptable to Owner (the “Operating Account”) and a separate acquisition account at Owner’s platform bank or other bank acceptable to Owner (the “Acquisition Account”), and each will be named in the Account Agency Agreement. Owner shall retain the ability to change the platform banks at its discretion with reasonable notice to Manager. It is understood that the bank account contemplated and authorized by the Account Agency Agreement shall be a non-interest bearing checking account.

SECTION 4.05 Owner’s Right to Audit and Test. Manager, in the conduct of its responsibilities and obligations to Owner hereunder, shall maintain complete, accurate, and separate books and records for the Properties, the entries to which shall be supported by sufficient documentation to ascertain that said entries are properly and accurately recorded with regard to each Property. Such books and records shall be maintained in accordance with Owner’s financial information requirements and shall at all times be the property of Owner. Manager shall maintain such books and records for a period of not less than 12 months after the date of expiration or earlier termination of this Agreement, except that upon any termination of this Agreement by Owner, Manager shall immediately deliver to Owner all such books and records. Owner reserves the right to conduct an examination of the books and records maintained by Manager for Owner or that relate to the calculation of the fees, expenses, or other compensation paid or payable pursuant to this Agreement, and to perform any and all audit tests (whether conducted by the external auditors or Owner’s internal audit team) relating to Manager’s activities, either at the Properties, or at the office of Manager; provided such examination and tests are related to those activities performed by Manager for Owner or the calculation of the fees, expenses, or other compensation paid or payable pursuant to this Agreement. Owner may also conduct periodic testing of Manager’s internal controls. For purposes of clarity and not limitation, Owner shall have the right to exam and audit Manager’s books and records in order to verify the accuracy of the Profit Cap, as defined in Section 6.03. Owner shall give Manager not less than forty-eight (48) hours written notice of any such audit, examination or testing. Any and all such audits conducted either by Owner’s employees or appointees will be at the sole expense of Owner.

ARTICLE V

OWNER’S DUTIES AND RESPONSIBILITIES

SECTION 5.02 Insufficient Operating Funds. If a cash flow deficit can be anticipated in the next budgeted month of operations, Owner agrees to, prior to the commencement of the next budgeted month, remit to Manager sufficient funds to cover the anticipated deficiency and fully fund the Operating Expenditures and approved contingency reserves. In the event that funds in the Operating Account become insufficient to cover all Operating Expenditures and approved contingency reserves, Owner agrees to, within three (3) days of notice, remit to Manager sufficient funds to cover the deficiency and replenish the contingency reserves. Notwithstanding any provision hereof to the contrary, Manager’s performance under this Agreement shall be excused and shall in no event be in default in the event there are insufficient funds in the Operating Account to perform its services described hereunder unless due to the gross negligence or willful misconduct of Manager.

SECTION 5.05 Representations. As of the Effective Date, Owner represents and warrants to Manager as follows:

(a) Each Owner (i) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, (ii) has qualified or will

qualify to do business as a foreign corporation and will remain so qualified, and is and will remain in good standing, in each jurisdiction where the character of its Properties or the nature of its activities makes such qualification necessary and in which failure to so qualify would have a material adverse effect upon Owner or its ability to perform its obligations hereunder, (iii) has and will have full limited liability company power to own the Properties, carry on its business as presently conducted, and to enter into and perform it obligations under this Agreement and (iv) has and will have all licenses or other governmental approvals necessary to perform it obligations hereunder.

ARTICLE VI

COMPENSATION OF MANAGER

SECTION 6.02 Property Management Fee. Subject to Section 9.01 below, Owner shall pay to Manager on a monthly basis in arrears, fees for services provided by Manager to manage each Property equal to 8% of the Collected Rental Revenues for all Properties up to $45,000,000.00, 7% of the Collected Rental Revenues for all Properties in excess of $45,000,000.00 up to $65,000,000.00, 6% of the Collected Rental Revenues for all Properties in excess of $65,000,000.00 up to $85,000,000.00, 5% of the Collected Rental Revenues for all Properties in excess of $85,000,000.00 (the “Property Management Fee”, and collectively with the Acquisition Fee and the Construction Fee, the “Management Fees”).

SECTION 6.03 Reserved

SECTION 6.04 Definitions. “Collected Rental Revenues” shall mean the amount of rental revenue actually collected for each Property per the terms of the lease pertaining to each Property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by Manager, including but not limited to: application fees, forced place insurance, late fees, security deposits (except to the extent applied to rent per the terms of the lease pertaining to any Property), and bad check fees. “EBITDA” means Manager’s profit, based upon Manager’s earnings before deductions for interest expenses, taxes, depreciation, and amortization. “Net Asset Value” has the meaning ascribed to such term in that certain advisory agreement between the Advisor and the REIT. “OP Units” means common units of limited partnership interest in the OP.

ARTICLE VII

INSURANCE AND INDEMNIFICATION

SECTION 7.01 Property and Liability Insurance. Manager shall, at Owner’s sole cost and expense, promptly obtain and keep in force at all times adequate insurance against physical damage (e.g., fire with extended coverage endorsement) and against liability for loss, damage, or injury to property or persons which might arise out of the occupancy, management, operation, or maintenance of the Properties and in accordance with Schedule D. If flood insurance coverage is required by any applicable law or Lender, separate policies shall be procured at Owner’s sole cost and expense. Liability insurance must include a Commercial General Liability Policy and shall have bodily injury and property damage combined single limits of $1,000,000 each occurrence/$1,000,000 aggregate. Such liability insurance shall be deemed to be primary coverage over Manager’s general liability insurance and must cover claims asserted by reason of alleged wrongful actions, fault, or negligence on the part of third-parties and independent contractors, including persons employed by or acting on behalf of the Properties and Owner. Such insurance shall include Manager as an “Additional Insured” and provide for the payment of all costs of defense of any claims. Any deductible required under such insurance policies shall be Owner’s expense. Liability insurance shall be written by a nationally recognized and reputable carrier licensed to do business in the state in which such Property is located. Manager shall furnish Owner with certificates evidencing such insurance and duplicate copies of such policies. The certificates evidencing insurance shall have attached thereto an endorsement from the actual policy that Manager, Owner, and any Lender shall be given at least thirty (30) days prior written notice (by certified mail) of cancellation, non-renewal, or any material change in the subject policy. Without limiting the generality of the foregoing, the parties acknowledge that as of the date of this Agreement, Manager has procured the foregoing policies of insurance on behalf of Owner.

ARTICLE VIII

TERMINATION

SECTION 8.01 Termination. Notwithstanding the provisions of Article II above, this Agreement may also be terminated as follows:

SECTION 8.05 Manager’s Retention of Copies. Manager shall be entitled to retain copies of all documents referred to in Section 8.04.

ARTICLE IX

SECTION 9.01 Transition Period. Notwithstanding anything to the contrary contained herein, the property management company(ies) for the Properties prior to Owner’s acquisition of the Properties (the “Prior Manager”) shall continue to manage the Properties under the applicable property management agreement(s) (the “Prior Agreement”) for a reasonable period of time after the Effective Date of this Agreement in order to effectuate the orderly transition of management services to Manager (the “Transition Period”). Management of the Properties, including any operational guidelines and any fees paid to the Prior Manager, shall be governed by the Prior Agreement during the Transition Period.

ARTICLE X

MANAGER RESTRUCTURING

ARTICLE XI

MISCELLANEOUS

If to Owner:

c/o VB One, LLC

3500 Park Center Drive

Dayton, Ohio 45414

Attention: Brian Mitts

Email: BMitts@NexpointSecurities.com

with a copy to:

Wick Phillips Gould & Martin, LLP

3131 McKinney Ave.

Suite 100

Dallas, Texas 75201

Attention: D.C. Sauter

Email: dcsauter@wickphillips.com

If to Manager:

c/o VineBrook Homes, LLC

561 Virginia Road

Concord, Massachusetts 01742

Attn: Messrs. Sprong and McGarry

Email: dana.sprong@vinebrookhomes.com and ryan.mcgarry@vinebrookhomes.com

and

King & Spalding LLP

300 South Tryon Street, Suite 1700

Charlotte, North Carolina 28202

Attn: Christopher D. McCoy

Email: cmccoy@kslaw.com

or to such other addresses as may be specified by any such person to the other person pursuant to notice given by such person in accordance with the provisions of this Section 11.01.

SECTION 11.03 Entire Agreement. This Agreement sets forth the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof. Notwithstanding the foregoing, nothing in this Agreement shall be deemed to amend, modify, limit, or supersede the terms and conditions of the Purchase Agreement nor the rights of the purchasers thereunder or that certain Side Letter dated November 1, 2018 by and among the OP, the REIT, the Manager, VineBrook Homes OP GP, LLC, a Delaware limited liability company, VineBrook Management, LLC, a Delaware limited liability company, and the VineBrook Entities..

SECTION 11.09 Confidentiality. No party to this Agreement will disclose the terms of this Agreement to any third party without the consent of the other parties hereto, except as required by securities or other applicable laws. Notwithstanding the above provisions, each party may disclose the terms of this Agreement (i) in connection with the requirements of a public offering or securities filing, (ii) to accountants, banks, and financing sources (both debt and equity) and their advisors, (iii) in connection with the enforcement of this Agreement or rights under this Agreement, or (iv) in connection with a merger or acquisition (whether by an equity or asset transfer), or the like.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed and delivered this MANAGEMENT AGREEMENT as of the date first written above.


TI Pennsylvania Holdings LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True PIT2017-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True PIT2017-2, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True Jack2017-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory

[Signature Page to Management Agreement]


True Jack2017-2, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True OM2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True MEM2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


True KC2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory


TI KC Bravo, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory

[Signature Page to Management Agreement]


VINEBROOK HOMES, LLC, a Delaware limited liability company

By:		/s/Ryan McGarry
Name:		Ryan McGarry
Title:		Managing Partner

[Signature Page to Management Agreement]

Schedule A

The Properties

[Omitted]

Schedule B

Account Agency Agreement

[Omitted]

Schedule C

Financial Records and Reports

[Omitted]

Schedule D

Standard of Care

[Omitted]

Schedule E

Approved Operating Budget

[Omitted]

Schedule F

Approved Guidelines

[Omitted]

Schedule G

Defined Terms

Capitalized terms used in this Agreement but not otherwise defined herein have the following definitions:

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. 1956 and 1957, as amended.

“Assignment of Management Agreement” means each Assignment of Management Agreement and Subordination of Management Fees among Manager, Owner and Lender.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time.

“Bankruptcy Event” with respect to any Person, means the occurrence of any of the following:

(a)

Such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(b)

(c)

(d)

(e)

(f)

If such Person is a general partnership, any of the following occur:

(i)

Any general partner of such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(ii)

(iii)

(viii)

“Books and Records” is defined in Section 1.07(a) of Schedule D.

“Business Day” means any day other than a Saturday, a Sunday, or any other day on which Owner or the national banking associations are not open for business.

“Eligible Lease” means, unless otherwise approved by Owner, a written Lease that satisfies all of the following characteristics:

(i)

It is on a form approved by Owner.

(ii)

It is executed by an Eligible Tenant and Owner, or Manager on behalf of Owner (or, in the case of a Lease existing on the Effective Date, such Lease has been assigned to Owner).

(iii)

It has a rental rate and terms consistent with existing local market rates and terms.

(iv)

As of the date the Lease was executed, the Lease had an initial term of at least 6 months and not more than 2 years.

(v)

It complies with all applicable law in all material respects and includes all disclosures required by applicable law.

(vi)

It covers 100% of the square footage of the applicable Property or Unit.

(vii)

It does not include any purchase option, right of refusal, right of first offer or other similar interest in any Property in favor of any Tenant or other Person.

“Eligible Tenant” means a bona fide third-party lessee of a Property who satisfies each of the following criteria:

(i)

Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Property.

(ii)

The tenant is not subject to an ongoing Bankruptcy Event as such date of initial screening (or if not so initially screened, as of the Effective Date).

(iii)

The tenant is not an Affiliate of Manager or any Immediate Family Member of any of the foregoing.

“Event of Default” means an event of default under the Loan Documents of which Manager has received written notice or has actual knowledge.

“FHFA” means the Federal Housing Finance Authority.

“Immediate Family Members” means a Person’s spouse, parent (including step-parent), child (including stepchild), grandchild (including step-grandchild) or sibling (including step-siblings).

“Insurance” means Property Insurance, liability insurance and all other insurance that Owner requires Manager to maintain pursuant to this Agreement.

“Land” means the land described in Exhibit A to the Security Instrument(s).

“Lender” means any lender providing a loan to Owner which is secured by a mortgage or deed of trust on any Property.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance on any Property or any direct or indirect ownership interest in Borrower.

“Loan” means any loan provided by any Lender to Owner.

“Loan Documents” means all documents now or in the future executed by Owner in connection with any Loan.

“Mold” means mold, fungus, microbial contamination or pathogenic organisms.

“Property” means, individually, and “Properties” means, collectively, the residential real properties encumbered by the Security Instruments.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“OFAC Lists” means either one of the following:

(i)

The OFAC Specially Designated Nationals and Blocked Persons List.

(a)

(ii)

The OFAC Consolidated Sanctions List.

“Personalty” means all of the following:

(a)

Accounts (including deposit accounts) of Owner related to any Property.

(b)

(c)

(d)

Any service contracts relating to the Land or the Improvements.

(e)

Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements.

(f)

(g)

Any rights of Owner in or under letters of credit.

“Priority Repairs” means those repairs required to be performed under any Loan which are set forth on Schedule H attached hereto or of which Manager has been given written notice by Owner.

“Prohibited Activity or Condition” means each of the following:

(i)

(ii)

The transportation of any Hazardous Materials to, from or across a Property.

(iii)

Any occurrence or condition on a Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws.

(A)

Prepackaged supplies, cleaning materials, and petroleum products customarily used in the operation and maintenance of comparable properties.

(B)

Cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential units in the Properties.

(C)

Petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Property’s parking areas.

“Prohibited Parties List” means any one or more of the following:

(i)

The OFAC Lists.

(ii)

The FHFA SCP List.

“Property Improvement” is defined in Section 1.08(e)(v) of Schedule D.

“Property Jurisdiction” means the jurisdiction in which the Land is located for any particular Property.

“Purchase Agreement” means that certain Purchase and Sale Agreement, dated as of August 16, 2019, by and among the OP, Timber Real Estate Holdings, LLC, and the other parties thereto (as amended or modified) whereby the OP purchased (a) all of the membership interests of True Owner and (b) those certain direct sale properties owned by (i) Timber Holdings, LLC, and (ii) TI Long Term Holdings I, LLC

“REIT” means VineBrook Homes Trust, Inc., a Maryland corporation.

“Related Party” means all the following:

(i)

Manager.

(ii)

Any general partner of Manager if Manager is a general partnership.

(iii)

(iv)

Any Person in which Manager or any general partner of Manager if Manager is a general partnership.

(v)

Any Person in which any partner, shareholder, or member of Manager or any general partner of Manager if Manager is a general partnership.

(vi)

Any Person in which any Person holding an interest in Manager or any general partner of Manager if Manager is a general partnership.

(vii)

Any creditor of Manager that is related by blood, marriage or adoption to Manager.

(viii)

“Repairs” means all repairs made to the Properties, including all Priority Repairs.

“Restoration” is defined in Section 1.09(i) of Schedule D.

“Unit” means each separate legal address comprising all or part of a Property.

Schedule H

Priority Repairs

[Omitted]

Exhibit 10.5

Execution Version

FIRST AMENDMENT

MANAGEMENT AGREEMENT

This First Amendment to Management Agreement (this “Amendment”), is entered into as of May 4, 2020 by and among VB One, LLC, a Delaware limited liability company (“VB One”), TI Pennsylvania Holdings, LLC, a Delaware limited liability company (“Pennsylvania”), True JACK2017-2, LLC, a Delaware limited liability company (“Jack2017-2”), True JACK2017-1, LLC, a Delaware limited liability company (“Jack2017-1”), True OM2016-1, LLC, a Delaware limited liability company (“OM2016”), True KC2016-1, LLC, a Delaware limited liability company (“KC2016”), True PIT2017-1, LLC, a Delaware limited liability company (“PIT2017-1”), True PIT2017-2, LLC, a Delaware limited liability company (“PIT2017-2”), True MEM2016-1, LLC, a Delaware limited liability company (“MEM2016”), TI KC Bravo, LLC, a Delaware limited liability company (“Bravo”; Pennsylvania, Jack2017-2, Jack2017-1, OM2016, KC2016, PIT2017-1, PIT2017-2, and MEM2016, individually and collectively, “True Owner”, together with VB One, “Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”) All capitalized terms used herein and not otherwise defined have the respective meaning given to such terms in the Management Agreement (as defined below).

RECITALS

A. The parties hereto previously entered into that certain Management Agreement, dated September 30, 2019 (the “Management Agreement”).

B. In accordance with Section 11.04 of the Management Agreement, the parties hereto desire to amend certain provisions of the Management Agreement as set forth herein.

AGREEMENTS

Section 1. Termination. Section 8.01(a) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

Section 2. Termination Fee. Section 8.02 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

Management Fee for the trailing 12-month period; provided, however, if this Agreement is terminated prior to the one year anniversary of the date of this Agreement, (a) Owner shall pay Manager $1,000,000.00, in addition to the amount otherwise payable under this paragraph, and (b) the Property Management Fee will be annualized for such 12-month period based on such Property Management Fee earned by Manager during such period. Any amounts accruing to Manager prior to such termination, shall be due and payable upon termination of this Agreement. To the extent funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager upon demand. For the avoidance of doubt, Acquisition Fees, Construction Fees, and fees attributable to Additional Services are not considered in the calculation of the Termination Fee.”

Section 3. Miscellaneous.

(b) Single Document. From and after the date hereof, all references to the Management Agreement shall be deemed to be references to the Management Agreement as amended by this Amendment.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed and delivered this FIRST AMENDMENT TO MANAGEMENT AGREEMENT as of the date first written above.


VB One, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


TI Pennsylvania Holdings LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True PIT2017-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True PIT2017-2, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


True Jack2017-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True Jack2017-2, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True OM2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True MEM2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory


True KC2016-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


TI KC Bravo, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


VINEBROOK HOMES, LLC a Delaware limited liability company By: VineBrook Management, LLC, its managing member

By:		/s/Dana W. Sprong
Name: Dana W. Sprong Title: Managing Partner

[Signature Page to First Amendment to Management Agreement]

Exhibit 10.6

MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”), dated September 30, 2019, is made and entered into by and between True FM2017-1, LLC, a Delaware limited liability company (“Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

SECTION 1.02 Independent Contractor Status. Manager is hereby engaged to manage the Properties as an independent contractor.

ARTICLE II

TERM OF AGREEMENT

ARTICLE III

MANAGER’S DUTIES AND RESPONSIBILITIES

disposition and management of the Properties and in compliance with the directives of Owner or the Investment Committee (as hereinafter defined), all pursuant to the terms, conditions and limitations of this Agreement. Manager shall have such responsibilities, and shall perform and take, or cause to be performed or taken, all such services and actions customarily taken by managing agents of property of similar nature, location, and character to that of the Properties consistent with the duties set forth in this Article III. Unless otherwise specifically provided in this Agreement, the written directives of Owner or the Investment Committee, the Approved Guidelines, or the Approved Operating Budget (collectively, the “Guiding Documents”), all services and actions that Manager is required or permitted to perform or take, or cause to be performed or taken in connection with the management of the Properties shall be performed or taken, as the case may be, on behalf of Owner and at Owner’s sole cost, expense, and risk. Manager’s authority is limited to performing the services set forth herein and the other Guiding Documents. Except as provided in the Guiding Documents, Manager shall have no authority (a) to execute any contract or agreement for or on behalf of Owner, (b) to provide additional services or modify existing services to tenants, or (c) to assume or create any obligation or liability or to make any representation, covenant, agreement or warranty for or on behalf of Owner.

Operating Budget for the period between the effective date and December 31, 2019 is attached hereto as Schedule E. The proposed Management Plans and Operating Budgets for Fiscal Year 2020 shall be submitted to Owner on or before November 15, 2019, and subsequent proposed Management Plans and Operating Budgets shall be submitted to Owner sixty (60) days prior to the beginning of the next Fiscal Year. All proposed Management Plans and Operating Budgets shall include, without limitation, leasing objectives for the next annual budget period, a marketing plan for the next annual budget period including the estimated costs of the marketing and promotional plans, a market analysis of the leasing market in which the Properties are located, and if requested by Owner, a review of the real estate taxes and assessed valuation and a recommendation concerning the merits of a tax appeal for the Properties. Owner will review the proposed Management Plan and Operating Budget and will consult with Manager prior to the commencement of the forthcoming fiscal year in order to agree on an approved Management Plan and an approved Operating Budget (collectively, the “Approved Operating Budget”). Until such time as the Management Plan and Operating Budget shall be approved by Owner as aforesaid, Manager shall, unless otherwise directed in writing by Owner and subject to the terms of this Agreement, make only those expenditures necessary to (1) maintain the physical integrity of the Properties, preserve the security of the Properties (including without limitation taxes, insurance and utilities borne by Owner), or prevent any lien or other encumbrances on the Properties, (2) comply with the Requirements, (3) comply with Owner’s obligations hereunder, as landlord under the terms of any Leases, and under any Loan Documents (as defined in Schedule D), and (4) remedy an emergency situation. Manager agrees to use such efforts as are consistent with the Standard of Care to ensure the actual costs of all Operating Expenditures and capital expenditures for the Properties shall not exceed the Approved Operating Budget, both in the aggregate and in respect of the specific budget category pertaining thereto (taking into account any variance allowances permitted in the Guiding Documents).

proposal for any new acquisition, disposition or financing. Upon the request of Owner or any member of the Investment Committee, Manager shall deliver such reports to the Investment Committee prior to any meeting of the Investment Committee. Further, Manager will be responsible for all other reports, analysis or studies as requested by Owner or the Investment Committee, and Manager is hereby authorized to contact the NexPoint Real Estate Advisors V, L.P. (the “Advisor”) and any Lender to obtain additional information reasonably necessary for the preparation of such reports, analyses, or studies. The approved guidelines for the acquisition, disposition and leasing of existing and future Properties are attached hereto as Schedule F (the “Approved Guidelines”). The Approved Guidelines shall be applicable to the markets within which the Properties are located, and before acquiring Properties in new markets, Manager shall propose updated guidelines for properties in that market for the approval of the Investment Committee. Provided that Manager has obtained the Investment Committee’s prior written approval, Manager shall be authorized to cause Owner or an Affiliate thereof to acquire, dispose of, and lease Properties consistent with this Agreement, the Approved Guidelines and the other Guiding Documents. For purposes of clarification, Properties acquired by Owner or any subsidiaries of the OP will be deemed Properties under this Agreement, and Properties sold by Owner or any subsidiaries of the OP shall no longer be deemed Properties under this Agreement, in either case regardless of whether this Agreement or any exhibit or schedule is formally amended to reflect the new or former Properties.

applicable Requirements, Manager is authorized to institute the following actions: (a) terminate tenancies; (b) sign and serve such notices as are deemed reasonably necessary or expedient by Manager; (c) institute and prosecute actions and evict residents; (d) recover rents and other sums due by legal proceedings; and (e) settle, compromise, and release such actions or suits, or reinstitute such tenancies. Attorney’s fees, filing fees, court costs, and other reasonable and necessary expenses incurred in connection with such actions and not recovered from residents shall be paid out of the Operating Account.

SECTION 3.09 Operating Expenditures.

Properties) that could be contracted or subcontracted out to third parties hereunder, and, for performing such services, Manager (or its Affiliates) shall be entitled to reimbursement for the costs and expenses incurred performing such services (in addition to the Management Fees contemplated under Article VI) at rates commensurate with rates that would be payable to unrelated third parties if Manager engaged such unrelated third parties to perform such services (collectively, the “Additional Services”).

(b) The indemnities herein shall be immediately vested and shall survive the expiration or termination of this Agreement.

SECTION 3.17 Representations. Manager represents and warrants to Owner as follows:

(h) As of the Effective Date, Manager has no actual knowledge of any illegal activities relating to controlled substances on any Property.

ARTICLE IV

BANKING AND FINANCIAL RECORDS

ARTICLE V

OWNER’S DUTIES AND RESPONSIBILITIES

maintain a contingency reserve of $250 per Property at all times in the Operating Account to enable Manager to pay obligations of Owner under this Agreement as they become due and in the Acquisition Account to enable Manager to acquire new Properties in accordance with this Agreement and the Approved Operating Budget.

SECTION 5.05 Representations. As of the Effective Date, Owner represents and warrants to Manager as follows:

transactions herein contemplated, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on Owner or its Properties or the certificate of formation of Owner, or any of the provisions of any indenture, mortgage, contract or other instrument to which Owner is a party or by which it is bound or result in the creation or imposition of any lien, charge or encumbrance upon any of the Properties pursuant to the terms of any such indenture, mortgage, contract or other instrument.

ARTICLE VI

COMPENSATION OF MANAGER

SECTION 6.03 Reserved

SECTION 6.04 Definitions. “Collected Rental Revenues” shall mean the amount of rental revenue actually collected for each Property per the terms of the lease pertaining to each Property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by Manager, including but not limited to: application fees, forced place insurance, late fees, security deposits (except to the extent applied to rent per the terms of the lease pertaining to any Property), and bad check fees. “EBITDA” means Manager’s profit, based upon Manager’s earnings before deductions for interest expenses, taxes, depreciation, and amortization. “Net Asset Value” has the meaning ascribed to such term in that certain advisory agreement between the Advisor and the REIT. “OP Units” means common units of limited partnership interest in the OP.

ARTICLE VII

INSURANCE AND INDEMNIFICATION

gross negligence, willful misconduct, or fraud on the part of Manager, its agents or employees. Manager shall indemnify, defend and hold harmless Owner and its agents from and against all claims, liabilities, losses, damages and/or expenses arising out of the gross negligence, willful misconduct, or fraud on the part of Manager, its agents, or employees, and shall at its own cost and expense defend any action or proceeding against Owner arising therefrom.

ARTICLE VIII

TERMINATION

SECTION 8.01 Termination. Notwithstanding the provisions of Article II above, this Agreement may also be terminated as follows:

SECTION 8.05 Manager’s Retention of Copies. Manager shall be entitled to retain copies of all documents referred to in Section 8.04.

ARTICLE IX

SECTION 9.01Transition Period. Notwithstanding anything to the contrary contained herein, the property management company(ies) for the Properties prior to Owner’s acquisition of the Properties (the “Prior Manager”) shall continue to manage the Properties under the applicable property management agreement(s) (the “Prior Agreement”) for a reasonable period of time after the Effective Date of this Agreement in order to effectuate the orderly transition of management services to Manager (the “Transition Period”). Management of the Properties, including any operational guidelines and any fees paid to the Prior Manager, shall be governed by the Prior Agreement during the Transition Period.

ARTICLE X

MANAGER RESTRUCTURING

ARTICLE XI

MISCELLANEOUS

mails and (iii) if given by courier or other means, when received or personally delivered, and, in any such case, addressed as follows:

If to Owner:

c/o True FM2017-1, LLC

3500 Park Center Drive

Dayton, Ohio 45414

Attention: Brian Mitts

Email: BMitts@NexpointSecurities.com

with a copy to:

Wick Phillips Gould & Martin, LLP

3131 McKinney Ave.

Suite 100

Dallas, Texas 75201

Attention: D.C. Sauter

Email: dcsauter@wickphillips.com

If to Manager:

c/o VineBrook Homes, LLC

561 Virginia Road

Concord, Massachusetts 01742

Attn: Messrs. Sprong and McGarry

Email: dana.sprong@vinebrookhomes.com and ryan.mcgarry@vinebrookhomes.com

and

King & Spalding LLP

300 South Tryon Street, Suite 1700

Charlotte, North Carolina 28202

Attn: Christopher D. McCoy

Email: cmccoy@kslaw.com

or to such other addresses as may be specified by any such person to the other person pursuant to notice given by such person in accordance with the provisions of this Section 11.01.

CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed and delivered this MANAGEMENT AGREEMENT as of the date first written above.


TRUE FM2017-1, LLC, a Delaware limited liability company

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Authorized Signatory

[Signature Page to Management Agreement]


VINEBROOK HOMES, LLC, a Delaware limited liability company

By:		/s/Ryan McGarry
Name:		Ryan McGarry
Title:		Managing Partner

[Signature Page to Management Agreement]

Schedule A

The Properties

[Omitted]

Schedule B

Account Agency Agreement

[Omitted]

Schedule C

Financial Records and Reports

[Omitted]

Schedule D

Standard of Care

[Omitted]

Schedule E

Approved Operating Budget

[Omitted]

Schedule F

Approved Guidelines

[Omitted]

Schedule G

Defined Terms

Capitalized terms used in this Agreement but not otherwise defined herein have the following definitions:

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. 1956 and 1957, as amended.

“Assignment of Management Agreement” means each Assignment of Management Agreement and Subordination of Management Fees among Manager, Owner and Lender.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time.

“Bankruptcy Event” with respect to any Person, means the occurrence of any of the following:

(a)

Such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(b)

(c)

(d)

(e)

(f)

If such Person is a general partnership, any of the following occur:

(i)

Any general partner of such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(ii)

(iii)

(viii)

“Books and Records” is defined in Section 1.07(a) of Schedule D.

“Business Day” means any day other than a Saturday, a Sunday, or any other day on which Owner or the national banking associations are not open for business.

“Eligible Lease” means, unless otherwise approved by Owner, a written Lease that satisfies all of the following characteristics:

(i)

It is on a form approved by Owner.

(ii)

It is executed by an Eligible Tenant and Owner, or Manager on behalf of Owner (or, in the case of a Lease existing on the Effective Date, such Lease has been assigned to Owner).

(iii)

It has a rental rate and terms consistent with existing local market rates and terms.

(iv)

As of the date the Lease was executed, the Lease had an initial term of at least 6 months and not more than 2 years.

(v)

It complies with all applicable law in all material respects and includes all disclosures required by applicable law.

(vi)

It covers 100% of the square footage of the applicable Property or Unit.

(vii)

It does not include any purchase option, right of refusal, right of first offer or other similar interest in any Property in favor of any Tenant or other Person.

“Eligible Tenant” means a bona fide third-party lessee of a Property who satisfies each of the following criteria:

(i)

Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Property.

(ii)

The tenant is not subject to an ongoing Bankruptcy Event as such date of initial screening (or if not so initially screened, as of the Effective Date).

(iii)

The tenant is not an Affiliate of Manager or any Immediate Family Member of any of the foregoing.

“Event of Default” means an event of default under the Loan Documents of which Manager has received written notice or has actual knowledge.

“FHFA” means the Federal Housing Finance Authority.

“Immediate Family Members” means a Person’s spouse, parent (including step-parent), child (including stepchild), grandchild (including step-grandchild) or sibling (including step-siblings).

“Insurance” means Property Insurance, liability insurance and all other insurance that Owner requires Manager to maintain pursuant to this Agreement.

“Land” means the land described in Exhibit A to the Security Instrument(s).

“Lender” means any lender providing a loan to Owner which is secured by a mortgage or deed of trust on any Property.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance on any Property or any direct or indirect ownership interest in Borrower.

“Loan” means any loan provided by any Lender to Owner.

“Loan Documents” means all documents now or in the future executed by Owner in connection with any Loan.

“Mold” means mold, fungus, microbial contamination or pathogenic organisms.

“Property” means, individually, and “Properties” means, collectively, the residential real properties encumbered by the Security Instruments.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“OFAC Lists” means either one of the following:

(i)

The OFAC Specially Designated Nationals and Blocked Persons List.

(a)

(ii)

The OFAC Consolidated Sanctions List.

“Personalty” means all of the following:

(a)

Accounts (including deposit accounts) of Owner related to any Property.

(b)

(c)

(d)

Any service contracts relating to the Land or the Improvements.

(e)

Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements.

(f)

(g)

Any rights of Owner in or under letters of credit.

“Priority Repairs” means those repairs required to be performed under any Loan which are set forth on Schedule H attached hereto or of which Manager has been given written notice by Owner.

“Prohibited Activity or Condition” means each of the following:

(i)

(ii)

The transportation of any Hazardous Materials to, from or across a Property.

(iii)

Any occurrence or condition on a Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws.

(A)

Prepackaged supplies, cleaning materials, and petroleum products customarily used in the operation and maintenance of comparable properties.

(B)

Cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential units in the Properties.

(C)

Petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Property’s parking areas.

“Prohibited Parties List” means any one or more of the following:

(i)

The OFAC Lists.

(ii)

The FHFA SCP List.

“Property Improvement” is defined in Section 1.08(e)(v) of Schedule D.

“Property Jurisdiction” means the jurisdiction in which the Land is located for any particular Property.

“Purchase Agreement” means that certain Purchase and Sale Agreement, dated as of August 16, 2019, by and among the OP, Timber Real Estate Holdings, LLC, and the other parties thereto (as amended or modified) whereby the OP purchased all of the membership interests of Owner and (b) those certain direct sale properties owned by (i) Timber Holdings, LLC, and (ii) TI Long Term Holdings I, LLC

“REIT” means VineBrook Homes Trust, Inc., a Maryland corporation.

“Related Party” means all the following:

(i)

Manager.

(ii)

Any general partner of Manager if Manager is a general partnership.

(iii)

(iv)

Any Person in which Manager or any general partner of Manager if Manager is a general partnership.

(v)

Any Person in which any partner, shareholder, or member of Manager or any general partner of Manager if Manager is a general partnership.

(vi)

Any Person in which any Person holding an interest in Manager or any general partner of Manager if Manager is a general partnership.

(vii)

Any creditor of Manager that is related by blood, marriage or adoption to Manager.

(viii)

“Repairs” means all repairs made to the Properties, including all Priority Repairs.

“Restoration” is defined in Section 1.09(i) of Schedule D.

“Unit” means each separate legal address comprising all or part of a Property.

Schedule H

Priority Repairs

[Omitted]

Exhibit 10.7

Execution Version

FIRST AMENDMENT

MANAGEMENT AGREEMENT

This First Amendment to Management Agreement (this “Amendment”), is entered into as of May 4, 2020 by and between True FM2017-1, LLC, a Delaware limited liability company (“Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”) All capitalized terms used herein and not otherwise defined have the respective meaning given to such terms in the Management Agreement (as defined below).

RECITALS

A. The parties hereto previously entered into that certain Management Agreement, dated September 30, 2019 (the “Management Agreement”).

B. In accordance with Section 11.04 of the Management Agreement, the parties hereto desire to amend certain provisions of the Management Agreement as set forth herein.

AGREEMENTS

Section 1. Termination. Section 8.01(a) of the Management Agreement is hereby amended and restated in its entirety to read as follows:

Section 2. Termination Fee. Section 8.02 of the Management Agreement is hereby amended and restated in its entirety to read as follows:

“If Owner terminates this Agreement pursuant to Section 8.01(e) before the end of the Term or any subsequent term year, then Owner shall be obligated to pay Manager an amount equal to three times the sum of the annual Property Management Fee for the trailing 12-month period; provided, however, if this Agreement is terminated prior to the one year anniversary of the date of this Agreement, (a) Owner shall pay Manager $1,000,000.00, in addition to the amount otherwise payable under this paragraph, and (b) the Property Management Fee will be annualized for such 12-month period based on such Property Management Fee earned by Manager during such period. Any amounts accruing to Manager prior to such termination, shall be due and payable upon termination of this Agreement. To the extent funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager upon demand. For the avoidance of doubt, Acquisition Fees, Construction Fees, and fees attributable to Additional Services are not considered in the calculation of the Termination Fee.”

Section 3. Miscellaneous.

(b) Single Document. From and after the date hereof, all references to the Management Agreement shall be deemed to be references to the Management Agreement as amended by this Amendment.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed and delivered this FIRST AMENDMENT TO MANAGEMENT AGREEMENT as of the date first written above.


True FM2017-1, LLC a Delaware limited liability company

By:		/s/Brian Mitts
Name: Brian Mitts Title: Authorized Signatory

[Signature Page to First Amendment to Management Agreement]


VINEBROOK HOMES, LLC a Delaware limited liability company By: VineBrook Management, LLC, its managing member

By:		/s/Dana W. Sprong
Name: Dana W. Sprong Title: Managing Partner

[Signature Page to First Amendment to Management Agreement]

Exhibit 10.8

Execution Version

Amended and Restated Side Letter

This SIDE LETTER (this “Agreement”), dated July 31, 2020, is entered into by and among (a) VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership (the “OP”), (b) VineBrook Homes Trust, Inc., a Maryland corporation (the “REIT”), (c) VineBrook Homes, LLC, a Delaware limited liability company (“Manager”), (d) VineBrook Homes OP GP, LLC, a Delaware limited liability company (the “General Partner”), (e) VineBrook Management, LLC, a Delaware limited liability company (the “Managing Member”), (f) Vinebrook Development Corporation, a Massachusetts corporation, Vinebrook Homes Property Management Company, Inc., an Ohio corporation, Vinebrook Homes Realty Company, Inc., an Ohio corporation, and Vinebrook Homes Services Company, Inc., an Ohio corporation (collectively with Managing Member, the “Manager Equityholders”) and (g) Dana Sprong and Ryan McGarry (collectively, the “Guarantors”).

WHEREAS, (a) certain of the parties hereto entered into that certain Management Agreement, dated as of November 1, 2018 (as may be amended and/or restated from time to time, the “Original Management Agreement”), pursuant to which the Manager has undertaken certain management and oversight functions with respect to certain properties owned by the OP or its subsidiaries, and, subject to the limitations set forth in the OP LPA and herein, the acquisition and disposition of single family residential properties, in each case, during the term of the Original Management Agreement, (b) subject to the exclusivity provision of the Original Management Agreement, to more efficiently finance prior and future acquisitions of single family residential assets, the board of directors of the REIT (the “Board”) has authorized the Manager to enter into one or more additional management agreements (such management agreements entered into from time to time, as may be further amended and/or restated, the “Additional Management Agreements” and, collectively with the Original Management Agreement, the “Management Agreements”), pursuant to which the Manager will undertake certain management and oversight functions, and, subject to the limitations set forth in the OP LPA and herein, the acquisition and disposition of single family residential properties, in each case, during the term of such Additional Management Agreement, and (c) the General Partner, in its role as the general partner of the OP, entered into that certain Amended and Restated Agreement of Limited Partnership of the OP (as the same may be amended and/or restated from time to time, the “OP LPA”), pursuant to which the General Partner manages the operations of the OP, subject to oversight and direction provided by the Board and the Investment Committee of the OP; and

WHEREAS, previously the parties hereto entered into that certain Side Letter, dated November 1, 2018 (the “Original Side Letter”), to set forth their understanding with respect to certain other arrangements among the parties that are not explicitly provided for in the Original Management Agreement or the OP LPA, and the parties hereto desire to amend and restate the Original Side Letter in its entirety as a result of the Additional Management Agreements, among other matters.

NOW, THEREFORE, in consideration of the mutual covenants, representations, and warranties made in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties agree as follows:

1. Defined Terms. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the applicable Management Agreement. For the avoidance of doubt, any Additional Management Agreements will adhere to the same form as the Original Management Agreement and, where possible, utilize the same defined terms and Section references throughout.

2. Call Right.

(a) Ownership of Manager. All of the outstanding and issued equity interests of Manager (the “Membership Units”), as of the date hereof, are owned by the Manager Equityholders. There are no (i) outstanding securities of Manager other than equity held by Manager Equityholders having the right to vote on any matters on which the holders of equity securities of Manager may vote or which are convertible into or exchangeable for, at any time, equity securities of Manager, (ii) options, warrants, calls, subscriptions or other rights, agreements or commitments obligating Manager to issue, deliver or sell, or cause to be issued, delivered or sold, any equity securities of Manager except as expressly set forth in this Agreement, (iii) outstanding contractual obligations of Manager to repurchase, redeem or otherwise acquire any equity securities or securities convertible into or exchangeable for equity securities of Manager, and (iv) voting trusts or other agreements or understandings to which Manager is a party or by which Manager is bound with respect to the voting, transfer or other disposition of its equity securities. The Membership Units have been duly authorized and validly issued, are fully paid and non-assessable, were issued in compliance with all applicable Laws and are not subject to and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under which Manager is a party or otherwise bound.

(b) Call Right. At any time following the date of this Agreement, the OP or the REIT shall have the right and option (but not the obligation) to purchase all, but not less than all, of the Membership Units (the “Manager Equity”) from the Manager Equityholders, as applicable (the “Call Right”). The purchase price for the Manager Equity to be purchased under the Call Right shall be equal to three times the sum of the annual Property Management Fee (excluding, for the avoidance of doubt, any refunds of EBITDA derived from Management Fees in excess of the Dollar Cap or Equity Cap, as applicable, which is represented as a contra-revenue entry on the financial statements of the Manager and a corresponding contra-expense entry on the financial statements of the OP) for the trailing 12-month period as of the month end immediately preceding the delivery of notice of exercise of the Call Right reduced by the value of the Manager Equityholders as of November 1, 2018, which for purposes hereof equals $6,500,000 (the “Legacy Value”), then further reduced by 50% and then increased by the Legacy Value (the “Call Price”). Notwithstanding the foregoing, the Call Price shall be capped at 2.5% of the combined equity value of the REIT and the OP combined at the time of the Call Right Closing (as defined below) as calculated by multiplying the aggregate number of outstanding shares of the REIT and OP Units (excluding OP Units held by the REIT) by the then-current Net Asset Value on a per unit basis. For illustration purposes, example calculations of Call Price have been included in Schedule 1 attached hereto. If the Call Right is exercised pursuant to this Section 2, all Management Agreements shall automatically terminate and Manager shall not be entitled to the Termination Fee provided under Section 8.02 of any Management Agreement. The parties acknowledge and agree that the purpose of the Call Right is to provide the OP, the REIT or their transferee with the ability to perform the responsibilities and obligations of Manager under the Management Agreements; and to the extent the transfer of the equity interests contemplated hereby does not provide the OP, the REIT or the their transferees with the ability to do so, the applicable Manager Equityholders shall take all action necessary, and cause their respective affiliates (as applicable), to transfer ownership to all properties, assets and rights used or held for use in connection with the performance of the obligations under the Management Agreements that are necessary to accomplish such purpose and permit the OP, the REIT or their transferees with the ability to perform the responsibilities and obligations of Manager under the Management Agreements in the same manner and to the same level performed by Manager during the term of the Management Agreements.

(c) Closing. At the closing of the Call Right (the “Call Right Closing”), the OP or the REIT, as applicable, or their transferee, shall pay the Call Price to the Manager Equityholders, as applicable, in Common Units of the OP, class A shares of the REIT or cash. At the Call Right Closing, the Managing Member or the Manager Equityholders, as applicable, shall transfer the Manager Equity, free and clear of any lien or encumbrance, and shall deliver to the OP or the REIT, as applicable, or their transferee, certificates (if any have been issued) evidencing the Manager Equity, duly endorsed in blank or accompanied by a duly executed instrument of assignment separate from the certificate, together with any other documentation reasonably requested by the OP, the REIT, or their transferee.

(d) Assignment of Call Right. The OP and the REIT shall have the option to assign its Call Right to any affiliate of the OP or the REIT upon no less than ten days’ prior written notice to Manager.

(e) No Sale or Transfer. So long as this Agreement remains in effect, neither the Managing Member nor the Manager Equityholders, as applicable, shall permit the sale or transfer of any assets of the Manager Equityholders or the direct or indirect sale or transfer of the Manager Equity to any person (other than a Permitted Transferee (as defined below)) without the prior written consent of the OP and the REIT, which may be withheld in their sole and absolute discretion. The consent of the REIT shall require the affirmative vote of at least one member of the Board appointed by the Adviser, so long as the Advisory Agreement is in place. Notwithstanding any provision hereof to the contrary, the parties acknowledge that certain of the Manager Equityholders own direct or indirect ownership or management interests in the properties described on Schedule 2 attached hereto (the “Excluded Properties”), and in no event shall the terms and conditions of this Agreement apply to the Excluded Properties.

(f) Successors and Assigns. Notwithstanding Section 2(d) above, each Manager Equityholder acknowledges and agrees that this Section 2 shall be binding on any successor, assignee or heir of such Manager Equityholder. In furtherance of the foregoing, any Manager Equityholder shall provide prior written notice of any sale or transfer of any portion of the Manager Equity to any person who is considered a “permitted transferee” pursuant to the terms of Manager’s governing documents (a “Permitted Transferee”), and such Manager Equityholder shall, as a condition to such sale or transfer, require any Permitted Transferee to execute a joinder to this Agreement, in form and substance reasonably satisfactory to the OP and the REIT, and any such documents as may be required by any lender of the REIT, the OP or any of their respective subsidiaries, including a joinder to any Management Agreement.

3. Withdrawal as the General Partner.

(a) Withdrawal Event. Notwithstanding anything contained in the OP LPA to the contrary, the General Partner shall resign and withdraw automatically (and without any further action by the General Partner or the limited partners of the OP) as the general partner of the OP if (i) the General Partner defaults in the performance of its obligations under this Agreement in any material respect, (ii) the Management Agreements are terminated for any reason, (iii) the General Partner is removed as general partner under the OP LPA, (iv) Dana Sprong and Ryan McGarry are no longer the managers and majority holders of the issued and outstanding equity interests of the General Partner, or (v) the limited partners holding a majority of the percentage interests in the OP provide notice to the General Partner that such limited partners are requesting the resignation and withdrawal of the General Partner (each, a “Withdrawal Event”). In the event of a Withdrawal Event occurs, the procedures set forth in Section 11.2(c) of the OP LPA shall apply.

(b) Impact on Management Agreements. In the event the General Partner withdraws from the OP as a result of the Withdrawal Events described in Sections 3(a)(i), (iii) or (v) of this Agreement, at the election of the OP and the REIT, the Management Agreements may be terminated, and if such Withdrawal Event arises under (I) Sections 3(a)(i) or (iii), or (II) for cause under Sections 3(a)(v), then such termination shall not give rise to any liability or obligation to pay the Termination Fee contemplated by Section 8.02 of any Management Agreement upon written notice to Manager.

4. General Partnership Agreement.

(a) The General Partner shall not amend its governing documents in a manner that has an adverse and material impact on the OP without the prior written consent of the limited partners holding a majority of the issued and outstanding ownership interests in the OP.

(b) No equityholder of the General Partner shall transfer its equity interest in a manner that is not permitted under the Loan Documents without the prior written consent of the REIT and no additional equity or debt securities shall be issued to any person who is not an equityholder of the General Partner as of the date of this Agreement.

(c) For so long as the General Partner is acting as the general partner of the OP, the General Partner shall (i) continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is formed and (ii) qualify or otherwise be authorized to act as a foreign entity and in good standing under the laws of every other jurisdiction in which such qualification or authorization is necessary under applicable law.

5. Manager Appointee. In the event the Manager desires to nominate anyone to serve as a member of the Board other than Dana Sprong, Manager shall provide at least 30 days’ prior notice to the REIT and any lender of the OP or its subsidiaries. For the avoidance of doubt, the 30 days’ prior notice shall be no less than 30 days’ prior to the date any stockholder of the REIT must submit the name of any nominee to be included in the slate of individuals to be elected at a meeting of the stockholders at which directors will be elected pursuant to the terms of the REIT’s governing documents. Any right under this Section 5 shall automatically terminate in the event of a Withdrawal Event.

6. REIT Status. The General Partner shall take all actions requested by NexPoint Real Estate Advisors V, L.P., the REIT’s advisor (the “Adviser”), in order for the REIT to qualify and maintain its status as a real estate investment trust, including causing distributions to be made to the REIT, in such amounts and at such times as determined by the Adviser. All costs and expenses incurred in connection with REIT compliance shall be costs and expenses of the REIT.

7. Profit Cap. Manager’s EBITDA derived from Management Fees under all Management Agreements shall, in each Fiscal Year, not exceed the greater of (a) an amount equal to $1,000,000 (the “Dollar Cap”) and (b) 0.5% of the combined equity value of the REIT and the OP on a consolidated basis per Fiscal Year (as calculated by multiplying the aggregate number of outstanding shares of the REIT and OP Units (excluding OP Units held by the REIT) by the Net Asset Value on a per unit basis as of the last business day of the prior Fiscal Year) (the “Equity Cap”). The Dollar Cap or Equity Cap, as applicable, shall be paid (i) in cash in an

amount equal to the tax obligations of the Manager Equityholders resulting from the aggregate Management Fees earned in such Fiscal Year (up to a maximum rate of 25%) and (ii) with respect to the remaining portion of the Dollar Cap or Equity Cap, as applicable, in the form of OP Units issued to the Manager at a price per OP Unit equal to the Cash Amount (as defined in the OP LPA) as of the applicable date. The Equity Cap will reset each year as of the first business day of the Fiscal Year. Notwithstanding anything to the contrary in the OP LPA, the REIT and the OP hereby authorize the General Partner to cause the OP to issue the OP Units in accordance with this paragraph as and when Management Fees are due and payable under the applicable Management Agreement.

8. Guarantee. The Guarantors will cause the General Partner, Manager and the Manager Equityholders to comply with their obligations or representations and warranties in this Agreement. The Guarantors hereby absolutely and unconditionally guarantee to the OP and the REIT the due, punctual and complete performance of the obligations under this Agreement, and the OP and the REIT shall be entitled to enforce such obligations directly against the Guarantors (for purposes of clarification, the foregoing guarantee shall not be an obligation of payment or require the equityholders of Manager to fund Backstop Loans (as defined below)).

9. Backstop. During the term of the Management Agreements, in the event Manager does not have sufficient cash flow from operations to meet its budgeted obligations (including, without limitation, Executive Compensation) or to invest in budgeted capital resources to expand and grow the operations of Manager, including, but not limited to sufficient employees to service the addition of new Properties acquired by the OP or its subsidiaries (in each case, a “Shortfall”), Manager may provide a written notice to the Board requesting the OP or the REIT (for purposes of this Section 9, individually the “Lender”) provide additional funds to Manager (“Funding Request”) to satisfy the Shortfall. The Funding Request shall include: (a) the dollar-amount requested; (b) the use of the proceeds; (c) financial statements of Manager that evidence the necessity for the additional funds and an updated operating or capital budget, as applicable, and (d) any other information or documents reasonably requested by the Board. If the Board approves the Funding Request, then the approved additional funds shall be deemed a loan (a “Backstop Loan”). All Backstop Loans: (i) shall be interest-free; (ii) may be prepaid at any time; (iii) shall not exceed a principal amount that is in the aggregate equal to the lesser of the Termination Fee and the Call Price; (iv) each of the equityholders of Manager agrees to unconditionally guarantee the performance of the Backstop Loans (for purposes of clarification, the foregoing guarantee shall not be an obligation of payment or require the equityholders of Manager to fund Backstop Loans); and (v) shall be evidenced by a promissory note in form and substance satisfactory to the Board, together with any other documents or instruments as may be requested by the Board in connection with such Backstop Loan. The aggregate principal underlying the Backstop Loans shall become due and payable in full upon the termination of the applicable Management Agreement, for any reason. In the event Manager is entitled to receive the Call Price or the Termination Fee in connection with the termination of the Management Agreements, the Lender of the Backstop Loans shall be entitled to offset the amounts owing thereunder by the aggregate principal of the Backstop Loans. For purposes hereof, the term “Executive Compensation” shall mean the aggregate salaries paid to Dana Sprong, Ryan McGarry, Graham Strong, Thomas Silvia and Daniel Bathon, and others that may be added in the future with the approval of the Board (and together the “Executive Managers”), which for the period from November 1, 2019 to October 31, 2020, shall equal $1,890,000 and which shall increase for each 12-month period thereafter by an amount as determined by the Board, in its sole and absolute discretion, but is expected as of the date hereof to be targeted at 5% over the immediately preceding 12-month period.

10. VineBrook Name. From and after the date hereof, none of Manager, the General Partner or any their respective affiliates, will have the right to use the names “VineBrook,” “VB” or similar names, and any service marks, trademarks, trade names, d/b/a names, fictitious names, identifying symbols, logos, emblems or signs containing or comprising the foregoing, or otherwise used in the operations, development, improvement, management or ownership of single-family and multi-family homes, including any name or mark confusingly similar thereto (collectively, the “VineBrook Marks”), and Manager and the General Partner shall not, and shall not permit any of their respective equityholders or affiliates to use such name or any variation or simulation thereof; provided, however, (a) Manager shall be permitted to use the VineBrook Marks so long as any Management Agreement remains in place, solely in connection with the performance of its obligations thereunder, and (b) the General Partner shall be permitted to use the VineBrook Marks so long as the General Partner is the general partner of the OP, solely in connection with the performance of its obligations under the OP LPA. In furtherance thereof, as promptly as practicable, but no later than 60 days following (i) the termination of all Management Agreements or (ii) the withdrawal the General Partner as the general partner of the OP, as applicable, Manager and/or the General Partner (as the case may be) shall, and shall cause their respective equityholders and affiliates to remove, strike over otherwise eliminate all VineBrook Marks from all materials owned by Manager and/or the General Partner or any of their respective equityholders or affiliates and used or displayed publicly including any sales and marketing materials, displays, signs, promotional materials and other materials. Further, at, or as promptly as practicable, but in no event later than ten days after (i) the termination of all Management Agreements or (ii) the withdrawal the General Partner as the general partner of the OP, as applicable, Manager and/or the General Partner (as the case may be) shall, and shall cause their respective equityholders and affiliates to, remove any VineBrook Marks from its legal name by appropriate legal proceedings in the jurisdiction of its organization or formation and in each jurisdiction where such entity has registered to do business.

11. Acquisition and Construction Fee Advances. Manager will submit a budget for “Payroll-Construction,” “Payroll-Acquisition,” “Payroll-Accounting Personnel,” and “Payroll Related Expense” line items (the “Acquisition and Construction Fee Budgets”) to the Board 60 days prior to year-end for approval by the Board, in its sole and absolute discretion. The OP and Manager agree that Manager may request an advance from the OP for an amount not to exceed the Acquisition and Construction Fee Budgets in any given month to finance the operations of the Manager to the extent such advances relate solely to “Payroll-Construction,” “Payroll-Acquisition,” “Payroll-Accounting Personnel,” and “Payroll Related Expense”. The OP shall not have an obligation to make any advance (a) that does not satisfy the requirements of this Section 11, (b) if Manager has not provided invoices and other documents reasonably requested by the Board evidencing the appropriateness of such request, (c) if such advance would result in a breach of any credit facility the OP or any of its subsidiaries is a party or (d) would otherwise prohibit the OP from having sufficient cash to distribute to the REIT to allow it to qualify and maintain its status as a real estate investment trust. At least quarterly, Manager will submit a revised Acquisition and Construction Fee Budget to be approved by the Board, in its sole and absolute discretion. Manager and the OP shall reconcile the fees advanced for Acquisition and Construction Fees on a monthly basis, with Manager repaying any advances to Manager that were in excess of actual amounts due and owing. In the event any over-advances are not promptly repaid following such reconciliation, the Board may, in its sole and absolute discretion, deny any future advances of the Acquisition and Construction Fees.

12. Termination. This Agreement shall terminate automatically upon the termination of all Management Agreements. For the avoidance of doubt, unless all Management Agreements are terminated, the withdrawal of the General Partner as the general partner of the OP shall not terminate this Agreement.

13. Amendments. This Agreement may not be amended except by a writing signed by the party against whom such amendment is to be enforced and consented to.

14. Transferability; Successors and Assigns; Third-Party Beneficiaries. This Agreement is not transferable by the General Partner or any of the Manager Equityholders. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, permitted assigns and heirs. No other person shall have any rights or benefits hereunder except to the extent expressly provided herein or by applicable law.

15. Non-Waiver. The failure of a party to seek redress for violation, or to insist on strict performance, of any covenant or condition of this Agreement shall not (a) prevent a subsequent act which would have constituted a violation from having the effect of an original violation or (b) excuse strict performance of such covenant or condition in any subsequent case.

16. Separability of Provisions. Each provision of this Agreement shall be considered separable, and if for any reason any provision or provisions of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid or unenforceable in any jurisdiction, such provision or provisions shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, or the application of the affected provision to persons or circumstances other than those to which it was held invalid or unenforceable, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

17. Construction. Each of the parties hereto has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel. This Agreement shall be construed as if jointly drafted by the parties hereto. Headings for sections, subsections, and other parts of this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

18. Counterparts. This Agreement may be executed in several counterparts, all of which together shall constitute one agreement binding on all parties hereto notwithstanding that all the parties have not signed the same counterpart.

19. Notice. All notices or other communications required or permitted by this Agreement shall be in writing and shall be deemed to have been duly received (a) if given by electronic mail transmitted delivery receipt requested, upon receipt of a delivery receipt, (b) if given by certified or registered mail, return receipt requested, postage prepaid, three business days after being deposited in the U.S. mails and (c) if given by courier or other means, when received or personally delivered, and, in any such case, addressed as follows:

If to the OP or the REIT:

c/o NexPoint Advisors, L.P.

300 Crescent Court

Suite 700

Dallas, Texas 75201

Attention: Brian Mitts

Email: BMitts@nexpointsecurities.com

with a copy (which does not constitute notice) to:

Winston & Strawn LLP

2121 North Pearl Street

Suite 900

Dallas, Texas 75201

Attention: Charles T. Haag

Email: chaag@winston.com

If to the General Partner, any of the Manager Equityholders or the Guarantors:

c/o VineBrook Homes

561 Virginia Road

Concord, Massachusetts 01742

Attn: Messrs. Sprong and McGarry

Email: dana.sprong@vinebrookhomes.com and ryan.mcgarry@vinebrookhomes.com

with a copy (which does not constitute notice) to:

King & Spalding LLP

1180 Peachtree Street, NE, Suite 1600

Atlanta, Georgia 30309

Attn: C. Spencer Johnson, III

Email: csjohnson@kslaw.com

or to such other addresses as may be specified by any such person to the other person pursuant to notice given by such person in accordance with the provisions of this Section 19.

20. Conflicts. In the event this Agreement conflicts with any of the terms of the Management Agreements or the OP LPA, the terms of this Agreement shall govern.

21. Governing Law; Waiver of Jury Trial. THE PROVISIONS OF THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AS AT THE TIME IN EFFECT, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES TO THIS AGREEMENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF DELAWARE, INCLUDING ANY APPELLATE COURTS THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

[Signature Pages Follow]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.


VINEBROOK HOMES OPERATING PARTNERSHIP, L.P.

By: VineBrook Homes OP GP, LLC, its general partner

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Managing Partner


VINEBROOK HOMES TRUST, INC.

By:		/s/Brian Mitts
Name:		Brian Mitts
Title:		Chief Financial Officer, Treasurer and Assistant Secretary


VINEBROOK HOMES OP GP, LLC

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Managing Partner


VINEBROOK HOMES, LLC

By: VineBrook Management, LLC, a Delaware limited liability company, its managing member

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Managing Partner

[Signature Page to Amended and Restated Side Letter]


VINEBROOK MANAGEMENT, LLC, a Delaware limited liability company

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Managing Partner


VINEBROOK DEVELOPMENT CORPORATION, a Massachusetts corporation

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Managing Partner


VINEBROOK HOMES PROPERTY MANAGEMENT COMPANY, INC., an Ohio corporation

By:		/s/Thomas J. Silvia
Name:		Thomas J. Silvia
Title:		Chief Executive Officer


VINEBROOK HOMES REALTY COMPANY, INC., an Ohio corporation

By:		/s/ Ryan McGarry
Name:		Ryan McGarry
Title:		Chief Executive Officer


VINEBROOK HOMES SERVICES COMPANY, INC., an Ohio corporation

By:		/s/Dana W. Sprong
Name:		Dana W. Sprong
Title:		Chief Executive Officer

[Signature Page to Amended and Restated Side Letter]

/s/Dana W. Sprong

Dana Sprong

/s/Ryan McGarry

Ryan McGarry

[Signature Page to Amended and Restated Side Letter]

Schedule 1

Example Calculations of Call Price

Call Price Equation: Call Price is equal to the lesser of (i) 2.5% of the combined equity value of the REIT and the OP combined at the time of the Call Right Closing as calculated by multiplying the aggregate number of outstanding shares of the REIT and OP Units (excluding OP Units held by the REIT) by the then-current Net Asset Value on a per unit basis and (ii) ((((the sum of the trailing 12 month aggregate Property Management Fee * 3) - $6.5mm) * 0.5) + $6.5mm).

Example 1

Variables:

•

Aggregate LTM Property Management Fee: $3,800,000

•

Outstanding REIT Shares: 5,235,000

•

Outstanding OP Units: 8,427,000

•

Number of OP Units Held by the REIT: 5,235,000

•

Combined Net Asset Value: $250,000,000

Example 1 Call Price: $6,250,000, which is the lesser of (0.025 * $250,000,000) and (((($3.8mm*3) - $6,500,000) *0.5) + $6,500,000). 8,950,000

Example 2

Variables:

•

Aggregate Property Management Fee: $5,200,000

•

Outstanding REIT Shares: 6,000,000

•

Outstanding OP Units: 9,192,000

•

Number of OP Units Held by the REIT: 6,000,000

•

Combined Net Asset Value: $310,000,000

Example 2 Call Price: $7,750,000, which is the lesser of (0.025 * $310,000,000) and (((($5,200,000*3) - $6,500,000) *0.5) + $6,500,000).

Example 3

Variables:

•

Aggregate Property Management Fee: $3,500,000

•

Outstanding REIT Shares: 6,500,000

•

Outstanding OP Units: 9,692,000

•

Number of OP Units Held by the REIT: 6,500,000

•

Combined Net Asset Value: $350,000,000

Example 3 Call Price: $8,500,000, which is the lesser of (0.025 * $350,000,000) and (((($3,500,000*3) - $6,500,000) *0.5) + $6,500,000).

[Schedule 1 to Amended and Restated Side Letter]

Schedule 2

List of Excluded Properties

[Omitted]

Exhibit 10.9

MANAGEMENT AGREEMENT

This MANAGEMENT AGREEMENT (this “Agreement”), dated January 22, 2021, is made and entered into by and between CONREX RESIDENTIAL PROPERTY GROUP 2013-1, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-2 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-3 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-4 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-5 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-6 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-7 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-8 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-9 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-10 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-11 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-12 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-13 OPERATING COMPANY, LLC, a Delaware limited liability company (collectively, “Owner”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

APPOINTMENT OF MANAGER

SECTION 1.02 Independent Contractor Status. Manager is hereby engaged to manage the Properties as an independent contractor.

ARTICLE II

TERM OF AGREEMENT

SECTION 2.01 Term of Agreement. Subject to Section 9.01 below, this Agreement shall commence upon the Owner’s acquisition or control of the Properties (the “Effective Date”) and shall continue until the last day of the calendar month following the three-year anniversary of the Effective Date (the “Term”). Upon expiration of the Term, this Agreement will automatically renew for additional one-year periods until terminated as provided in Article VIII.

ARTICLE III

MANAGER’S DUTIES AND RESPONSIBILITIES

SECTION 3.03 Proposed Management Plans. Manager shall prepare and submit to Owner a proposed “Management Plan” and “Operating Budget,” which include an annual business plan and budget of proposed Operating Expenditures and capital expenditures with respect to the leasing, management, identification, acquisition, promotion, operation, disposition, and repair and maintenance of the Properties for each calendar year (the “Fiscal Year”); provided, that if the effective date of this Agreement occurs on a date other than the first day of a calendar year, or if the day on which the term of this Agreement expires or is terminated occurs on a day other than the last day of a calendar year, then the first and last Fiscal Years, as applicable, shall be prorated according to the number of days in the applicable Fiscal Year. The initial Approved Operating Budget for the period between the effective date and December 31, 2021 is attached hereto as Schedule E. The proposed Management Plans and Operating Budgets for Fiscal Year 2021 shall be submitted to Owner on or before February 28, 2021, and subsequent proposed Management Plans and Operating Budgets shall be submitted to Owner sixty (60) days prior to the beginning of the next Fiscal Year. All proposed Management Plans and Operating Budgets shall include, without limitation, leasing objectives for the next annual budget period, a marketing plan for the next annual budget period including the estimated costs of the marketing and promotional plans, a market analysis of the leasing market in which the Properties are located, and if requested by Owner, a review of the real estate taxes and assessed valuation and a recommendation concerning the merits of a tax appeal for the Properties. Owner will review the proposed Management Plan and Operating Budget and will consult with Manager prior to the commencement of the forthcoming fiscal year in order to agree on an approved Management Plan and an approved Operating Budget (collectively, the “Approved Operating Budget”). Until such time as the Management Plan and Operating Budget shall be approved by Owner as aforesaid, Manager shall, unless otherwise directed in writing by Owner and subject to the terms of this Agreement, make only those expenditures necessary to (1) maintain the physical integrity of the Properties, preserve the security of the Properties (including without limitation taxes, insurance and utilities borne by Owner), or prevent any lien or other encumbrances on the Properties, (2) comply with the Requirements, (3) comply with Owner’s obligations hereunder, as landlord under the terms of any Leases, and under any Loan Documents (as defined in Schedule D), and (4) remedy an emergency situation. Manager agrees to use such efforts as are consistent with the Standard of Care to ensure the actual costs of all Operating Expenditures and capital expenditures for the Properties shall not exceed the Approved Operating Budget, both in the aggregate and in respect of the specific budget category pertaining thereto (taking into account any variance allowances permitted in the Guiding Documents).

SECTION 3.05 Acquisition and Disposition. Manager shall provide management, supervisory, administrative and logistical services and support to Owner consistent with the Standard of Care and the Guiding Documents in connection with (i) the identification and evaluation of Properties that might be suitable for purchase or other acquisition, (ii) the purchase or other acquisition of Properties, (iii) the financing or refinancing of Properties, and (iv) the sale or other disposition of Properties (including, without limitation, the structuring and negotiation of such transactions and the management of Owner’s dealings with brokers, appraisers, bankers and other professionals engaged by Owner in connection with such transactions). Manager shall be responsible for the preparation of all diligence reports and the initial underwriting proposal for any new acquisition, disposition or financing. Upon the request of Owner or any member of the Investment Committee, Manager shall deliver such reports to the Investment Committee prior to any meeting of the Investment Committee. Further, Manager will be responsible for all other reports, analysis or studies as requested by Owner or the Investment Committee, and Manager is hereby authorized to contact NexPoint Real Estate Advisors V, L.P. (the “Advisor”) and any Lender to obtain additional information reasonably necessary for the preparation of such reports, analyses, or studies. The approved guidelines for the acquisition, disposition and leasing of existing and future Properties are attached hereto as Schedule F (the “Approved Guidelines”). The Approved Guidelines shall be applicable to the markets within which the Properties are located, and before acquiring Properties in new markets, Manager shall propose updated guidelines for properties in that market for the approval of the Investment Committee. Provided that Manager has obtained the Investment Committee’s prior written approval, Manager shall be authorized to cause Owner or an Affiliate thereof to acquire, dispose of, and lease Properties consistent with this Agreement, the Approved Guidelines and the other Guiding Documents. For purposes of clarification, Properties acquired by Owner or any subsidiaries of the OP will be deemed Properties under this Agreement, and Properties sold by Owner or any subsidiaries of the OP shall no longer be deemed Properties under this Agreement, in either case regardless of whether this Agreement or any exhibit or schedule is formally amended to reflect the new or former Properties.

SECTION 3.09 Operating Expenditures.

by Manager in following Owner’s and Owner’s environmental consultant’s directions, (2) Owner’s failure or refusal to employ an environmental consultant with respect to the Properties, (3) the acts, omissions, or negligence of Owner, Owner’s environmental consultant, or the failure of such environmental consultant, to fulfill its obligations with respect to the Properties, (4) any violation of Hazardous Materials Laws applicable to the Properties, (5) the designation of Manager as an “operator” or the Properties as a “regulated facility” under Hazardous Materials Laws, or otherwise liable as a party under any Hazardous Materials Laws, or as a party in any claim for contribution, cost recovery or indemnity against Manager, or its insurer arising out of the foregoing, and (6) any condition or circumstance arising initially prior to the date of this Agreement (regardless of whether such condition or circumstance continues). The foregoing indemnity shall not apply to any claim, cause of action, liability, loss, demand, damages (including damages associated with any environmental law), fine, penalty, injury, cost, or expense (including attorney’s fees and expenses) resulting from an indemnified party’s sole or gross negligence or willful misconduct.

(b) The indemnities herein shall be immediately vested and shall survive the expiration or termination of this Agreement.

SECTION 3.17 Representations. Manager represents and warrants to Owner as follows:

certificate of formation of Manager, or any of the provisions of any indenture, mortgage, contract or other instrument to which Manager is a party or by which it is bound or result in the creation or imposition of any lien, charge or encumbrance upon any of its property pursuant to the terms of any such indenture, mortgage, contract or other instrument.

conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website, http://www.treas.gov/ofac/tllusdn.pdf or any replacement website or other replacement official publication of such list.

(h) As of the Effective Date, Manager has no actual knowledge of any illegal activities relating to controlled substances on any Property.

SECTION 3.19 Additional Covenants. Manager shall exercise such efforts as are consistent with the Standard of Care to comply with the terms and conditions of Schedule D attached hereto and agrees not to knowingly or intentionally take any action in material contravention thereof.

ARTICLE IV

BANKING AND FINANCIAL RECORDS

ARTICLE V

OWNER’S DUTIES AND RESPONSIBILITIES

SECTION 5.05 Representations. As of the Effective Date, Owner represents and warrants to Manager as follows:

ARTICLE VI

COMPENSATION OF MANAGER

SECTION 6.03 Reserved

SECTION 6.04 Definitions. “Collected Rental Revenues” shall mean the amount of rental revenue actually collected for each Property per the terms of the lease pertaining to each Property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by Manager, including but not limited to: application fees, forced place insurance, late fees, security deposits (except to the extent applied to rent per the terms of the lease pertaining to any Property), and bad check fees. “EBITDA” means Manager’s profit, based upon Manager’s earnings before deductions for interest expenses, taxes, depreciation, and amortization. “Net Asset Value” has the meaning ascribed to such term in that certain advisory agreement between the Advisor and the REIT. “OP Units” means common units of limited partnership interest in the OP.

ARTICLE VII

INSURANCE AND INDEMNIFICATION

required to indemnify Manager against damages or expenses suffered as a result of the gross negligence, willful misconduct, or fraud on the part of Manager, its agents or employees. Manager shall indemnify, defend and hold harmless Owner and its agents from and against all claims, liabilities, losses, damages and/or expenses arising out of the gross negligence, willful misconduct, or fraud on the part of Manager, its agents, or employees, and shall at its own cost and expense defend any action or proceeding against Owner arising therefrom.

ARTICLE VIII

TERMINATION

SECTION 8.01 Termination. Notwithstanding the provisions of Article II above, this Agreement may also be terminated as follows:

(a) Automatically, in the event (i) Owner sells or otherwise disposes of all or substantially all of the Properties (which for purposes of clarification may include the sale of all or substantially all of the REIT’s or the OP’s direct or indirect ownership interests in Owner) or (ii) a Bankruptcy Event occurs with respect to Manager; or

SECTION 8.02 Termination Fee. If Owner terminates this Agreement pursuant to Section 8.01(e) before the end of the Term or any subsequent term year, then Owner shall be obligated to pay Manager an amount equal to three times the sum of the annual Property Management Fee for the trailing 12-month period; provided, however, if this Agreement is terminated prior to the one year anniversary of the date of this Agreement, (a) Owner shall pay Manager $1,000,000.00, in addition to the amount otherwise payable under this paragraph, and (b) the Property Management Fee will be annualized for such 12-month period based on such Property Management Fee earned by Manager during such period. Any amounts accruing to Manager prior to such termination, shall be due and payable upon termination of this Agreement. To the extent funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager upon demand. For the avoidance of doubt, Acquisition Fees, Construction Fees, and fees attributable to Additional Services are not considered in the calculation of the Termination Fee.

SECTION 8.05 Manager’s Retention of Copies. Manager shall be entitled to retain copies of all documents referred to in Section 8.04.

ARTICLE IX

SECTION 9.01Transition Period. Notwithstanding anything to the contrary contained herein, the property management company(ies) for the Properties prior to Owner’s acquisition of the Properties (the “Prior Manager”) shall continue to manage the Properties under the applicable property management agreement(s) (the “Prior Agreement”) for a reasonable period of time after the Effective Date of this Agreement in order to effectuate the orderly transition of management services to Manager (the “Transition Period”). Management of the Properties, including any operational guidelines and any fees paid to the Prior Manager, shall be governed by the Prior Agreement during the Transition Period.

ARTICLE X

MANAGER RESTRUCTURING

ARTICLE XI

MISCELLANEOUS

If to Owner:

c/o Conrex Residential Property Group

3500 Park Center Drive

Dayton, Ohio 45414

Attention: Brian Mitts

Email: BMitts@NexpointSecurities.com

with a copy to:

Wick Phillips Gould & Martin, LLP

3131 McKinney Ave.

Suite 100

Dallas, Texas 75201

Attention: Chris Fuller

Email: cfuller@wickphillips.com

If to Manager:

c/o VineBrook Homes, LLC

561 Virginia Road

Concord, Massachusetts 01742

Attn: Messrs. Sprong and McGarry

Email: dana.sprong@vinebrookhomes.com and ryan.mcgarry@vinebrookhomes.com

and

King & Spalding LLP

300 South Tryon Street, Suite 1700

Charlotte, North Carolina 28202

Attn: Christopher D. McCoy

Email: cmccoy@kslaw.com

or to such other addresses as may be specified by any such person to the other person pursuant to notice given by such person in accordance with the provisions of this Section 11.01.

SECTION 11.03 Entire Agreement. This Agreement sets forth the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof.

SECTION 11.05 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed and delivered this MANAGEMENT AGREEMENT as of the date first written above.


CONREX RESIDENTIAL PROPERTY GROUP 2013-1, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-2 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-3 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-4 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

[Signature Page to Management Agreement]


CONREX RESIDENTIAL PROPERTY GROUP 2013-5 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-6 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-7 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-8 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-9 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

[Signature Page to Management Agreement]


CONREX RESIDENTIAL PROPERTY GROUP 2013-10 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-11 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-12 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-13 OPERATING COMPANY, LLC,
a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

[Signature Page to Management Agreement]


VINEBROOK HOMES, LLC, a Delaware limited liability company

By:		/s/Dana Sprong
Name:		Dana Sprong
Title:		Authorized Signatory

[Signature Page to Management Agreement]

Schedule A

The Properties

[Omitted]

Schedule B

Account Agency Agreement

[Omitted]

Schedule C

Financial Records and Reports

[Omitted]

Schedule D

Standard of Care

[Omitted]

Schedule E

Approved Operating Budget

[Omitted]

Schedule F

Approved Guidelines

[Omitted]

Schedule G

Defined Terms

Capitalized terms used in this Agreement but not otherwise defined herein have the following definitions:

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. 1956 and 1957, as amended.

“Assignment of Management Agreement” means each Assignment of Management Agreement and Subordination of Management Fees among Manager, Owner and Lender.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time.

“Bankruptcy Event” with respect to any Person, means the occurrence of any of the following:

(a)

Such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(b)

(c)

(d)

(e)

(f)

If such Person is a general partnership, any of the following occur:

(i)

Any general partner of such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(ii)

(iii)

(viii)

“Books and Records” is defined in Section 1.07(a) of Schedule D.

“Business Day” means any day other than a Saturday, a Sunday, or any other day on which Owner or the national banking associations are not open for business.

“Eligible Lease” means, unless otherwise approved by Owner, a written Lease that satisfies all of the following characteristics:

(i)

It is on a form approved by Owner.

(ii)

It is executed by an Eligible Tenant and Owner, or Manager on behalf of Owner (or, in the case of a Lease existing on the Effective Date, such Lease has been assigned to Owner).

(iii)

It has a rental rate and terms consistent with existing local market rates and terms.

(iv)

As of the date the Lease was executed, the Lease had an initial term of at least 6 months and not more than 2 years.

(v)

It complies with all applicable law in all material respects and includes all disclosures required by applicable law.

(vi)

It covers 100% of the square footage of the applicable Property or Unit.

(vii)

It does not include any purchase option, right of refusal, right of first offer or other similar interest in any Property in favor of any Tenant or other Person.

“Eligible Tenant” means a bona fide third-party lessee of a Property who satisfies each of the following criteria:

(i)

Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Property.

(ii)

The tenant is not subject to an ongoing Bankruptcy Event as such date of initial screening (or if not so initially screened, as of the Effective Date).

(iii)

The tenant is not an Affiliate of Manager or any Immediate Family Member of any of the foregoing.

“Event of Default” means an event of default under the Loan Documents of which Manager has received written notice or has actual knowledge.

telephone systems and equipment; elevators and related machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants; swimming pools; and exercise equipment.

“FHFA” means the Federal Housing Finance Authority.

“Immediate Family Members” means a Person’s spouse, parent (including step-parent), child (including stepchild), grandchild (including step-grandchild) or sibling (including step-siblings).

“Insurance” means Property Insurance, liability insurance and all other insurance that Owner requires Manager to maintain pursuant to this Agreement.

“Land” means the land described in Exhibit A to the Security Instrument(s).

“Lender” means any lender providing a loan to Owner which is secured by a mortgage or deed of trust on any Property.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance on any Property or any direct or indirect ownership interest in Borrower.

“Loan” means any loan provided by any Lender to Owner.

“Loan Documents” means all documents now or in the future executed by Owner in connection with any Loan.

“Mold” means mold, fungus, microbial contamination or pathogenic organisms.

“Property” means, individually, and “Properties” means, collectively, the residential real properties encumbered by the Security Instruments.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“OFAC Lists” means either one of the following:

(i)

The OFAC Specially Designated Nationals and Blocked Persons List.

(a)

(ii) The OFAC Consolidated Sanctions List.

“Personalty” means all of the following:

(a)

Accounts (including deposit accounts) of Owner related to any Property.

(b)

(c)

(d)

Any service contracts relating to the Land or the Improvements.

(e)

Any surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements.

(f)

(g)

Any rights of Owner in or under letters of credit.

“Priority Repairs” means those repairs required to be performed under any Loan which are set forth on Schedule H attached hereto or of which Manager has been given written notice by Owner.

“Prohibited Activity or Condition” means each of the following:

(i)

(ii)

The transportation of any Hazardous Materials to, from or across a Property.

(iii)

Any occurrence or condition on a Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws.

(A)

Prepackaged supplies, cleaning materials, and petroleum products customarily used in the operation and maintenance of comparable properties.

(B)

Cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential units in the Properties.

(C)

Petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Property’s parking areas.

“Prohibited Parties List” means any one or more of the following:

(i)

The OFAC Lists.

(ii)

The FHFA SCP List.

“Property Improvement” is defined in Section 1.08(e)(v) of Schedule D.

“Property Jurisdiction” means the jurisdiction in which the Land is located for any particular Property.

“REIT” means VineBrook Homes Trust, Inc., a Maryland corporation.

“Related Party” means all the following:

(i)

Manager.

(ii)

Any general partner of Manager if Manager is a general partnership.

(iii)

(iv)

Any Person in which Manager or any general partner of Manager if Manager is a general partnership.

(v)

Any Person in which any partner, shareholder, or member of Manager or any general partner of Manager if Manager is a general partnership.

(vi)

Any Person in which any Person holding an interest in Manager or any general partner of Manager if Manager is a general partnership.

(vii)

Any creditor of Manager that is related by blood, marriage or adoption to Manager.

(viii)

“Repairs” means all repairs made to the Properties, including all Priority Repairs.

“Restoration” is defined in Section 1.09(i) of Schedule D.

“Unit” means each separate legal address comprising all or part of a Property.

Schedule H

Priority Repairs

[Omitted]

Exhibit 10.10

FIRST AMENDMENT

TO MANAGEMENT AGREEMENT

This FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this “Amendment”), is entered into this 1^st day of March, 2021, by and among CONREX RESIDENTIAL PROPERTY GROUP 2013-1, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-2 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-3 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-4 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-5 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-6 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-7 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-8 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-9 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-10 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-11 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-12 OPERATING COMPANY, LLC, a Delaware limited liability company, CONREX RESIDENTIAL PROPERTY GROUP 2013-13 OPERATING COMPANY, LLC, a Delaware limited liability company (collectively, “Existing Owners”), and REX RESIDENTIAL PROPERTY OWNER, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER A, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER II, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER III, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER IV, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER V, LLC, a Delaware limited liability company, REX RESIDENTIAL PROPERTY OWNER VI, LLC, a Delaware limited liability company. (collectively, “New Owners”), and VineBrook Homes, LLC, a Delaware limited liability company (“Manager”).

RECITALS:

WHEREAS, Existing Owners and Manager entered into that certain Management Agreement dated January 22, 2021 (the “Agreement”); and

WHEREAS, Existing Owners, New Owners, and Manager desire to amend the Agreement in accordance with the terms and conditions set forth hereinbelow.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by all parties, the parties agree as follows:

AGREEMENT:

1. Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement.

2. From and after the date hereof, New Owners hereby assume and agree to be liable and responsible for and bound by all of the obligations, agreements and liabilities under the Agreement, as fully and completely as if New Owners had originally executed and delivered such Agreement as an Owner thereunder. From and after the date of this Amendment, the Agreement is amended to provide that all references to the term “Owner” used in the Agreement shall mean and refer to Existing Owners and New Owners collectively.

3. Except to the extent modified or amended by this Amendment, the parties hereby ratify and affirm the Agreement and agree that the Agreement is and shall remain in full force and effect as originally written.

4. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile, scanned pages or electronic signature shall be effective as delivery of a manually executed counterpart to this Amendment.

[Signature Pages Follow]

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first set forth above.


EXISTING OWNERS:

CONREX RESIDENTIAL PROPERTY GROUP 2013-1, LLC, a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-2 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-3 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-4 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement

CONREX RESIDENTIAL PROPERTY GROUP 2013-5 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-6 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-7 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-8 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-9 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement

CONREX RESIDENTIAL PROPERTY GROUP 2013-10 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-11 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-12 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

CONREX RESIDENTIAL PROPERTY GROUP 2013-13 OPERATING COMPANY, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement


NEW OWNERS:

REX RESIDENTIAL PROPERTY OWNER, LLC, a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY OWNER A, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY OWNER II, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY OWNER III, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY OWNER IV, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement

REX RESIDENTIAL PROPERTY OWNER V, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

REX RESIDENTIAL PROPERTY OWNER VI, LLC,

a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement


MANAGER:

VINEBROOK HOMES, LLC, a Delaware limited liability company



By:		/s/Dana Sprong


Name:		Dana Sprong


Title:		Authorized Signatory

Signature page to First Amendment to Management Agreement

Exhibit 10.12

Loan Agreement - SFR (Revised 6-29-2018)

Freddie Mac Loan Number: Property Name:

505993538

Highland-VineBrook Portfolio


Borrower:		NREA VB I LLC, NREA VB II LLC, NREA VB III LLC, NREA VB IV LLC, NREA VB V LLC, NREA VB VI LLC and NREA VB VII LLC, each a Delaware limited liability company, as coborrowers (individually and collectively, “Borrower”)
Lender:		KEYBANK NATIONAL ASSOCIATION, a national banking association
Effective Date:		November 1, 2018
Loan Amount:		$241,400,000.00

This Loan Agreement (“Loan Agreement”) is made by and between Borrower and Lender and is dated as of the Effective Date. Lender has agreed to make and Borrower has agreed to accept a loan for the Loan Amount (“Loan”) upon the terms and subject to the conditions in this Loan Agreement. The Loan will be evidenced by the Note and will bear interest and be paid in accordance with the payment terms set forth in the Note. Lender and Borrower each acknowledge the receipt and sufficiency of adequate consideration for the making and receiving of this Loan.


Table of Contents
Article I	Key Terms	Article VII	Transfers
Article II	Security Agreement	Article VIII	Events of Default and Remedies
Article III	Personal Liability	Article IX	Release; Indemnity
Article IV	Reserve Funds and Requirements	Article X	Miscellaneous Provisions
Article V	Representations and Warranties	Article XI	Defined Terms
Article VI	Covenants

ARTICLE I – KEY TERMS.


Modifications and Riders
☒		Loan Agreement modifications are included in Exhibit B
☒		The following rider(s) are attached to this Loan Agreement:
		• Multiple Entities Comprising Borrower and Pledgor (Modified)
		• Substitutions

Base Recourse

A portion of the Indebtedness equal to 0 % of the Loan Amount (see Article III)


Tax, Insurance, and HOA Fee Reserves
Taxes - ☒ Collected or ☐ Deferred		Insurance premiums - ☐ Collected or ☒ Deferred
HOA Fees - ☐ Collected or ☒ Deferred
(See Article IV)


Capital Replacement and Repair Reserve
Capital Replacement and Repair Reserves Monthly Deposit of $199,683.00 is ☒ Collected or ☐ Deferred
☐		One Time Capital Replacement Deposit of $ is required for Additional Capital Replacements.
☒		One Time Repair Deposit of $246,769.00 is required for Priority Repairs
Capital Replacement and Repair Reserve Fund Disbursement Minimum is $10,000.00
(See Article IV) Recourse and other requirements related to Repairs are detailed in Sections 3.03, 3.04, and Section 6.14.


Required Additional Capital Replacements and Repairs
☐		Additional Capital Replacements are required and are listed in Exhibit B. The Additional Capital Replacements Completion Date is days after the Effective Date.
☒		Priority Repairs are required and are listed in Exhibit B.


Loan Agreement - SFR		Page 1


Special Purpose Reserve

☐		One Time Special Purpose Reserve Fund Deposit in the amount of $ is required
		The Termination Date is days after the Effective Date. The Release Conditions are listed in Exhibit B.
(See Article IV)

Property, Management

As of the Effective Date, the Mortgaged Properties are managed by the following Property Manager(s):

VineBrook Homes, LLC

(See Section 6.09 for requirements for management of the Mortgaged Properties.)


Required Rent to Debt Service Ratio		Property Release Cap

1:40 : 1:00		366 Mortgaged Properties
(See Section 7.05 for Mortgaged Property release provisions.)

Guarantor(s)

VineBrook Homes Operating Partnership, L.P., a Delaware limited partnership

Pledgor

NREA VB Pledgor I LLC, a Delaware limited liability company

NREA VB Pledgor II LLC, a Delaware limited liability company

NREA VB Pledgor III LLC, a Delaware limited liability company

NREA VB Pledgor IV LLC, a Delaware limited liability company

NREA VB Pledgor V LLC, a Delaware limited liability company

NREA VB Pledgor VI LLC, a Delaware limited liability company

NREA VB Pledgor VII LLC, a Delaware limited liability company


Notices:

Addresses for Notices as of the Effective Date are as follows (See Section 10.03)

If to Lender:		c/o KeyBank Real Estate Capital – Servicing Department 11501 Outlook Street, Suite 300 Overland Park, Kansas 66211 Mailcode: KS-01-11-0501 Attn: Servicing Manager

If to Borrower:		c/o Highland Capital Management 300 Crescent Court, Suite 700 Dallas, Texas 75201


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ARTICLE II SECURITY AGREEMENT.

2.01

Uniform Commercial Code Security Agreement. This Loan Agreement is also a security agreement for any portion of the Mortgaged Properties which, under applicable law, may be subjected to a security interest under the UCC, for the purpose of securing Borrower’s obligations under this Loan Agreement and to further secure Borrower’s obligations under the Note, Security Instrument and other Loan Documents, whether the Mortgaged Properties are owned now or acquired in the future, and all products and cash and non-cash proceeds of the Mortgaged Properties and all Reserve Funds (collectively, “UCC Collateral”), and by this Loan Agreement, Borrower grants to Lender a security interest under the UCC in the UCC Collateral.

ARTICLE lll PERSONAL LIABILITY.

3.01

Limited Recourse Generally. Except as otherwise provided in this Article Ill, neither Borrower, Pledgor, nor any member or manager of Pledgor will have any personal liability under the Note, this Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of or compliance with any other obligations of Borrower under the Loan Documents, and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations will be Lender’s exercise of its rights and remedies with respect to the Mortgaged Properties, the equity interests in Borrower pursuant to the terms of the Pledge Agreement, and to any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability will not limit or impair Lender’s enforcement of its rights against any Guarantor.

3.02

Base Recourse. Borrower will be personally liable to Lender for the Base Recourse specified in Article I (“Base Recourse”), plus any other amounts for which Borrower has personal liability under this Article Ill.

3.03

Loss or Damage Recourse. Borrower will be personally liable to Lender for the repayment of a portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events:

(a)

Borrower fails to complete any of the Priority Repairs.

(b)

Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3 of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence. This Section 3.03(b) will not apply if Borrower’s failure is a result of a valid order issued in, or an automatic stay applicable because of, bankruptcy, receivership, or a similar judicial proceeding.

(c)

Borrower fails to apply all Insurance proceeds and Condemnation proceeds as required by this Loan Agreement. This Section 3.03(c) will not apply if Borrower’s failure is a result of a valid order issued in, or an automatic stay applicable because of, bankruptcy, receivership, or a similar judicial proceeding.

(d)

If an Event of Default has occurred and is continuing, Borrower fails to deliver all Books and Records, contracts, Leases and other instruments relating to the Mortgaged Properties or their operation in accordance with the provisions of Section 6.07.

(e)

Borrower fails to pay when due any of the following:

(i)

Taxes, if Lender does not collect a Tax Reserve Fund.

(ii)

Insurance premiums, if Lender does not collect an Insurance Reserve Fund.

(iii)

Water and sewer charges that could become a lien on any Mortgaged Property.

(iv)

Assessments or any Other Charges that could become a lien on any Mortgaged Property.


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(v)

Transfer or recording Taxes required to be paid by Borrower.

(f)

Borrower engages in any willful act of material waste of any Mortgaged Property.

(g)

Any of the following Transfers occurs:

(i)

Any Person that is not an Affiliate of Borrower or a Borrower Principal creates a mechanic’s lien or other involuntary lien or encumbrance against any Mortgaged Property and Borrower has not complied with the provisions of Article VII.

(ii)

A Transfer by devise, descent or operation of law occurs upon the death of a natural person and such Transfer does not meet Lender’s requirements in Article VII.

(iii)

Borrower grants an easement that does not meet Lender’s requirements.

(iv)

Borrower executes a Lease that does not meet Lender’s requirements.

(h)

If any Mortgaged Property is located in Ohio and such Mortgaged Property is subject to any oil or gas lease, pipeline agreement, or other instrument related to the production or sale of oil or natural gas that under applicable state law has been given priority over the Security Instrument.

(i)

If any Mortgaged Property is non-conforming under the applicable zoning laws, ordinances and/or regulations in the applicable Property Jurisdiction (“Zoning Code”), either of the following circumstances occurs following a casualty affecting the Mortgaged Property and the Borrower does not Transfer the Mortgaged Property to a third party pursuant to either Section 7.05(a) or Section 7.05(b):

(i)

The Improvements impacted by the casualty cannot be rebuilt or restored to their pre-casualty condition under the terms of the Zoning Code and the Mortgaged Property Insurance proceeds available to Lender under the terms of this Loan Agreement are insufficient to repay the Indebtedness in full.

(ii)

Borrower fails to commence and diligently pursue completion of any Restoration within the time frame required by both the Zoning Code and any permits issued pursuant to the Zoning Code which are necessary to allow the Restoration of such Mortgaged Property to its pre-casualty condition.

(j)

If primary ingress to and egress from a Mortgaged Property is through an easement or private road, any party takes, or threatens to take, any action to deny ingress to or egress from such Mortgaged Property from or to a publicly dedicated and maintained right-of-way.

(k)

If Borrower fails to pay in full the amount of principal and interest due under the Note on each of the first three Payment Dates under the Note.

(l)

Any Loan Party commences any legal or other proceeding related to the Loan that delays, opposes, impedes, obstructs, hinders, enjoins or otherwise interferes with or frustrates the efforts of Lender to exercise any rights and remedies available to Lender under the Loan Documents, except for any proceedings instituted in good faith or are otherwise expressly permitted under the Loan Documents.

(m)

Borrower or Pledgor fails to comply with any provision of Section 6.13(a)(i) through (iv) and Section 6.13(a)(vii) through (xiii) (subject to possible full recourse liability as set forth in Section 3.05(b)).


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(n)

Borrower or any Affiliate or employee of Borrower makes an unintentional written material misrepresentation in connection with (i) the application for or creation of the Indebtedness, (ii) on-going financial or other reporting requirements or information required by the Loan Documents, or (iii) any request by Borrower or Guarantor for any action or consent by Lender; provided that the assumption will be that any written material misrepresentation was intentional and the burden of proof will be on Borrower to prove that there was no intent.

3.04

Performance and Cost Recourse. Borrower will be personally liable to Lender for all of the following:

(a)

The performance of, and the cost to Lender of any nonperformance of, all of Borrower’s obligations under each of the following:

(i)

Section 6.14(a) (relating to completion of Priority Repairs).

(ii)

Sections 6.12 and 9.02(b) (relating to environmental matters).

(b)

The cost to Lender of each of the following:

(i)

Any audit required under Section 6.07.

(ii)

Any expenses incurred in connection with the collection of any amount for which Borrower is personally liable under this Article Ill, including Attorneys’ Fees and Costs and the costs of conducting any independent audit of Borrower’s Books and Records to determine the amount for which Borrower has personal liability.

3.05

Full Recourse. Borrower will become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following:

(a)

Borrower or Pledgor fails to comply with Sections 6.13(a)(v) or (vi).

(b)

Borrower or Pledgor fails to comply with any provision of any of Sections 6.13(a)(i) through (iv) or Sections 6.13(a)(vii) through (xiii) and a court of competent jurisdiction holds or determines that such failure or combination of failures is the basis, in whole or in part, for the substantive consolidation of the assets and liabilities of Borrower and/or Pledgor with the assets and liabilities of a debtor pursuant to Title 11 of the Bankruptcy Code.

(c)

A Transfer that is an Event of Default under Section 7.02 occurs, other than a Transfer set forth in Section 3.03(g) (for which Borrower will have personal liability for Lender’s loss or damage); provided, however, that Borrower will not have any personal liability for a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company.

(d)

There was fraud or intentional written material misrepresentation by Borrower or any Affiliate or employee of Borrower in connection with (i) the application for or creation of the Indebtedness, (ii) on-going financial or other reporting requirements or information required by the Loan Documents, or (iii) any request by Borrower or Guarantor for any action or consent by Lender.

(e)

A Bankruptcy Event occurs with respect to Borrower.

3.06

Exercise of Lender’s Rights and Application of Payment. If Borrower has personal liability under this Article Ill, then Lender may, to the fullest extent permitted by applicable law, exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against a Mortgaged Property or any other security, or pursued any rights against any Guarantor, or pursued any other rights available to Lender under the Note, this Loan Agreement, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Article Ill, Borrower waives any right to set off the value of a Mortgaged Property against such personal liability. All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Loan Documents will be applied first to the portion of the Indebtedness for which Borrower has no personal liability.


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ARTICLE IV RESERVE FUNDS AND REQUIREMENTS.

4.01

Reserves Generally.

(a)

Establishment of Reserve Funds. Each Reserve Fund marked in Article I as required or collected will be established on the Closing Date and funded in accordance with this Article IV. Upon Notice to Borrower following (i) an Event of Default or (ii) a Transfer requiring Lender’s approval under Article VII, Lender may require Borrower to establish and make deposits into any Reserve Fund marked in Article I as deferred.

(b)

Investment of Reserve Funds. All Reserve Funds will be deposited in an Eligible Account at an Eligible Institution or invested in “permitted investments” as then defined and required by the Rating Agencies. Lender will not be obligated to open additional accounts or deposit Reserve Funds in additional institutions when the amount of any Reserve Fund exceeds the maximum amount of the federal deposit insurance or guaranty. Borrower acknowledges and agrees that it will not have the right to direct Lender as to any specific investment of monies in any Reserve Fund. Lender will not be responsible for any losses resulting from investment of monies in any Reserve Fund or for obtaining any specific level or percentage of earnings on such investment. Unless applicable law requires, Lender will not be required to pay Borrower any interest, earnings or profits on any Reserve Funds. Any amounts deposited with Lender under this Article IV will not be trust funds, nor will they operate to reduce the Indebtedness, unless applied by Lender for that purpose pursuant to the terms of this Loan Agreement.

(c)

Use of Reserve Funds; No Disbursements during Event of Default. Each Reserve Fund will, except as otherwise provided in this Loan Agreement, be used for the sole purpose of paying, or reimbursing Borrower for payment of, the item(s) for which the applicable Reserve Fund is established. Except as specified in this Loan Agreement, monies in one Reserve Fund will not be used to pay, or reimburse Borrower for, matters for which another Reserve Fund has been established. Lender will not be obligated to make disbursements from any Reserve Fund if any Event of Default has occurred and is continuing. If an Event of Default has occurred and is continuing, then Lender may use any Reserve Fund for the payment or performance of any obligation of Borrower to Lender or otherwise with respect to any Mortgaged Property.

(d)

Termination of Reserve Funds. Upon payment in full of the Indebtedness, Lender will pay to Borrower all funds remaining in any Reserve Funds.

(e)

Release of Mortgaged Properties. Upon the release of any Mortgaged Property from the applicable Security Instrument pursuant to this Agreement, if Lender determines that all Reserve Funds are fully funded, Lender will pay to Borrower all funds in any Reserve Funds that relate solely to such Release Property.

4.02

Tax, Insurance, and HOA Fee Reserves.

(a)

Deposits. When required by Lender, Borrower will deposit with Lender on the Closing Date and on each Payment Date under the Note an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, Taxes (“Tax Reserve Fund”) and HOA Fees (“HOA Reserve Fund”) and 110% of the entire sum required to pay, when due, Insurance premiums (“Insurance Reserve Fund”).

The amount of each required deposit into the Tax Reserve Fund, the Insurance Reserve Fund and the HOA Reserve Fund must be sufficient to enable Lender to pay the Taxes, Insurance premiums or HOA Fees, as applicable, before the last date upon which the payment may be made without any penalty or interest charge being added with a 10% additional deposit amount with respect to the Insurance Fund.


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(b)

Disbursements.

(i)

Lender will pay Taxes from the Tax Reserve Fund held by Lender upon Lender’s receipt of a bill or invoice for Taxes and, once received, prior to the addition of any interest, penalty, or cost for nonpayment. Lender will have no obligation to pay Taxes to the extent the amount payable exceeds the Tax Reserve Fund then held by Lender. Lender may pay Taxes according to any bill, statement or estimate from either the appropriate public office or the Borrower without inquiring into the accuracy of the bill, statement or estimate.

(ii)

Lender will pay Insurance premiums from the Insurance Reserve Fund held by Lender upon Lender’s receipt of a bill or invoice for Insurance premiums and, once received, prior to the addition of any interest, penalty, or cost for nonpayment. Lender will have no obligation to pay Insurance premiums to the extent the amount payable exceeds the Insurance Reserve Fund then held by Lender. Lender may pay Insurance premiums according to any bill, statement or estimate from either an insurance company or the Borrower without inquiring into the accuracy of the bill, statement or estimate.

(ii)

Lender will pay HOA Fees from the HOA Reserve Fund held by Lender upon Lender’s receipt of a bill or invoice for HOA Fees and, once received, prior to the addition of any interest, penalty, or cost for nonpayment. Lender will have no obligation to pay HOA Fees to the extent the amount payable exceeds the HOA Reserve Fund then held by Lender. Lender may pay HOA Fees according to any bill, statement or estimate from an HOA or the Borrower without inquiring into the accuracy of the bill, statement or estimate.

(c)

Adjustments to Reserve Fund Deposits. If at any time the amount of the Tax Reserve Fund, the Insurance Reserve Fund or the HOA Reserve Fund held by Lender for payment of Taxes, Insurance premiums or HOA Fees exceeds the amount reasonably deemed necessary by Lender, then the excess will be credited against future payments into the applicable Reserve Fund. If at any time the amount of the Tax Reserve Fund, the Insurance Reserve Fund or the HOA Reserve Fund is less than the amount reasonably estimated by Lender to be necessary, then Borrower will pay to Lender the amount of the deficiency within 20 days after Notice from Lender.

(d)

Delivery of Invoices; Proof of Payment by Borrower. Borrower will promptly deliver to Lender a copy of all notices of, and invoices for, Taxes, Insurance premiums and HOA Fees. If Lender has not established a Reserve Fund for Taxes, Insurance premiums or HOA Fees, then on or before the date the Taxes, Insurance premiums or HOA Fees are due, Borrower will provide Lender with proof of payment of the Taxes, Insurance premiums or HOA Fees.

4.03

Special Purpose Reserve Fund.

(a)

Deposit. If a Special Purpose Reserve is required in Article I, then Borrower will pay to Lender on the Closing Date the amount set forth in Article I (“Special Purpose Reserve Fund”).

(b)

Disbursements. Lender will disburse the funds in the Special Purpose Reserve Fund to Borrower when the Release Conditions specified in Exhibit B have been satisfied in Lender’s discretion.

(c)

Application of Reserve Funds after the Termination Date. If Borrower has not satisfied the Release Conditions on or before the Termination Date specified in Article I, then Lender may apply some or all of the Special Purpose Reserve Fund to the Indebtedness, and Borrower will pay a prepayment premium computed using the formula set forth in the Note with respect to any such prepayment of principal under the Note. Borrower may not pay the prepayment premium from funds drawn from the Special Purpose Reserve Fund.

4.04

Capital Replacement and Repair Reserve Fund.

(a)

Monthly Deposits. If the Capital Replacement and Repair Reserve Monthly Deposit is shown as collected in Article I, then on each Payment Date under the Note, Borrower will pay to Lender the Capital Replacement and Repair Reserve Monthly Deposit amount shown in Article I (“Capital Replacement and Repair Reserve Fund”).


Loan Agreement – SFR		Page 7

(b)

Disbursements from Capital Replacement and Repair Reserve Fund. Lender will disburse funds from the Capital Replacement and Repair Reserve Fund to Borrower for payment or reimbursement of, or to defray the cost of, each of the following, provided the conditions set forth in Sections 4.04(f) and (g) are satisfied:

(i)

Replacing any of the items listed in Schedule II and other items that Lender may approve after the Effective Date, subject to any conditions that Lender may require (“Basic Capital Replacements,” and together with any Additional Capital Replacements listed in Exhibit B, “Capital Replacements”).

(ii)

Completing the Priority Repairs, provided a Repair Deposit is required in Article I.

(c)

Additional Capital Replacements Deposit. If an Additional Capital Replacements Deposit is required in Article I, then on the Closing Date, Borrower will pay the Additional Capital Replacements Deposit to Lender for deposit into the Capital Replacement and Repair Reserve Fund. The Additional Capital Replacements Deposit will be available to reimburse Borrower only for reimbursement of, or to defray, the cost of the Additional Capital Replacements listed in Exhibit B.

Borrower may not displace or relocate tenants to undertake or complete the Additional Capital Replacements unless such displacement or relocation has been approved by Lender. Borrower must complete the Additional Capital Replacements on or before the Additional Capital Replacements Completion Date specified in Article I, as may be extended by Lender in its discretion. Any funds from the Additional Capital Replacements Deposit remaining in the Capital Replacement and Repair Reserve Fund after the Additional Capital Replacements are completed in a manner satisfactory to Lender will be returned to Borrower.

(d)

Repair Deposit. If a Repair Deposit is required in Article I, then on the Closing Date, Borrower will pay the Repair Deposit to Lender for deposit into the Capital Replacement and Repair Reserve Fund. The Repair Deposit will be available to reimburse Borrower only for payment or reimbursement of, or to defray the cost of, completing Priority Repairs. Any funds from the Repair Deposit remaining in the Capital Replacement and Repair Reserve Fund after all of the Priority Repairs are completed in a manner satisfactory to Lender will be returned to Borrower.

(e)

Insufficient Amount in Capital Replacement and Repair Reserve Fund. If Borrower requests disbursement from the Capital Replacement and Repair Reserve Fund for a Capital Replacement or a Priority Repair in an amount that exceeds the amount on deposit in the Capital Replacement and Repair Reserve Fund, then Lender will disburse to Borrower only the amount on deposit in the Capital Replacement and Repair Reserve Fund. Borrower will pay all additional amounts required in connection with any such Capital Replacement or Priority Repair from Borrower’s own funds.

(f)

Limits on Disbursements. Lender will disburse funds from the Capital Replacement and Repair Reserve Fund no more frequently than once per calendar month, and no disbursement will be made in an amount less than the Capital Replacement and Repair Reserve Fund Disbursement Minimum specified in Article I.

(g)

Performance of Capital Replacements and Priority Repairs; Requests for Disbursement.

(i)

If Borrower determines that a Capital Replacement is necessary or desirable, then Borrower will perform such Capital Replacement and request from Lender, in writing, payment or reimbursement for the cost of such Capital Replacement from the Capital Replacement and Repair Reserve Fund using the Disbursement Request attached to this Loan Agreement as Exhibit A. The Disbursement Request must be accompanied by paid invoices or bills that show Borrower has paid for the applicable Capital Replacement.


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(ii)

Borrower must complete all Priority Repairs pursuant to Section 6.14. After Borrower performs one or more Priority Repairs, Borrower may request from Lender reimbursement for the cost of such Priority Repair(s) from the Capital Replacement and Repair Reserve Fund using the Disbursement Request attached to this Loan Agreement as Exhibit A. The Disbursement Request must be accompanied by paid invoices or bills that show Borrower has paid for the applicable Priority Repair.

(iii)

If requested by Lender, Borrower must provide any other information, documents, lien waivers, certifications, or professional engineering reports regarding the work and the cost of such Capital Replacements or Priority Repairs. Lender, at its option, may retain a professional inspection engineer or other qualified third party to inspect any Capital Replacement or Priority Repair. If Lender retains such a third party, then it will charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third party inspector. Lender may, at its election, either deduct such cost from the Capital Replacement and Repair Reserve Fund or send Borrower a Notice of the amount of such charge, which Borrower must pay within 20 days following its receipt of such Notice.

(iv)

If Lender reasonably determines at any time that a Capital Replacement or a Repair is necessary for the proper maintenance of a Mortgaged Property, then Lender will give Notice to Borrower requesting that Borrower obtain and submit to Lender bids for all labor and materials required in connection with such Capital Replacement or Repair. In response, Borrower will submit such bids and a time schedule for completing each Capital Replacement or Repair to Lender within 30 days after Borrower’s receipt of Lender’s Notice. Borrower will perform such Capital Replacement or Repair in conformity with the requirements of this Section 4.04 and then may request reimbursement for such Capital Replacement or Repair in accordance with this Section 4.04.

(h)

Adjustments to Reserve Fund Deposits. If the initial term of the Loan is greater than 120 months, then following each of the 120^th and 180^th Payment Dates under the Note, Lender may adjust the amount of the Capital Replacement and Repair Reserve Monthly Deposit based on Lender’s most recent assessment of the physical condition of the Mortgaged Properties and will provide Borrower Notice of this revised Capital Replacement and Repair Reserve Monthly Deposit amount. Borrower will begin paying this revised Capital Replacement and Repair Reserve Monthly Deposit on the next Payment Date following its receipt of the Notice from Lender.

ARTICLE V REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Lender as follows as of the Effective Date:

5.01

Review of Documents. Borrower has reviewed: (a) the Commitment Letter, (b) the Note, (c) this Loan Agreement, (d) the Security lnstrument(s), (e) the Pledge Agreement and (f) all other Loan Documents.

5.02

Condition of Mortgaged Properties. Except as Borrower may have disclosed to Lender in writing in connection with the issuance of the Commitment Letter (which written disclosure may be in certain written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the Effective Date), no Mortgaged Property has been damaged by fire, water, wind or other cause of loss, or, if so damaged, any previous damage to a Mortgaged Property has been fully restored.

5.03

No Condemnation. No part of any Mortgaged Property has been taken in Condemnation or other similar proceeding, and, to the best of Borrower’s knowledge after due inquiry and investigation, no such proceeding is pending or threatened for the partial or total Condemnation or other taking of a Mortgaged Property.

5.04

Actions; Suits; Proceedings. There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or, to the best of Borrower’s knowledge, threatened in writing against or affecting Borrower, any Borrower Principal, or any Mortgaged Property which, if adversely determined, would have a Material Adverse Effect.


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5.05

Environmental. Except as previously disclosed by Borrower to Lender in writing (which written disclosure may be in certain environmental assessments and other written reports accepted by Lender in connection with the funding of the Indebtedness and dated prior to the Effective Date), each of the following is true:

(a)

Borrower has not at any time engaged in, caused, or permitted any Prohibited Activities or Conditions on any Mortgaged Property.

(b)

To Borrower’s knowledge, no Prohibited Activities or Conditions exist or have existed on any Mortgaged Property.

(c)

No Mortgaged Property contains any underground storage tanks, and, to Borrower’s knowledge, no Mortgaged Property has contained any underground storage tanks in the past. If there is an underground storage tank located on the Mortgaged Property that has been previously disclosed by Borrower to Lender in writing, that tank complies with all requirements of Hazardous Materials Laws.

(d)

To the best of Borrower’s knowledge after due inquiry and investigation, Borrower has complied with all Hazardous Materials Laws, including all requirements for notification regarding releases of Hazardous Materials.

(e)

There are no actions, suits, claims, or proceedings pending or, to the best of Borrower’s knowledge after due inquiry and investigation, threatened in writing, that involve the Mortgaged Property and allege, arise out of, or relate to any Prohibited Activity or Condition.

(f)

Borrower has received no actual or constructive notice of any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting any Mortgaged Property or any property that is adjacent to any Mortgaged Property.

5.06

No Labor or Materialmen’s Claims. Except as described on Exhibit B, Borrower represents and warrants that all parties furnishing labor and materials for which a Lien or claim of Lien may be filed against any Mortgaged Property have been paid in full and there are no mechanics’, laborers’ or materialmen’s Liens or claims outstanding for work, labor or materials affecting any Mortgaged Property, whether prior to, equal with or subordinate to the Lien of the Security Instrument, except such Liens or claims that Borrower has disclosed to both Lender and the title company and which are insured against by the policy of title insurance to be issued in connection with the Loan.

5.07

Compliance with Applicable Laws and Regulations. Each of the following is true:

(a)

All Improvements and the use of each Mortgaged Property comply with all applicable statutes, rules, and regulations, including all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning, and land use (“legal non-conforming” status with respect to uses or structures will be considered to comply with zoning and land use requirements for the purposes of this representation).

(b)

The Improvements comply with applicable health, fire, and building codes.

(c)

Neither Borrower nor any Property Manager has knowledge of any illegal activities relating to controlled substances on any Mortgaged Property.

(d)

No Mortgaged Property is (a) zoned for, or being used for, any purpose other than a one to four unit single-family residential or residential condominium occupancy, (b) an assisted living facility, or (c) subject to any rent control, rent stabilization or similar law limiting, or placing conditions upon, the amount of rent that can be charged under a Lease or the ability of a landlord to decline the renewal or extension of a Lease.


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5.08

Access; Utilities; Tax Parcels. Each Mortgaged Property: (a) has ingress and egress via a publicly dedicated right of way or via an irrevocable easement permitting ingress and egress, (b) is served by public utilities and services generally available in the surrounding community or otherwise appropriate for the current use of such Mortgaged Property, and (c) constitutes one or more separate tax parcels.

5.09

Licenses and Permits; Property Documents. Borrower is in possession of all material licenses, permits and authorizations required for use of each Mortgaged Property, which are valid and in full force and effect as of the Effective Date. The uses being made of each Mortgaged Property are in conformity in all material respects with all such licenses and permits and all Property Documents for such Property. The certificate of occupancy for each Mortgaged Property does not permit the use of such Property for any purpose other than as a one to four unit single-family residential home or residential condominium.

5.10

No Other Interests. No Person has (a) any possessory interest in any Mortgaged Property or right to occupy any Mortgaged Property except under the provisions of existing Leases by and between tenants and Borrower, or (b) an option to purchase any Mortgaged Property or an interest in any Mortgaged Property, except as has been disclosed to and approved in writing by Lender. No Person has any direct ownership interest in Borrower other than the Pledgor who has executed the Pledge Agreement in favor of Lender.

5.11

Leasing.

(a)

Each Property is either (i) leased by Borrower to and occupied by an Eligible Tenant pursuant to an Eligible Lease that is in full force and effect and is not in default in any material respect or (ii) in lease ready condition, meaning that the Mortgaged Property has been cleaned, no renovations or repairs to the Mortgaged Property are needed and the Mortgaged Property is immediately available to be leased to an Eligible Tenant.

(b)

No Loan Party, Affiliate of any Loan Party or any Immediate Family Member of any of the foregoing is in occupancy of a Mortgaged Property.

(c)

Borrower has delivered to Lender true and complete copies of all Leases, and there are no material oral agreements with respect thereto.

(d)

To Borrower’s and each Property Manager’s knowledge, each Mortgaged Property is being used exclusively as a residential rental property and no illegal activity is taking place at any Mortgaged Property.

(e)

No Person has any option, right of first refusal, or any similar preferential right to purchase all or any portion of any Mortgaged Property, whether pursuant to Lease or any other recorded or unrecorded document.

(f)

Borrower has maintained records of all documentation collected and all diligence performed in connection with any current or prospective tenant.

5.12

No Prior Assignment; Prepayment of Rents. Borrower has (a) not executed any prior assignment of Rents (other than an assignment of Rents securing any prior indebtedness that is being assigned to Lender or that is being paid off and discharged with the proceeds of the Loan), and (b) not performed any acts and has not executed, and will not execute, any instrument which would prevent Lender from exercising its rights under any Loan Document. At the time of execution of this Loan Agreement there has been no prepayment of any Rents for more than 30 days prior to the due dates of such Rents other than the last month’s Rent, if collected at the time a tenant enters into a Lease.

5.13

Illegal Activity. No portion of any Mortgaged Property has been or will be purchased with the proceeds of any illegal activity.

5.14

Taxes and Other Charges Paid. Borrower has filed all federal, state, county, and municipal tax returns required to have been filed by Borrower, and has paid all Taxes and Other Charges which have become due pursuant to such returns or to any notice of assessment received by Borrower, and Borrower has no


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knowledge of any basis for additional assessments with respect to such Taxes or Other Charges. To the best of Borrower’s knowledge after due inquiry and investigation, there are not presently pending any special assessments against any Mortgaged Property or any part of any Mortgaged Property.

5.15

Title Exceptions. To the best of Borrower’s knowledge after due inquiry and investigation, none of the items shown in the schedule of exceptions to coverage in the title insurance policy issued to and accepted by Lender contemporaneously with the execution of this Loan Agreement and insuring Lender’s interest in each Mortgaged Property (“Permitted Encumbrances”) will have a Material Adverse Effect on the: (a) ability of Borrower to pay the Loan in full, (b) ability of Borrower to use all or any part of a Mortgaged Property in the manner in which the Mortgaged Property is being used on the Effective Date, (c) operation of any Mortgaged Property as a residential rental property, or (d) value of any Mortgaged Property.

5.16

No Change in Facts or Circumstances.

(a)

All information in the application for the Loan submitted to Lender, including all financial statements for the Mortgaged Properties, Borrower, and any Borrower Principal, and all Rent Schedules, reports, certificates, and any other documents submitted in connection with the application (collectively, “Loan Application”) is complete and accurate in all material respects as of the date such information was submitted to Lender.

(b)

There has been no change in any fact or circumstance since the Loan Application was submitted to Lender that would make any information submitted as part of the Loan Application materially incomplete or inaccurate.

5.17

ERISA – Borrower Status.

(a)

Borrower is not an “investment company,” or a company under the Control of an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(b)

Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA or a “plan” to which Section 4975 of the Tax Code applies, and the assets of Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.

(c)

Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and is not subject to state statutes regulating investments or fiduciary obligations with respect to governmental plans.

5.18

No Fraudulent Transfer or Preference. No Borrower or Borrower Principal has taken or will take any of the following actions:

(a)

Transfer of an interest in the property of Borrower or Borrower Principal to or for the benefit of Lender or otherwise as security for any of the obligations under the Loan Documents which is or could constitute a voidable preference under federal bankruptcy, state insolvency or similar applicable creditors’ rights laws.

(b)

Transfer of (including any Transfer to or for the benefit of an insider under an employment contract) an interest of Borrower or any Borrower Principal in property which is or could constitute a voidable preference under federal bankruptcy, state insolvency or similar applicable creditors’ rights laws.

(c)

Incur any obligation (including any obligation to or for the benefit of an insider under an employment contract) which is or could constitute a fraudulent transfer under federal bankruptcy, state insolvency or similar applicable creditors’ rights laws.


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5.19

No Insolvency or Judgment.

(a)

No Borrower or Borrower Principal is (i) the subject of or a party to (other than as a creditor) any completed or pending bankruptcy, reorganization or insolvency proceeding, or (ii) the subject of any unsatisfied judgment that is of record or docketed in any court located in the United States.

(b)

Borrower is not presently insolvent, and the Loan will not render Borrower insolvent. As used in this Section 5.19, the term “insolvent” means that the total of all of a Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of all of the assets of the Person that are available to satisfy claims of creditors.

5.20

Working Capital. After the Loan is made, Borrower intends to have sufficient working capital, including cash flow from the Mortgaged Properties or other sources, to (a) adequately maintain the Mortgaged Properties, and (b) to pay all of Borrower’s outstanding debts as they come due (other than any balloon payment due upon the maturity of the Loan). Lender acknowledges that no members or partners of Borrower or any Borrower Principal will be obligated to contribute equity to Borrower for purposes of providing working capital to maintain the Mortgaged Properties or to pay Borrower’s outstanding debts except as may otherwise be required under their organizational documents.

5.21

Regulatory Agreement. No Mortgaged Property is subject to a Regulatory Agreement.

5.22

Commercial Purpose; No Right to Residency. Borrower represents that Borrower is incurring the Indebtedness solely for the purpose of carrying on a business or commercial enterprise, and not for consumer, personal, family, household or agricultural purposes.

5.23

Prohibited Parties Lists and AML Laws.

(a)

Neither Borrower, and to the best of Borrower’s knowledge after due inquiry and investigation, no Borrower Principal or Non-U.S. Equity Holder:

(i)

is identified on the OFAC Lists.

(ii)

has been convicted of a violation of the AML Laws or been the subject of a final enforcement action relating to the AML Laws.

(iii)

Is the subject of any pending proceedings for any violation of the AML Laws.

(b)

Borrower is not listed, and to the best of Borrower’s knowledge after due inquiry and investigation, no Borrower Principal is listed, on the FHFA SCP List.

5.24

Internal Controls. Borrower has in place, and to the best of Borrower’s knowledge after due inquiry and investigation, Borrower has determined that each Borrower Principal has in place, practices and procedures for the admission of investors which prevent the admission of:

(a)

Any investor that is in violation of any criminal or civil law or regulation intended to prevent money laundering or the funding of terrorist or illegal drug trafficking activities.

(b)

Any Person that will have a 25% or more ownership interest in Borrower (whether directly or indirectly) that is on the Prohibited Parties Lists.

(c)

Any Non-U.S. Equity Holder that is on the OFAC Lists.

5.25

Crowdfunding. Except as has been disclosed in writing to and approved in writing by Lender, no direct or indirect ownership (or other economic) interest of 25% or more in the aggregate in Borrower or any Borrower Principal has been marketed or sold to investors through any form of Crowdfunding.

5.26

Organizational Structure. The organizational chart attached as Exhibit D accurately represents the ownership and control of Borrower, Pledgor and Guarantor (if an entity).


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5.27

Survival. The representations and warranties set forth in this Loan Agreement will survive until the Indebtedness is paid in full; however, the representations and warranties set forth in Section 5.05 will survive beyond repayment of the entire Indebtedness, as provided in Sections 9.02(b) and 9.02(h).

ARTICLE VI BORROWER COVENANTS.

6.01

Compliance with Laws. Borrower will at all times comply with all laws, ordinances, rules, regulations, and requirements of any Governmental Authority having jurisdiction over any Mortgaged Property and with the terms of all licenses and permits and all recorded covenants and agreements relating to or affecting any Mortgaged Property, including all laws, ordinances, regulations, requirements, and covenants pertaining to health and safety, construction of improvements on a Mortgaged Property, Repairs, Capital Replacements, fair housing, disability accommodation, zoning and land use, applicable building codes, special use permits, environmental regulations, Leases, and the maintenance and disposition of tenant security deposits. Borrower will at all times take appropriate measures to prevent, and will not engage in or knowingly permit, any illegal activities at or on any Mortgaged Property, including those that could endanger tenants or visitors, result in damage to any Mortgaged Property, result in forfeiture of any Mortgaged Property, or otherwise materially impair the Lien created by the Security Instrument or Lender’s interest in any Mortgaged Property. Borrower will at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.01.

6.02

Compliance with Organizational Documents. Borrower will at all times comply with all laws, regulations and requirements of any Governmental Authority relating to Borrower’s formation, continued existence and good standing in its state of formation and, if different, in the Mortgaged Property Jurisdiction. Borrower will at all times comply with its organizational documents.

6.03

Use of Mortgaged Property. Unless required by applicable law, without the prior written consent of Lender, Borrower will not take any of the following actions:

(a)

Allow any Mortgaged Property to be used for any purpose other than a residential rental property.

(b)

Initiate or acquiesce to a change in the zoning classification of any Mortgaged Property.

(c)

Establish any condominium or cooperative regime with respect to any Mortgaged Property beyond any that may be in existence on the Effective Date.

(d)

Combine all or any part of any Mortgaged Property with all or any part of a tax parcel which is not part of such Mortgaged Property.

(e)

Subdivide or otherwise split any tax parcel constituting all or any part of any Mortgaged Property.

(f)

Add to or change any location at which any of any collateral for the Loan is stored, held or located unless Borrower (A) gives Notice to Lender within 30 days after the occurrence of such addition or change, (B) executes and delivers to Lender any modifications of or supplements to this Loan Agreement that Lender may require, and (C) authorizes the filing of any financing statement or amendment which may be filed in connection with this Loan Agreement, as Lender may require.

(g)

Permit any Mortgaged Property to be subject to a Regulatory Agreement.


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6.04

Leasing.

(a)

Borrower will not permit the occupancy of any Property other than pursuant to an Eligible Lease with an Eligible Tenant.

(b)

Borrower or Property Manager will maintain records of all documentation collected and all diligence performed in connection with any Tenant and Borrower will provide any such items to Lender upon Lender’s request, including at least one of the following:

(i)

A credit report from a national credit reporting agency on each Eligible Tenant (except that no such credit report will be required for any tenant of a Mortgaged Property where the Lease payment is subsidized with Section 8 vouchers in accordance with HUD guidelines).

(ii)

Other evidence that Borrower or Property Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Mortgaged Property.

(c)

Borrower will not permit a Related Party or any Immediate Family Member of a Related Party to occupy any Mortgaged Property.

(d)

Borrower will perform the obligations of the lessor under all Leases, and will enforce, in a commercially reasonable manner, the obligations of the Tenants under such Leases.

(e)

Borrower will not grant or permit Property Manager to grant any tenant or other Person an option, right of first refusal, or any similar preferential right to purchase all or any portion of any Mortgaged Property, whether pursuant to a Lease or any other recorded or unrecorded document.

6.05

Prepayment of Rents. Borrower will not collect any Rent more than 30 days in advance of its due date; provided, that the foregoing restriction will not prevent Borrower from collecting both the first and last month’s rent contemporaneously with the execution of a Lease in accordance with customary residential leasing practices.

6.06

Inspection. Borrower authorizes Lender and its agents, representatives, and designees to enter, at any reasonable time (subject to applicable law and the rights of tenants), any portion of any Mortgaged Property to inspect, attend to Lender’s interests, and perform any of the acts that Lender is authorized to perform pursuant to the Loan Documents, including with respect to Restoration, Repairs, and Capital Replacements.

6.07

Books and Records; Financial Reporting.

(a)

Maintenance of Books and Records.

(i)

Borrower will keep and maintain at all times at Borrower’s main business office or a Mortgaged Property Manager’s office, and upon Lender’s request will make available at such office, complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Properties, and copies of all written contracts, Leases, and other instruments that affect any Mortgaged Property (“Books and Records”).

(ii)

The Books and Records will be kept in accordance with one of the following accounting methods, consistently applied, and Borrower will promptly provide Lender Notice of any change in Borrower’s accounting methods:

(A)

Generally accepted accounting principles (GAAP).

(B)

Tax method of accounting, provided that under the tax method of accounting, the accrual basis may be used for interest expense, real estate taxes and insurance expense, and the cash basis will be used for all other items, including income, prepaid rent, utilities and payroll expense. Financial statements may exclude depreciation and amortization.


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(C)

Such other method that is acceptable to Lender.

(iii)

The Books and Records will be subject to examination and inspection by Lender at any reasonable time with or without prior Notice to Borrower.

(b)

Delivery of Borrower Financial Information – Annual Requirements. Within 90 days after the end of each calendar year (or the end of Borrower’s fiscal year, if Borrower has adopted fiscal year financial reporting), Borrower will deliver to Lender an annual statement of income and expenses for Borrower’s operation of the Mortgaged Properties.

(c)

Delivery of Borrower Financial Information – Quarterly Requirement. Within 25 days after the end of each calendar quarter each year (or the end of the second quarter of Borrower’s fiscal year, if Borrower has adopted fiscal year financial reporting), Borrower will deliver the following to Lender:

(i)

a Rent Schedule dated no earlier than the date that is 5 days prior to the end of such quarter.

(ii)

a quarterly statement of income and expenses for Borrower’s operation of the Mortgaged Properties.

(d)

Delivery of Borrower Financial Information – When Requested by Lender. Within 25 days following a Notice from Lender including a request for such information, Borrower will deliver the following to Lender:

(i)

The Rent Schedule for any period specified by Lender.

(ii)

A statement of income and expenses for Borrower as of the end of (A) the quarter that ended at least 30 days prior to the due date of the requested item, and/or (B) the fiscal year that ended at least 90 days prior to the due date of the requested item.

(iii)

A balance sheet showing all assets and liabilities of Borrower as of the end of (A) the quarter that ended at least 30 days prior to the due date of the requested item, and/or (B) the fiscal year that ended at least 90 days prior to the due date of the requested item.

(iv)

An accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts.

(v)

A property management report for the Mortgaged Properties, showing the number of inquiries made and rental applications received from tenants or prospective tenants and deposits received from tenants for any period specified by Lender.

(vi)

Copies of Borrower’s state and federal tax returns, including current tax return extensions.

(vii)

Written updates on the status of all litigation proceedings that were disclosed or should have been disclosed by Borrower to Lender either (A) as of the Effective Date or (B) during the term of the Loan pursuant to Section 6.16.

(viii)

A statement that identifies all owners of any direct interest in Borrower and any Person(s) that Control(s) Borrower (except that the statement need not identify the owners of a publicly-traded entity). The statement must identify the percentage and type of ownership or Control interest held by each Person and must also identify any Non-U.S. Equity Holders.


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(ix)

Such other financial information or property management information as Lender may require (including information on tenants under Leases if such information is available to Borrower and copies of bank account statements from financial institutions where funds owned or controlled by Borrower are maintained).

(e)

Delivery of Guarantor or Pledgor’s Financial Information – When Requested by Lender. Within 25 days following a Notice from Lender including a request for such information, Borrower will cause Guarantor or Pledgor, as applicable, to deliver the following to Lender:

(i)

Its balance sheet and profit and loss statement (or if such party is a natural person, such party’s personal financial statements) as of the end of (A) the quarter that ended at least 30 days prior to the due date of the requested items, and/or (B) the fiscal year that ended at least 90 days prior to the due date of the requested items.

(ii)

Other financial statements as Lender may reasonably require.

(iii)

Written updates on the status of all litigation proceedings that Guarantor or Pledgor, as applicable, disclosed or should have disclosed to Lender as of the Effective Date.

(iv)

If an Event of Default has occurred and is continuing, copies of Guarantor’s or Pledgor’s, as applicable, state and federal tax returns, including current tax return extensions.

(f)

Form of Financial Statements. All financial statements required under this Agreement should be prepared using the template available from Lender, which may be revised from time to time, or in a format otherwise acceptable to Lender.

(g)

Certification of Statements; Audited Financials. A natural person having authority to bind Borrower, Guarantor, or Pledgor, as applicable, will certify each of the statements, schedules and reports required by Sections 6.07(b)-(f) to be complete and accurate. Each of the statements, schedules and reports required by Sections 6.07(b)-(f) will be in such form and contain such detail as Lender may reasonably require. At any time when an Event of Default has occurred and is continuing, or at any time that Lender determines that audited financial statements are required for an accurate assessment of the financial condition of Borrower or the Mortgaged Properties, Lender also may require that any of the statements, schedules or reports listed in Sections 6.07(b)-(f) be audited at Borrower’s expense by an independent certified public accountant acceptable to Lender.

(h)

Failure to Timely Provide Financial Statements. If Borrower fails to provide in a timely manner the statements, schedules and reports required by Sections 6.07(b)-(f), then Lender will give Notice to Borrower specifying the statements, schedules and reports required by Sections 6.07(b)-(f) that Borrower has failed to provide. If Borrower has not provided the required statements, schedules and reports within 10 Business Days following such Notice, then (i) Borrower will pay a late fee of $500 for each late statement, schedule or report, plus an additional $500 per month that any such statement, schedule or report continues to be late, and (ii) Lender will have the right to have Borrower’s Books and Records audited, at Borrower’s expense, by an independent certified public accountant acceptable to Lender.

(i)

Reporting Upon Event of Default. If an Event of Default has occurred and is continuing, then Borrower will deliver to Lender upon written demand all Books and Records and other instruments that affect the Mortgaged Properties.

(j)

Credit Reports. Borrower authorizes Lender to obtain a credit report on Borrower at any time.

6.08

Taxes; Operating Expenses.

(a)

Payment of Taxes and Other Charges. Subject to the provisions of Section 6.08(c), Borrower will pay or cause to be paid all Taxes and Other Charges when due and before the addition of any interest, fine, penalty or cost for nonpayment.


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(b)

Payment of Operating Expenses and Insurance Premiums. Subject to the provisions of Section 6.08(d), Borrower will (i) pay the expenses of operating, managing, maintaining and repairing the Mortgaged Properties (including utilities, Repairs and Capital Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added, and (ii) pay Insurance premiums prior to the expiration date of each policy of Insurance.

(c)

Payment of Taxes and Reserve Funds. If Lender is collecting Tax Reserves pursuant to Article IV, then so long as no Event of Default exists, Borrower will not be obligated to pay Taxes, but only if Lender holds sufficient Tax Reserves and Borrower has timely delivered to Lender any bills or notices that it has received with respect to Taxes. Lender will have no liability to Borrower for failing to pay any Taxes if any of the following conditions exist: (i) any Event of Default has occurred and is continuing, (ii) Lender holds insufficient Tax Reserves at the time a Tax becomes due and payable, or (iii) Borrower has failed to provide Lender with bills and notices as provided in this Section 6.08.

(d)

Payment of Insurance and Reserve Funds. If Lender is collecting Insurance Reserves pursuant to Article IV, then so long as no Event of Default exists, Borrower will not be obligated to pay Insurance premiums but only if Lender holds sufficient Insurance Reserve Deposits and Borrower has timely delivered to Lender any bills or premium notices that it has received with respect to Insurance premiums. Lender will have no liability to Borrower for failing to pay any Insurance premiums if any of the following conditions exist: (i) any Event of Default has occurred and is continuing, (ii) Lender holds insufficient Insurance Reserve Deposits at the time an Insurance premium becomes due and payable, or (iii) Borrower has failed to provide Lender with bills and premium notices as provided in this Section 6.08.

(e)

Payment of HOA Fees and Reserve Funds. If Lender is collecting HOA Reserves pursuant to Article IV, then so long as no Event of Default exists, Borrower will not be obligated to pay HOA Fees for the applicable Mortgaged Properties but only if Lender holds sufficient HOA Reserve Deposits and Borrower has timely delivered to Lender any bills or invoices that it has received with respect to HOA Fees. Lender will have no liability to Borrower for failing to pay any HOA Fees if any of the following conditions exist: (i) any Event of Default has occurred and is continuing, (ii) Lender holds insufficient HOA Reserve Deposits at the time an HOA Fee becomes due and payable, or (iii) Borrower has failed to provide Lender with bills and invoices as provided in this Section 6.08.

(f)

Right to Contest. Borrower, at its own expense, may contest by appropriate legal proceedings, conducted diligently and in good faith, the amount or validity of Taxes or Other Charges, if: (i) Borrower notifies Lender of the commencement or expected commencement of such proceedings, (ii) no Mortgaged Property is in danger of being sold or forfeited, (iii) if Borrower has not already paid the Taxes or Other Charges, Borrower deposits with Lender reserves sufficient to pay the contested Taxes or Other Charges, if requested by Lender, and (iv) Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested by Lender, which may include the delivery to Lender of reserves established by Borrower to pay the contested Taxes or Other Charges.

6.09

Preservation, Management, and Maintenance of Mortgaged Property.

(a)

Maintenance of Mortgaged Property; No Waste. Borrower will keep each Mortgaged Property in good repair, including replacing Personalty and Fixtures with items of equal or better function and quality. Borrower will not commit waste or permit impairment or deterioration of any Mortgaged Property.

(b)

Abandonment of Mortgaged Property. Borrower will not abandon any Mortgaged Property.

(c)

Preservation of Mortgaged Property.


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(i)

Borrower will promptly restore or repair, in a good and workmanlike manner, any damaged part of any Mortgaged Property to the equivalent of its original condition, or such other condition as Lender may approve in writing, whether or not Insurance proceeds or Condemnation awards are available to cover any costs of such Restoration or Repair; provided, however, that Borrower will not be obligated to perform such Restoration or Repair if (A) no Event of Default has occurred and is continuing, and (B) Lender has elected to apply any available Insurance proceeds and/or Condemnation awards to the payment of Indebtedness pursuant to Section 6.10(j) or Section 6.11(b).

(ii)

Borrower will give Notice to Lender of and, unless otherwise directed in writing by Lender, will appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement.

(d)

Alteration of Mortgaged Property – Consent Required. Before taking any of the following actions (or permitting any tenant or other Person to take any of the following actions, Borrower must have the prior written consent of Lender:

(i)

Converting any residential unit or common area to non-residential use.

(ii)

Converting, in whole or in part, any income producing unit to a non-income producing unit.

(iii)

Displacing or relocating tenants to undertake or complete any Repair, Capital Replacement, or other Property Improvements, unless such displacement or relocation is required by law.

(iv)

Removing, demolishing or altering any Mortgaged Property or any part of any Mortgaged Property, including any removal, demolition, or alteration occurring in connection with a rehabilitation of all or part of any Mortgaged Property.

(v)

Modifying the number of bedrooms in any residential unit.

(e)

Alteration of Mortgaged Property – Consent Not Required. Notwithstanding Section 6.09(d)(iv), Borrower may undertake, or permit a Tenant to undertake, any of the following without the prior written consent of Lender.

(i)

Repairs and Capital Replacements.

(ii)

Replacement of tangible Personalty.

(iii)

Making an individual unit ready for a new occupant.

(iv)

Preservation and maintenance of a Mortgaged Property in accordance with Sections 6.09(a) and (d).

(v)

Alterations intended to renovate or upgrade the Mortgaged Property (“Property Improvement”), provided the Property Improvement complies with Section 6.14 and it does not:

(A)

Include any of the actions listed in Sections 6.09(d)(i)-(iii) or (v).

(B)

Require demolition of any existing Improvements.

(C)

Cause a permanent obstruction of tenants’ access to units or a temporary obstruction of tenants’ access to units without a reasonable alternative access provided during the period the Property Improvement is underway.


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(D)

Have an adverse effect on any major building systems, including the following:

(1)

Electrical (electrical lines or power upgrades, excluding fixture replacement).

(2)

HVAC (central and unit systems, excluding replacement of in kind unit systems).

(3)

Plumbing (supply and waste lines, excluding fixture replacement).

(4)

Structural (foundation, framing, and all building support elements).

(f)

Property Documents. Borrower will observe and perform in all material respects each term to be observed or performed by Borrower pursuant to the terms of each Property Document. Borrower will enforce in a commercially reasonable manner the performance and observance of Property Document, will do all things reasonably necessary to preserve and to keep unimpaired its material rights thereunder and cause each Mortgaged Property to be operated in accordance therewith. Borrower will not, without the prior written consent of Lender, consent to the increase of the amount of any charges under any Property Document or the reduction of any material right thereunder. During the continuance of an Event of Default Borrower will not exercise any rights, make any decisions, grant any approvals or otherwise take any action under the Property Documents without Lender’s prior written consent.

(g)

Inspection of Mold. If Lender determines that Mold has or may have developed as a result of a water intrusion event or leak, then Lender may require that a professional inspector inspect the applicable Mortgaged Property to confirm whether Mold has developed and, if so, thereafter as frequently as Lender determines is necessary until any issue with Mold and its cause(s) are resolved to Lender’s satisfaction. Such inspection will be limited to a visual and olfactory inspection of the area that has experienced the Mold, water intrusion event or leak. Borrower will be responsible for the cost of each such professional inspection and any remediation deemed to be necessary as a result of the professional inspection.

(h)

Property Management. Borrower will provide for professional management of the Mortgaged Properties by one or more Property Managers at all times under property management agreements approved by Lender in writing. Without Lender’s prior consent, Borrower will not cancel or modify any property management agreement, except that Borrower and a Property Manager may renew a property management agreement on identical terms. Borrower will cause each Property Manager to execute an Assignment of Management Agreement with Borrower and Lender, in a form acceptable to Lender. If at any time Lender consents to the appointment of one or more new Property Managers, each such new Property Manager(s) and Borrower will, as a condition of Lender’s consent, execute an Assignment of Management Agreement in a form acceptable to Lender. As of the Effective Date, Borrower has confirmed that each Property Manager is not on any Prohibited Parties List. Borrower will confirm at the time of entering into or renewing any property management agreement that each Property Manager is not on any Prohibited Parties List.

6.10 Insurance.

(a)

Insurance Covenant. Borrower will at all times during the term of this Loan Agreement maintain, at its sole expense, for the mutual benefit of Borrower and Lender, Insurance as required by Lender and applicable law, with such endorsements as Lender may reasonably require from time to time and which are customarily required by institutional lenders for properties comparable to the Mortgaged Properties.

(b)

Property Insurance. Borrower will maintain Insurance against relevant physical hazards that may cause damage to the Mortgaged Properties, which Insurance will include coverage against loss or damage from fire, wind, hail, and other perils within the scope of a “Special Causes of Loss” policy form, an “All Risk” policy form, or a standard fire insurance policy with a customary extended


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coverage endorsement that includes replacement cost valuation, business income/rental value for all relevant perils, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency, or any successor to that agency, as a “Special Flood Hazard Area”) (collectively, “Property Insurance”). Property Insurance may also include coverage for other risks that Lender may reasonably require such as earthquake, Named Storm, sinkhole, mine subsidence, and ordinance or law (if any Mortgaged Property does not conform with applicable building, zoning or land use laws, rules or regulations).

(c)

Liability Insurance. Borrower will maintain commercial general liability Insurance, which may include workers’ compensation Insurance, and such other liability, errors and omissions, and fidelity Insurance coverage.

(d)

Builder’s Risk. During any period of construction or Restoration, Borrower will maintain builder’s risk Insurance, including fire and other perils within the scope of a policy known as “Causes of Loss – Special Form” or “All Risk” policy.

(e)

Payment of Premiums. All premiums for Insurance required under this Section 6.10 will be paid in the manner provided in Article IV and Section 6.08, unless Lender has designated in writing another method of payment.

(f)

Policy Requirements. The following requirements apply with respect to all Insurance required by this Section 6.1 0:

(i)

All Insurance policies will be with one or more insurance companies that are satisfactory to Lender, in a form and with the terms required by Lender, and in amounts and with maximum deductibles as required by Lender.

(ii)

All Property Insurance policies will contain a standard mortgagee or mortgage holder’s clause with loss payable to, and in favor of, and in a form approved by, Lender.

(iii)

All commercial general liability and excess umbrella liability policies will name Lender and its successors and assigns as an additional insured party.

(iv)

All Property Insurance policies will provide that the insurer will notify Lender in writing of cancellation of policies at least 10 days before the cancellation of the policy by the insurer for nonpayment of the premium or nonrenewal and at least 30 days before cancellation by the insurer for any other reason.

(g)

Evidence of Insurance; Insurance Policy Renewals. Borrower will deliver to Lender a legible copy of each Insurance policy, and Borrower will promptly deliver to Lender a copy of all renewal, nonrenewal, cancellation, and other notices received by Borrower with respect to the policies. Borrower will ensure that the Mortgaged Properties are continuously covered by the required Insurance. Prior to the expiration date of each Insurance policy, Borrower will deliver to Lender evidence acceptable to Lender that each Insurance policy has been renewed. If the evidence of a renewal does not include a legible copy of the renewal policy, then Borrower will deliver a legible copy of such renewal policy no later than the earlier of (i) 60 days after the expiration date of the original policy or (ii) the date of any Notice of an insured loss given to Lender under Section 6.10(i).

(h)

Compliance With Insurance Requirements. Borrower will comply with all Insurance requirements and will not permit any condition to exist on any Mortgaged Property that would invalidate any part of any Insurance coverage required under this Loan Agreement.

(i)

Obligations Upon Casualty: Proof of Loss.

(i)

If an insured loss occurs, then Borrower will give immediate written Notice to the Insurance carrier and to Lender.


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(ii)

Borrower will promptly restore or repair the Mortgaged Property to the equivalent of its original condition or to a condition approved by Lender (“Restoration”), subject to the limitations of Section 6.09(c)(i).

(iii)

Borrower authorizes and appoints Lender as attorney in fact for Borrower to make proof of loss, to adjust and compromise any claims under policies of Property Insurance, to appear in and prosecute any action arising from such Property Insurance policies, to collect and receive the proceeds of Property Insurance, to hold the proceeds of Property Insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 6.10 will require Lender to incur any expense or take any action.

(j)

Lender’s Options Following a Casualty. Following a casualty, Lender may, at Lender’s option, do any of the following:

(i)

Require a “repair or replacement” settlement, in which case the proceeds will be used to reimburse Borrower for the cost of Restoration. If Lender determines to require a repair or replacement settlement and to apply Insurance proceeds to Restoration, Lender will apply the proceeds in accordance with Lender’s then-current policies relating to the Restoration of casualty damage on similar residential properties. If Lender retains a professional inspection engineer or other qualified third party to inspect any Restoration items, Lender may charge Borrower an amount sufficient to pay all reasonable costs and expenses charged by such third-party inspector.

(ii)

Require an “actual cash value” settlement, in which case the proceeds may be applied to the payment of the Indebtedness, whether or not then due.

(iii)

If, in Lender’s discretion, the cost of Restoration following a casualty will equal or exceed 50% of the Release Amount, then Lender may require Borrower to Transfer the Mortgaged Property to a third-party and pay down the Indebtedness by an amount equal to the Release Amount plus all interest amounts required under the Note in accordance with Section 7.05(b) of this Agreement. If Lender elects to exercise its option under this Section 6.10(j)(iii), then Lender will provide Borrower with Notice that the Mortgaged Property must be Transferred in accordance with Section 7.05(b) no later than 30 days following the date of the Notice.

(k)

Borrower’s Rights Following a Casualty. Subject to Section 6.10(j), and provided no Event of Default has occurred and is continuing, following a casualty, Borrower may take the following actions:

(i)

If a casualty results in damage to any Mortgaged Property for which the cost of Repairs required to complete the Restoration will be equal to or less than $20,000, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the Insurance proceeds are used solely for the Restoration of the applicable Mortgaged Property.

(ii)

If a casualty results in damage to any Mortgaged Property for which the cost of Repairs required to complete the Restoration will be more than $20,000, but less than 50% of the Release Amount for the Mortgaged Property, Borrower is authorized to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender will, at its option, hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property.

(iii)

If a casualty results in damage to the Mortgaged Property for which the cost of Repairs required to complete the Restoration will be equal to or greater than 50% of the Release Amount for the Mortgaged Property, Borrower must obtain the consent of Lender prior to


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making any proof of loss or adjusting or compromising the claim, and Lender will, at its option, hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property.

(I)

Lender’s Succession to Insurance Policies. If any Mortgaged Property is sold at a foreclosure sale or Lender acquires title to a Mortgaged Property, then Lender will automatically succeed to all rights of Borrower in and to any Insurance policies and unearned Insurance premiums and in and to the proceeds resulting from any damage to such Mortgaged Property prior to such sale or acquisition.

(m)

Payments After Application of Insurance Proceeds. Unless Lender otherwise agrees in writing, any application of any Insurance proceeds to the Indebtedness will not extend or postpone the due date, or change the amount, of any monthly payments referred to in the Note or Article IV of this Loan Agreement.

(n)

Assignment of Insurance Proceeds. Borrower agrees to execute such further evidence of assignment of any Insurance proceeds as Lender may require.

(o)

Borrower Acknowledgment of Lender’s Right to Change Insurance Requirements. Borrower acknowledges and agrees that Lender’s Insurance requirements may change from time to time throughout the term of the Indebtedness to include coverage for the kind of risks customarily insured against and in such minimum coverage amounts and maximum deductibles as are generally required by institutional lenders for properties comparable to the Mortgaged Properties.

(p)

Blanket Policy. The Insurance coverage required by this Section 6.10 may be effected under a blanket policy or policies covering all the Mortgaged Properties if such blanket policy has been approved in advance by Lender.

6.11

Condemnation.

(a)

Borrower’s Obligations Generally. Borrower will promptly notify Lender in writing of any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of any Mortgaged Property, whether direct or indirect (“Condemnation”). Borrower will appear in, and prosecute or defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in writing. Borrower authorizes and appoints Lender as attorney in fact for Borrower to commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation, after consultation with Borrower and consistent with commercially reasonable standards of a prudent lender. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 6.11(a) will require Lender to incur any expense or take any action. Borrower transfers and assigns to Lender all right, title and interest of Borrower in and to any award or payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to any Mortgaged Property caused by governmental action that does not result in a Condemnation. Borrower agrees to execute such further evidence of assignment of any Condemnation awards or proceeds as Lender may require.

(b)

Lender’s Options Following a Condemnation.

(i)

Following a Condemnation, Lender may, at Lender’s option, (i) hold the Condemnation award or proceeds to be used to reimburse Borrower for the cost of Restoration of the Mortgaged Property, or (ii) apply the Condemnation award or proceeds to the payment of the Indebtedness, whether or not then due. Unless Lender otherwise agrees in writing, any application of any Condemnation award to the Indebtedness will not extend or postpone the due date, or change the amount, of any monthly payments referred to in the Note or Article IV of this Loan Agreement.

(ii)

If, in Lender’s discretion, the cost of Restoration following a Condemnation will exceed 50% of the Release Amount, then Lender may require Borrower to Transfer the Mortgaged


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Property to a third-party and pay down the Indebtedness by an amount equal to the Release Amount plus all interest amounts required under the Note in accordance with Section 7.05(b) of this Agreement.

(iii)

If Lender elects to exercise its option under Section 6.11(b)(ii), then Lender will provide Borrower with Notice that the Mortgaged Property must be Transferred in accordance with Section 7.05(b) no later than 30 days following the date of the Notice.

(c)

Borrower’s Rights Following a Casualty. Subject to Section 6.11, and provided no Event of Default has occurred and is continuing, then following a Condemnation, Borrower may take the following actions:

(i)

If a Condemnation results in proceeds or awards of $20,000 or less, Borrower will have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of Lender so long as the Insurance proceeds are used solely for the Restoration of the applicable Mortgaged Property.

(ii)

If a Condemnation results in proceeds or awards of more than $20,000, but less than 50% of the Release Amount for the Mortgaged Property, Borrower is authorized to make proof of loss and adjust and compromise the claim without the prior consent of Lender, and Lender will, at its option, hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the applicable Mortgaged Property.

(iii)

If a Condemnation results in damage to the Mortgaged Property for which the cost of Repairs required to complete the Restoration will be equal to or greater than 50% of the Release Amount for the Mortgaged Property, Borrower must obtain the consent of Lender prior to making any proof of loss or adjusting or compromising the claim, and Lender will, at its option, hold the applicable Insurance proceeds to be used to reimburse Borrower for the cost of Restoration of the applicable Mortgaged Property

(d)

Succession to Condemnation Proceeds. If any Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, then Lender will automatically succeed to all rights of Borrower in and to any Condemnation proceeds and awards prior to such sale or acquisition.

6.12

Environmental Hazards.

(a)

Prohibited Activities and Conditions. Borrower will comply with all Hazardous Materials Laws applicable to any Mortgaged Property and will not cause or permit Prohibited Activities or Conditions.

(b)

Notice to Lender. Borrower will promptly give Notice to Lender upon the occurrence of any of the following events:

(i)

Borrower’s discovery of any Prohibited Activity or Condition.

(ii)

Borrower’s receipt of or knowledge of any written complaint, order, notice of violation or other communication from any tenant, Property Manager, Governmental Authority or other Person with regard to present or future alleged Prohibited Activities or Conditions, or any other environmental, health or safety matters affecting the Mortgaged Properties.

(iii)

Borrower’s breach of any of its obligations under this Section 6.12.

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

(c)

Lender’s Option following a Hazardous Materials Event.


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(i)

If notwithstanding Borrower’s obligations under this Section 6.12, Borrower fails to comply with Hazardous Materials Laws applicable to a Mortgaged Property or Prohibited Activities or Conditions exist at a Mortgaged Property (“Hazardous Materials Event”), then Lender may require Borrower to Transfer the Mortgaged Property to a third party and pay down the Indebtedness by an amount equal to the Release Amount plus all interest amounts required under the Note in accordance with Section 7.05(b) of this Agreement.

(ii)

If Lender elects to exercise its option under Section 6.12(c)(i), then Lender will provide Borrower with Notice that the Mortgaged Property must be Transferred in accordance with Section 7.05(b) no later than 30 days following the date of the Notice.

(d)

Environmental Inspections, Tests and Audits. Borrower will pay promptly the costs of any environmental inspections, tests or audits, a purpose of which is to identify the extent or cause of or potential for a Prohibited Activity or Condition (“Environmental Inspections”), required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under Article VII, or required by Lender following a determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including Attorneys’ Fees and Costs and the costs of technical consultants whether incurred in connection with any judicial or administrative process or otherwise) that Borrower fails to pay promptly will become an additional part of the Indebtedness as provided in Section 8.02. As long as: (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not prohibited by law, contract or otherwise from doing so, Lender will make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender reserves the right, and Borrower expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by or for Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections made by or for Lender. Borrower acknowledges that Lender cannot control or otherwise ensure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount that a party may bid at such sale. Borrower agrees that Lender will have no liability whatsoever as a result of delivering the results of any Environmental Inspections made by or for Lender to any third party, and Borrower releases and forever discharges Lender from any and all claims, damages or causes of action arising out of, connected with or incidental to the results of the delivery of any Environmental Inspections made by or for Lender.

(e)

Remedial Work. If any investigation, site monitoring, containment, clean-up, Restoration or other remedial work (“Remedial Work”) is necessary to comply with any Hazardous Materials Law or order of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property, or is otherwise required by Lender as a consequence of any Prohibited Activity or Condition or to prevent the occurrence of a Prohibited Activity or Condition, then Borrower will, by the earlier of (i) the applicable deadline required by Hazardous Materials Law, or (ii) 30 days after Notice from Lender demanding such action, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and must in any event complete the work by the time required by applicable Hazardous Materials Law. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, then Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower will reimburse Lender on demand for the cost of doing so. Any reimbursement due from Borrower to Lender will become part of the Indebtedness as provided in Section 8.02.

(g)

Borrower Contest of Order. Notwithstanding Section 6.12(e), Borrower may contest the order of any Governmental Authority in good faith through appropriate proceedings, provided that (i) Borrower has demonstrated to Lender’s satisfaction that any delay in completing Remedial Work pending the outcome of such proceedings would not (A) result in damage to the Mortgaged


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Property or to persons who use or occupy the Improvements or (B) otherwise impair Lender’s interest under this Loan Agreement, and (ii) if any delay in completing the Remedial Work results in a Lien against the Mortgaged Property, Borrower must promptly furnish to Lender a bond or other security satisfactory to Lender in an amount not less than 150% of the claim that underlies the Lien.

6.13

Borrower and Pledgor Entity Requirements and Limitations

(a)

Until the Indebtedness is paid in full, Borrower and each Pledgor will satisfy each of the following requirements:

(i)

It will preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its formation or organization and will do all things necessary to observe organizational formalities.

(ii)

It will not merge or consolidate with any other Person.

(iii)

It will not take any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; to transfer or permit the direct or indirect transfer of any partnership, membership or other equity interests, as applicable, other than Transfers permitted under this Loan Agreement; to issue additional partnership, membership or other equity interests, as applicable, or to seek to accomplish any of the foregoing.

(iv)

It will not maintain its assets in a way difficult to segregate and identify.

(v)

Borrower will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than the Mortgaged Properties and such Personalty as may be necessary for the operation of the Mortgaged Properties and will conduct and operate its business as presently conducted and operated. Pledgor will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than its ownership interest in Borrower.

(vi)

Borrower will not engage in any business or activity other than the ownership, operation and maintenance of the Mortgaged Property and activities incidental to such ownership, operation, and maintenance. Pledgor will not engage in any business or activity other than the ownership of its interest in Borrower.

(vii)

Borrower will not incur or assume any debt other than the Indebtedness, except that Borrower is permitted to incur unsecured trade payables that are necessary for owning and operating the Mortgaged Property (“Trade Payables”). The Trade Payables:

(1)

Must not be evidenced by a promissory note.

(2)

Must be paid within 60 days of the date incurred.

(3)

In the aggregate, at any one time, must not exceed 3% of the Loan Amount.

Pledgor will not incur or assume any debt.

(viii)

It will hold all its assets in its own name and will not commingle its assets with the assets of any other Person.

(ix)

It will identify its assets on its financial statements separate from those of any other Person.

(x)

Except for the terms of the Pledge Agreement, it will not guaranty the debts or obligations of, hold itself out to be responsible for the debts of, pledge its assets for the benefit of or to secure the obligations of, or hold out its credit as being available to satisfy the obligations of, any other Person.


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(xi)

Borrower will pay (or cause the Property Manager to pay on behalf of Borrower from Borrower’s funds) its own liabilities (including salaries of its own employees) from its own funds; provided, however, that this requirement will not be deemed to require additional capital contributions by Borrower’s or Pledgor’s members, limited partners, or any Guarantor.

(xii)

It will not enter into any agreement with any affiliate of any Loan Party except upon commercially reasonable terms and conditions that are comparable to those of an arms-length basis with unaffiliated third parties.

(xiii)

It will not dissolve, merge, liquidate, consolidate with any other Person or sell, transfer, dispose, or encumber (except with respect to the Loan Documents) all or substantially all of its assets.

(xiv)

It will not make any loans or advances to any third party (including any affiliate of any Loan Party).

(xv)

It will do, all things necessary to observe organizational formalities and preserve its existence, and it will not, nor will it permit any Person to, (i) terminate or fail to comply with the provisions of its organizational documents, or (ii) unless Lender has consented, amend, modify or otherwise change its organizational documents in any material respect.

(xvi)

It will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any of its affiliates), will correct any known misunderstanding regarding its status as a separate entity, will conduct business in its own name, will not identify itself or any of its affiliates as a division or department or part of the other and will maintain and utilize separate stationery, invoices and checks bearing its own name.

(xvii)

It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that this requirement will not be deemed to require additional capital contributions by Borrower’s or Pledgor’s members, limited partners, or any Guarantor.

(b)

Borrower represents that it has never owned any real property other than the Mortgaged Property and personal property necessary or incidental to its ownership or operation of the Mortgaged Property and has never engaged in any business other than the ownership and operation of the Mortgaged Property.

(c)

Neither Borrower nor Pledgor will change its jurisdiction of formation or name without receiving Lender’s prior written consent and promptly providing Lender such information and replacement Uniform Commercial Code financing statements as Lender may reasonably request in connection with such a change.

(d)

Borrower and Pledgor will at all times elect to be treated as a “partnership” or “disregarded entity” that is not taxable as a corporation for state and U.S. federal tax purposes.

(e)

Borrower is and will continue to be a single member limited liability company wholly owned and controlled by Pledgor.

(f)

Pledgor is and will continue to be a limited liability company formed in Delaware.


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6.14

Restoration, Priority Repairs, Capital Replacements, Property Improvements, and Other Repairs.

(a)

Borrower Obligated to Complete Priority Repairs. Borrower will commence all Priority Repairs as soon as practicable after the Effective Date and will diligently proceed with and complete such Repairs.

(b)

Completion Work in Good and Workmanlike Manner. All (i) Restoration, (ii) Priority Repairs, (iii) Capital Replacements and (iv) Property Improvements and other Repairs Borrower elects to begin (collectively, “Work”) will be completed in a good and workmanlike manner, with suitable materials, and in accordance with good building practices and all applicable laws, ordinances, rules, regulations, building setback lines and restrictions applicable to the Mortgaged Properties. Borrower agrees to cause the replacement of any material or work that is defective, unworkmanlike or that does not comply with the requirements of this Loan Agreement, as determined by Lender.

(c)

No Conditional Sales Contracts or Lease Agreements. Without the prior written consent of Lender, no materials, machinery, equipment, fixtures or any other part of any Work will be purchased or installed under conditional sale contracts or lease agreements, or any other arrangement wherein title to such Work or any portion of such Work is retained or subjected to a purchase money security interest, or the right is reserved or accrues to anyone to remove or repossess any such Work, or to consider them as personal property.

(d)

Lien Protection. Borrower will promptly pay or cause to be paid, when due, all costs, charges and expenses incurred in connection with the construction and completion of the Work, and will keep the Mortgaged Properties free and clear of any and all Liens other than the Lien of the Security Instrument and any other junior Lien to which Lender has consented.

(e)

Adverse Claims. Borrower will promptly advise Lender in writing of any litigation, Liens or claims affecting any Mortgaged Property and of all complaints and charges made by any Governmental Authority that may delay or adversely affect the Work.

(f)

Right to Complete Work. If Borrower abandons or fails to proceed diligently with any Restoration, Priority Repair, or Capital Replacement or abandons any other Repair or Property Improvement once undertaken by Borrower, and such abandonment or failure continues for 30 days after Notice from Lender, then Lender will have the right (but not the obligation) to enter upon any Mortgaged Property and take over and cause the completion of such Work. However, no such Notice or cure period will apply in the case of such failure which could, in Lender’s discretion, result in harm to Lender, tenants or third parties or impairment of the security given under this Loan Agreement, the Security Instrument or any other Loan Document. Any contracts entered into or indebtedness incurred upon the exercise of such right may be in the name of Borrower, and Lender is irrevocably appointed the attorney in fact for Borrower, such appointment being coupled with an interest, to enter into such contracts, incur such obligations, enforce any contracts or agreements made by or on behalf of Borrower (including the prosecution and defense of all actions and proceedings in connection with the Work and the payment, settlement or compromise of all bills and claims for materials and work performed in connection with the Work) and do any and all things necessary or proper to complete any Work, including signing Borrower’s name to any contracts and documents as may be deemed necessary by Lender. In no event will Lender be required to expend its own funds to complete any Work, but Lender may advance such funds. Any funds advanced will be added to the Indebtedness, secured by the Security Instrument and payable to Lender by Borrower in accordance with the provisions of the Note, this Loan Agreement, the Security Instrument and any other Loan Document pertaining to the protection of Lender’s security and advances made by Lender. Borrower waives all claims it may have against Lender for materials used, work performed or resultant damage to a Mortgaged Property.

(g)

Completion of Work Not a Certification by Lender. Lender’s disbursement of monies from any Reserve Fund or other acknowledgment of completion of any Work in a manner satisfactory to Lender will not be deemed a certification by Lender that the Work has been completed in accordance with applicable building, zoning or other codes, ordinances, statutes, laws, regulations or requirements of any Governmental Authority. Borrower will, at all times, have the sole responsibility for ensuring that all Work is completed in accordance with all such requirements of any Governmental Authority.


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6.15

Residential Leases.

(a)

All Leases for residential units executed on or after the Effective Date (including renewals of any existing Leases) will satisfy the following conditions:

(i)

They will be on forms acceptable to Lender.

(ii)

They will not include options to purchase or have purchase options associated with them.

(iii)

They will be for initial terms of at least 6 months.

(b)

Borrower will promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect.

6.16

Litigation; Government Proceedings. Borrower will give prompt Notice to Lender of any litigation or governmental proceedings pending or, to the best of Borrower’s knowledge after due inquiry and investigation, threatened in writing against Borrower or any Borrower Principal which might have a Material Adverse Effect.

6.17

Estoppel Certificates; Further Assurances; Lender’s Expenses. Within 10 days after a request from Lender, Borrower will take each of the following actions:

(a)

Deliver to Lender a written statement, signed and acknowledged by Borrower, certifying to Lender or any Person designated by Lender, as of the date of such statement:

(i)

that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications),

(ii)

the unpaid principal balance of the Note,

(iii)

the date to which interest under the Note has been paid,

(iv)

that Borrower is not in default under any of the Loan Documents (or, if Borrower is in default, describing such default in reasonable detail),

(v)

whether there are any then-existing setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents, and

(vi)

any additional facts requested by Lender.

(b)

Execute, acknowledge and deliver and, if applicable, cause Guarantor, Pledgor, or Property Manager to execute, acknowledge and deliver, at Borrower’s expense (i) all amendments, modifications, corrections, deletions or additions to this Loan Agreement, the Note, the Security Instrument and/or any other Loan Document, and (ii) any further acts, deeds, conveyances, assignments, estoppel certificates, financing statements, transfers and assurances, as may be required by Lender from time to time in order to correct clerical errors and legal deficiencies and to better assure, grant and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the other Loan Documents, or in connection with Lender’s consent rights under Article VII; provided, however, that this Section 6.17 is not intended to require Borrower to execute any corrective amendment or modification of the Loan Documents that has the effect of (x) changing the essential economic terms of the Loan set forth in the Commitment Letter, or (y) imposing greater liability under the Loan Documents than that set forth in the terms of the Commitment Letter.


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(c)

Borrower agrees that, in connection with each request by Borrower under this Loan Agreement or any Loan Document, Borrower will pay or reimburse Lender for all reasonable Attorneys’ Fees and Costs and expenses incurred by Lender and Loan Servicer, including any fees charged by the Rating Agencies, if applicable, regardless of whether the matter is approved, denied or withdrawn. Any reimbursement due from Borrower to Lender will become part of the Indebtedness as provided in Section 8.02.

6.18

ERISA Requirements.

(a)

Borrower will not engage in any transaction which would cause an action by either Borrower or Lender permitted or required under this Loan Agreement or any other Loan Document to be a non-exempt prohibited transaction under either ERISA or Section 4975 of the Tax Code.

(b)

When requested by Lender, Borrower will deliver to Lender a certification from Borrower with supporting evidence satisfactory to Lender that each of the following is true:

(i)

Borrower is not any of the following:

(A)

An “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA.

(B)

A “plan” to which Section 4975 of the Tax Code applies.

(C)

An entity whose underlying assets constitute “plan assets” of one or more of the plans described in Sections 6.18(c)(i)(A) and (B).

(D)

A “governmental plan” within the meaning of Section 3(32) of ERISA.

(ii)

Borrower is not subject to state statutes regulating investments or fiduciary obligations with respect to governmental plans.

(iii)

At least one of the following circumstances is true:

(A)

None of the equity interests in Borrower are held by “benefit plan investors” within the meaning of Section 3(42) of ERISA.

(B)

Less than 25% of each outstanding class of equity interests in Borrower are held by “benefit plan investors” within the meaning of Section 3(42) of ERISA.

(C)

Equity interests in Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2), as amended or any successor provision.

(D)

Borrower qualifies as either an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c) or (e), as either may be amended or any successor provisions.

(E)

Borrower is an investment company registered under the Investment Company Act of 1940.

6.19

Economic Sanctions Laws: AML Laws. Borrower will comply with, and will take reasonable measures to ensure that each Borrower Principal will comply with, all Economic Sanctions Laws and AML Laws. Borrower and each Borrower Principal will have in place practices and procedures for the admission of investors which prevent the admission of:

(a)

Any Non-U.S. Equity Holder, or any investor that would have a 25% or more ownership interest in Borrower (whether directly or indirectly), and that has been convicted of a violation of the AML Laws or been the subject of a final enforcement action relating to the AML Laws.


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(b)

Any Person with a 25% or more ownership interest in Borrower (whether directly or indirectly) that is on the Prohibited Parties Lists.

(c)

Any Non-U.S. Equity Holder that is on the OFAC Lists.

6.20

Crowdfunding. Borrower and each Borrower Principal will not permit direct or indirect ownership (or other economic) interests of 25% or more in Borrower or any Borrower Principal that have been marketed or sold to investors through any fund of Crowdfunding.

ARTICLE VII TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

7.01

Permitted Transfers. The occurrence of any of the following Transfers will not constitute an Event of Default under this Loan Agreement, notwithstanding any provision of Section 7.02 to the contrary:

(a)

A Transfer to which Lender has consented.

(b)

A Transfer that is not a prohibited Transfer pursuant to Section 7.02.

(c)

A Transfer that is conditionally permitted pursuant to Section 7.03 upon the satisfaction of all applicable conditions.

(d)

A Preapproved Intrafamily Transfer that satisfies the requirements of Section 7.04.

(e)

A Release Property Transfer or Mandatory Release Property Transfer that satisfies the requirements of Section 7.05(a) or 7.05(b), as applicable.

(f)

A Transfer that satisfies the requirements of Section 7.06.

(g)

The grant of a leasehold interest in an individual residential unit for a term of 2 years or less (or longer if approved by Lender in writing) not containing an option to purchase.

(h)

A Transfer of a Mortgaged Property that has been released from the applicable Security Instrument pursuant to Section 6.10(j) or Section 6.12(c).

(i)

A Condemnation with respect to which Borrower satisfies the requirements of Section 6.11.

(j)

A Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality, which are free of Liens, encumbrances and security interests other than those created by the Loan Documents or consented to by Lender.

(k)

The creation of a mechanic’s, materialmen’s or judgment Lien against any Mortgaged Property which is released of record, bonded or otherwise remedied to Lender’s satisfaction within 60 days after the date of creation or is being contested as otherwise provided in this Loan Agreement; provided, however, if Borrower is diligently prosecuting such release or other remedy and advises Lender that such release or remedy cannot be consummated within such 60-day period, Borrower will have an additional period of time (not exceeding 120 days from the date of creation or such earlier time as may be required by applicable law in which the lienholder must act to enforce the Lien) within which to obtain such release of record or consummate such other remedy.

7.02

Prohibited Transfers. The occurrence of any of the following Transfers will constitute an Event of Default under this Loan Agreement:

(a)

A Transfer of all or any part of any Mortgaged Property or any interest in any Mortgaged Property, including the grant, creation or existence of any Lien on a Mortgaged Property, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of the Security Instrument, other than the Lien of the Security Instrument, or any other Lien to which Lender has consented.


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(b)

A Transfer or series of Transfers of any legal or equitable interest of any Guarantor which owns a direct or indirect interest in Borrower that result(s) in such Guarantor no longer owning any direct or indirect interest in Borrower.

(c)

A Transfer of any direct ownership interest in Borrower.

(d)

A Transfer or series of Transfers of any legal or equitable interest since the Effective Date that result(s) in (a) a change of more than 49% of the indirect ownership interests (or beneficial interests, if the applicable entity is a trust) in Borrower or (b) a change of more than 49% of the direct or indirect interests in any Person that Controls Borrower.

(e)

A Transfer of any general partnership interest in a partnership, or any manager interest (whether a member manager or nonmember manager) in a limited liability company if such partnership or limited liability company, as applicable, is a Person that Controls Borrower.

(f)

If Any Person that Controls Borrower is a corporation whose outstanding voting stock is held by 100 or more shareholders, one or more Transfers by a single transferor within a 12-month period affecting an aggregate of 10% or more of that stock.

(g)

The grant, creation or existence of any Lien, whether voluntary, involuntary or by operation of law, and whether or not such Lien has priority over the Lien of the Security Instrument, on any direct or indirect ownership interest in Borrower or any Person that Controls Borrower, if the foreclosure of such Lien would result in a Transfer prohibited under Sections 7.02(b), (c), (d), (e), or (f).

7.03	Conditionally Permitted Transfers. The occurrence of any of the following Transfers will not constitute a prohibited Transfer under Section 7.02, provided that Borrower has complied with all applicable specified conditions in this Section 7.03.

(a)

Transfer by Devise, Descent or Operation of Law. Upon the death of a natural person, a Transfer which occurs by devise, descent, or by operation of law (but excluding a Transfer as a result of the death of a Borrower that is a natural person) to one or more Immediate Family Members of such natural person or to a trust or family conservatorship established for the benefit of such Immediate Family Members (each a “Beneficiary”), provided that each of the following conditions is satisfied:

(i)

The Property Manager (if applicable) continues to be responsible for the management of the Mortgaged Properties, and such Transfer will not result in a change in the day-to-day operations of the Mortgaged Properties.

(ii)

Lender receives confirmation acceptable to Lender that Borrower continues to satisfy the requirements of Section 6.13.

(iii)

Following the Transfer, no Non-U.S. Equity Holder or Person with a direct or indirect interest in Borrower equal to or greater than 25% is on any Prohibited Parties List.

(iv)

Each Guarantor executes such documents and agreements as Lender requires to ratify each Guaranty, or in the event of the death of any Guarantor, Borrower causes one of the following to occur:

(A)

Within 60 days following the Guarantor’s death, one or more Persons acceptable to Lender execute(s) and deliver(s) to Lender a replacement guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Effective Date, without any cost or expense to Lender.

(B)

The estate of the deceased Guarantor immediately ratifies the Guaranty in writing, and within 6 months after the date of the death of the deceased Guarantor, one or more Persons acceptable to Lender execute(s) and deliver(s) to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Effective Date, without any cost or expense to Lender.


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(v)

Borrower gives Lender Notice of such Transfer together with copies of all documents effecting such Transfer not more than 30 days after the date of such Transfer, and contemporaneously with the Notice, takes each of the following additional actions:

(A)

Borrower reaffirms the representations and warranties under Article V.

(B)

Borrower satisfies Lender that the Beneficiary’s organization, credit and experience in the management of similar properties are appropriate to the overall structure and documentation of the existing financing.

(vi)

Borrower (A) pays the Transfer Processing Fee to Lender, and (B) pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with such Transfer; provided, however, that Lender will not be entitled to collect a Transfer Fee.

(b)

Affiliate Transfer. A Transfer of any direct or indirect interests in Pledgor held by an entity owned and directly or indirectly Controlled by Guarantor to one or more of Guarantor’s Affiliates (“Affiliate Transfer”) provided that each of the following conditions is satisfied:

(i)

Borrower provides Lender with at least 30 days prior Notice of the proposed Affiliate Transfer, including organizational charts and documents reflecting the structure of Borrower prior to and after the proposed Affiliate Transfer.

(i)

At the time of the proposed Affiliate Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default.

(ii)

Borrower delivers to Lender a certification that following the proposed Affiliate Transfer, each of the following conditions will be satisfied:

(A)

Control and management of the day-to-day operations of Borrower will continue to be held by the Person exercising such Control and management immediately prior to the Affiliate Transfer.

(B)

No Non-U.S. Equity Holder, and no other person with a direct or indirect interest in Borrower equal to or greater than 25%, is on any Prohibited Parties List.

(iv)

Borrower and Guarantor execute such additional documents as Lender may require to evidence the Affiliate Transfer.

(v)

(c)

Publicly-Held Fund or Publicly-Held Real Estate Investment Trust. If Guarantor is a publicly-held fund or a publicly-held real estate investment trust, either of the following:

(i)

The public issuance of common stock, convertible debt, equity or other similar securities (“Public Fund/REIT Securities”) and the subsequent Transfer of such Public Fund/REIT Securities.


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(ii)

The acquisition by a single Public Fund/REIT Securities holder of an ownership percentage of 10% or more in the Pledgor or Guarantor, if within 30 days following the acquisition, Borrower does each of the following:

(A)

Provides notice to Lender of that acquisition.

(B)

Complies with each of the following conditions:

(1)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will be not be any Person with a collective equity interest (whether direct or indirect) of 25% or more in Borrower or (ii) no Borrower Principal (A) is on any Prohibited Parties Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

(2)

Borrower certifies in writing to Lender that as of the date of the Transfer either (i) there will not be any Non-U.S. Equity Holders, or (ii) no Non-U.S. Equity Holder (A) is on the OFAC Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

(d)

Easement, Restrictive Covenant or other Encumbrance. The grant of an easement, restrictive covenant or other encumbrance, provided that each of the following conditions is satisfied:

(i)

Borrower provides Lender with at least 30 days prior Notice of the proposed grant.

(ii)

Prior to the grant, Lender determines that the easement, restrictive covenant or other encumbrance will not materially affect the operation or value of the Mortgaged Property or Lender’s interest in the Mortgaged Property.

(iii)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing Borrower’s request for Lender’s review of such grant of easement, restrictive covenant or other encumbrance; provided, however, that Lender will not be entitled to collect a Transfer Processing Fee or a Transfer Fee.

(iv)

If the Note is held by a REMIC trust, Lender may require an opinion of counsel which meets each of the following requirements:

(A)

The counsel providing the opinion is acceptable to Lender.

(B)

The opinion is addressed to Lender.

(C)

The opinion is paid for by Borrower.

(D)

The opinion is in form and substance satisfactory to Lender.

(E)

The opinion confirms each of the following:

(1)

The grant of such easement has been effected in accordance with the requirements of Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be modified, amended or replaced from time to time).

(2)

The qualification and status of the REMIC trust as a REMIC will not be adversely affected or impaired as a result of such grant.

(3)

That there will be no imposition of a tax under applicable REMIC provisions as a result of such grant.


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7.04

Preapproved Intrafamily Transfers. The occurrence of a Transfer or a series of Transfers of limited partnership interests or non-managing membership interests that result in a change of more than a 49% indirect interest in Borrower or a 49% direct or indirect interest in a Person that Controls Borrower as set forth in this Section 7.04 will be considered a “Preapproved Intrafamily Transfer” if each of the conditions set forth in Sections 7.04(a) and (b) is satisfied:

(a)

Type of Transfer. The Transfer is one of the following:

(i)

A sale or transfer to one or more of the transferor’s Immediate Family Members.

(ii)

A sale or transfer to any trust having as its sole beneficiaries the transferor and/or one or more of the transferor’s Immediate Family Members.

(iii)

A sale or transfer from a trust to any one or more of its beneficiaries who are the settlor and/or Immediate Family Members of the settlor of the trust.

(iv)

The substitution or replacement of the trustee of any trust with a trustee who is an Immediate Family Member of the settlor of the trust.

(v)

A sale or transfer from a natural person to an entity owned and under the Control of the transferor or the transferor’s Immediate Family Members.

(b)

Conditions. The Preapproved Intrafamily Transfer satisfies each of the following conditions:

(i)

Borrower provides Lender with 30 days prior Notice of the proposed Preapproved Intrafamily Transfer and pays the Transfer Processing Fee.

(ii)

Following the Transfer, Control and management of the day-to-day operations of Borrower continue to be held by the Person exercising such Control and management immediately prior to the Transfer and there is no change in Guarantor, if applicable.

(iii)

Following the Transfer, no Non-U.S. Equity Holder or Person with a direct or indirect interest in Borrower equal to or greater than 25% is on any Prohibited Parties List.

(iv)

At the time of the Preapproved Intrafamily Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default.

(v)

Borrower pays Lender all of Lender’s costs, including the cost of all title searches, title insurance and recording costs, and all Attorneys’ Fees and Costs; provided, however, that Lender will not be entitled to collect a Transfer Fee.

(vi)

Lender receives confirmation acceptable to Lender that Section 6.13 continues to be satisfied.

7.05

Mortgaged Property Releases.

(a)

The Transfer of one or more of the Mortgaged Properties (each a “Release Property”) will be considered a “Release Property Transfer” if each of the conditions set forth in this Section 7.05(a) is satisfied.

(i)

No Release Property Transfers can occur in the six months immediately prior to the Maturity Date.

(ii)

No Event of Default has occurred and is continuing, except that if the Release Property Transfer will cure the Event of Default, then the Release Property may be released and the release of such Release Property will be deemed to cure the applicable Event of Default.

(iii)

No more than two Release Property Transfers can occur in a calendar year.


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(iv)

Borrower has submitted to Lender, not less than 30 days prior to the proposed Release Property Transfer Date, all the following:

(A)

A Release Property Transfer request substantially in the form attached to this Loan Agreement as Exhibit C.

(B)

Evidence satisfactory to Lender that the conditions of this Section 7.05 are or will be satisfied in connection with the Release Property Transfer

(C)

The Release Property Processing Fee.

(v)

The Rent to Debt Service Ratio calculated as of each of the following dates is equal to or greater than the Required Rent to Debt Service Ratio specified in Article I:

(A)

The last day of the calendar quarter ended immediately prior to the request for a Release Property Transfer.

(B)

The last day of the month ended immediately prior to the request for a Release Property Transfer.

For the purposes of this Section 7.05, the “Rent to Debt Service Ratio” means a ratio as calculated by Lender of (a) Rents actually collected by Borrower for the Mortgaged Properties for the immediately preceding twelve full calendar months, minus the Rents during that period attributable to the Release Properties to (b) twelve times the amount of principal and interest payable under the Note for the immediately preceding month.

(vi)

The sum of the Mortgaged Properties released in connection with this and all prior Release Property Transfers does not exceed the Property Release Cap specified in Article I.

(vii)

Borrower, Pledgor, and Guarantor execute such additional documents as Lender may require to evidence the Release Property Transfer.

(viii)

The Release Property will be Transferred in exchange for United States dollars on arms-length terms and conditions to a Person that is not an Affiliate of the Borrower.

(viii)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Release Property Transfer.

(ix)

At the time of the Transfer, Borrower pays the Release Amount to Lender, plus all interest and prepayment premium amounts required under the Note; provided, however, that Lender will not be entitled to collect a Transfer Processing Fee or a Transfer Fee.

(b)

The required Transfer of one or more of the Mortgaged Properties following a casualty, condemnation, or Hazardous Materials Event pursuant to Section 6.10(j), 6.11(b), or 6.12(c) (each a “Mandatory Release Property”) will be considered a “Mandatory Release Property Transfer” if each of the conditions set forth in this Section 7.05(b) is satisfied.

(i)

Borrower has received notice from Lender that a Mandatory Release Property Transfer is required.

(ii)

Borrower, Pledgor, and Guarantor execute such additional documents as Lender may require to evidence the Mandatory Release Property Transfer.


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(iii)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Mandatory Release Property Transfer

(iv)

At the time of the Transfer, Borrower pays the Release Amount to Lender; plus all interest amounts required under the Note; provided, however, that Lender will not be entitled to collect a Release Property Processing Fee, Transfer Processing Fee, a Transfer Fee, or a prepayment premium.

7.06

Lender’s Consent to Prohibited Transfers. A Transfer that results in a change in the direct or indirect Control of the Borrower or the Pledgor will not constitute a prohibited Transfer under Section 7.02 if each of the conditions set forth in this Section 7.06 is satisfied.

(a)

Borrower provides Lender with at least 30 days prior Notice of the proposed Transfer, including organizational charts and documents reflecting the direct and indirect ownership and Control of Borrower and Pledgor prior to and after the proposed Transfer, and pays the Transfer Processing Fee.

(b)

At the time of the proposed Transfer, no Event of Default has occurred and is continuing and no event or condition has occurred and is continuing that, with the giving of Notice or the passage of time, or both, would become an Event of Default.

(c)

No Non-U.S. Equity Holder and no other person with a direct or indirect interest in Borrower equal to or greater than 25%, is on any Prohibited Parties List.

(d)

Lender determines that each of the following conditions is satisfied:

(i)

The transferee meets Lender’s eligibility, credit, management and other standards (including any standards with respect to previous relationships between Lender and the transferee).

(ii)

The transferee’s organization, credit and experience in the management of similar properties is appropriate to the overall structure and documentation of the Loan.

(iii)

At the time of the proposed Transfer, all the Mortgaged Properties meet Lender’s standards as to their physical condition, occupancy, net operating income and the accumulation of reserves.

(iv)

Following the Transfer, the Mortgaged Properties will be managed by one or more Property Managers meeting the requirements of Section 6.09(d).

(vii)

Following the Transfer, Borrower and Pledgor will continue to meet the requirements of Section 6.13.

(e)

Borrower, Pledgor, Guarantor, and transferee(s) execute such additional documents as Lender may require to evidence the Transfer, provided there will not be any adjustment to the rate at which the Indebtedness bears interest or to any other economic terms of the Indebtedness set forth in the Note.

(f)

Lender has received such legal opinions as Lender deems necessary, including an opinion that the assignment and assumption of the Loan Documents has been duly authorized, executed, and delivered and that the assignment documents are enforceable as the obligations of Borrower, Pledgor, Guarantor, and transferee(s), as applicable.

(g)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Transfer, and pays Lender the Transfer Fee.


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ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.

8.01

Events of Default. The occurrence of any one or more of the following will constitute an “Event of Default” under this Loan Agreement:

(a)

Borrower fails to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document.

(b)

Borrower or any of its officers, directors, trustees, general partners, or managers, or any Guarantor, commits fraud or makes a material misrepresentation or material omission in connection with any of the following:

(i)

The application for or creation of the Indebtedness.

(ii)

Any financial statement, Rent Schedule or other report or information provided to Lender during the term of the Indebtedness.

(iii)

Any request for Lender’s consent to any proposed action, including a request for disbursement of funds under this Loan Agreement or a release of a Mortgaged Property.

(c)

Borrower has made any representation or warranty in this Loan Agreement that is false or misleading in any material respect.

(d)

Borrower fails to maintain the Insurance coverage required by Section 6.10.

(e)

Borrower fails to comply with the Condemnation provisions of Section 6.11.

(f)

Borrower fails to comply with the provisions of Section 6.13.

(g)

A Transfer occurs that violates the provisions of Article VII, whether or not any actual impairment of Lender’s security results from such Transfer.

(h)

A forfeiture action or proceeding, whether civil or criminal, is commenced which could result in a forfeiture of any Mortgaged Property or otherwise materially impair the Lien created by the Security Instrument or Lender’s interest in any Mortgaged Property.

(i)

Reserved.

(j)

Borrower fails to perform any of its obligations under any Property Documents, and such failure continues beyond any applicable cure period, if any.

(k)

Reserved.

(l)

Any of the following occurs:

(i)

Borrower commences any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors (A) seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debt, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets.

(ii)

Any party other than Lender commences any case, proceeding or other action of a nature referred to in Section 8.01 (l)(i) against Borrower which (A) results in the entry of an order for relief or any such adjudication or appointment, or (B) has not been dismissed, discharged or bonded within a period of 90 days following commencement.


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(iii)

Any case, proceeding or other action is commenced against Borrower seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order by a court of competent jurisdiction for any such relief which is not vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry of such order.

(iv)

Borrower takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in Section 8.01 (l)(i), (ii) or (iii).

(m)

Reserved.

(n)

A Guarantor files for bankruptcy protection under the Bankruptcy Code or a Guarantor voluntarily becomes subject to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights, or any creditor (other than Lender) of a Guarantor commences any involuntary case against a Guarantor pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights, unless each of the following conditions is satisfied:

(i)

Borrower or Guarantor provides Notice of such action to Lender within 30 days after the filing of such action.

(ii)

Either (A) the case is dismissed or discharged within 90 days after filing, or (B) within 90 days following the date of such filing or commencement, the affected Guarantor is replaced with one or more other Persons acceptable to Lender, each of whom executes and delivers to Lender a replacement Guaranty in form and content acceptable to Lender; provided, however, that if Lender determines that any proposed replacement Guarantor is not acceptable, then the action will constitute a prohibited Transfer governed by Section 7.02.

(iii)

If Borrower must provide a replacement Guarantor pursuant to Section 8.01(n)(ii), Borrower pays the Transfer Processing Fee to Lender.

(o)

The dissolution of any Guarantor that is an entity, unless within 30 days following the dissolution of Guarantor, Borrower causes one or more Persons acceptable to Lender to execute and deliver to Lender a guaranty in a form acceptable to Lender and in substantially the same form as the Guaranty executed on the Effective Date, without any cost or expense to Lender.

(p)

The death of any Guarantor who is a natural person, unless Borrower satisfies one of the conditions set forth in Section 7.03(a)(iii).

(q)

If the Guaranty includes the “Expiring Term of Existence” rider, the Expiring Guarantor (as defined in the rider) does not comply with any of the requirements in the rider, including extending its term of existence, providing one or more replacement guarantors, or providing cash or letter of credit collateral for its obligations under the Guaranty.

(r)

Borrower fails to perform any of its obligations under this Loan Agreement (other than those Events of Default specified in Sections 8.01(a) through (q) or included on any exhibit, schedule, or rider attached to this Loan Agreement) as and when required, and that failure continues for a period of 30 days after Notice of the failure by Lender to Borrower.

However, if Borrower’s failure to perform its obligations as described in this Section 8.01 (r) is of the nature that it cannot be cured within the 30-day cure period after Notice from Lender but reasonably could be cured within 90 days, then Borrower will have additional time as determined by Lender (not to exceed an additional 60 days) in which to cure the default, provided that Borrower has diligently commenced to cure the default during the initial 30-day cure period and diligently pursues the cure of the default.


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No Notice or cure periods will apply in the case of any failure which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Loan Agreement, result in harm to Lender, danger to tenants or third parties, or impairment of the Note, the Security Instrument, this Loan Agreement, or any other security given under any other Loan Document.

(s)

Any Loan Party fails to perform any of its obligations as and when required under any Loan Document other than this Loan Agreement and that failure continues beyond the applicable cure period, if any, specified in that Loan Document.

8.02

Protection of Lender’s Security; Security Instrument Secures Future Advances.

(a)

If Borrower fails to perform any of its obligations under this Loan Agreement or any other Loan Document, or if any action or proceeding is commenced which purports to affect any Mortgaged Property, Lender’s security or Lender’s rights under this Loan Agreement, including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a bankrupt or decedent, then Lender may make such appearances, file such documents, disburse such sums and take such actions as Lender reasonably deems necessary to perform such obligations of Borrower and to protect Lender’s interest, including: (i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket expenses of accountants, inspectors and consultants, (iii) entry upon a Mortgaged Property to make Repairs or secure the Mortgaged Property, (iv) procurement of the Insurance required by Section 6.10, (v) payment of amounts which Borrower has failed to pay under Section 6.08, (vi) performance of Borrower’s obligations under Section 6.09, and (vii) advances made by Lender to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a Prior Lien.

(b)

Any amounts disbursed by Lender under this Section 8.02, or under any other provision of this Loan Agreement that treats such disbursement as being made under this Section 8.02, will be secured by the Security Instrument, will be added to, and become part of, the principal component of the Indebtedness, will be immediately due and payable and will bear interest from the date of disbursement until paid at the Default Rate.

(c)

Nothing in this Section 8.02 will require Lender to incur any expense or take any action.

8.03

Remedies.

(a)

Upon an Event of Default, Lender may exercise any or all of its rights and remedies provided under the Loan Documents and Borrower will pay all associated costs, including Attorneys’ Fees and Costs.

(b)

Each right and remedy provided in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document or afforded by applicable law or equity, and each will be cumulative and may be exercised concurrently, independently or successively, in any order. Lender’s exercise of any particular right or remedy will not in any way prevent Lender from exercising any other right or remedy available to Lender. Lender may exercise any such remedies from time to time and as often as Lender chooses.

(c)

Lender will have all remedies available to Lender under Revised Article 9 of the UCC, the Loan Documents and under applicable law.

(d)

Lender may also retain all money in the Reserve Funds, including interest, and in Lender’s discretion, may apply such amounts, without restriction and without any specific order of priority, to the payment of any and all Indebtedness.

(e)

If a claim or adjudication is made that Lender has acted unreasonably or unreasonably delayed acting in any case where, by law or under this Loan Agreement or the other Loan Documents, Lender has an obligation to act reasonably or promptly, then Lender will not be liable for any monetary damages, and Borrower’s sole remedy will be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably will be determined by an action seeking declaratory judgment.


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8.04

Forbearance.

(a)

Lender may (but will not be obligated to) agree with Borrower, from time to time, and without giving Notice to, or obtaining the consent of, or having any effect upon the obligations of, any Guarantor or other third party obligor, to take any of the following actions:

(i)

Extend the time for payment of all or any part of the Indebtedness.

(ii)

Reduce the payments due under any of the Loan Documents.

(iii)

Release anyone liable for the payment of any amounts due under any of the Loan Documents.

(iv)

Accept a renewal of the Note.

(v)

Modify the terms and time of payment of the Indebtedness.

(vi)

Join in any extension or subordination agreement.

(vii)

Release any portion of any Mortgaged Property.

(viii)

Take or release other or additional security.

(ix)

Modify the rate of interest or period of amortization of the Note or change the amount of the monthly payments payable under the Note.

(x)

Otherwise modify this Loan Agreement, the Note or any other Loan Document.

(b)

Any forbearance by Lender in exercising any right or remedy under any of the Loan Documents, or otherwise afforded by applicable law will not be a waiver of or preclude the exercise of any other right or remedy, or the subsequent exercise of any right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, will not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness will not constitute an election of remedies by Lender so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any awards or proceeds under Sections 6.10 and 6.11 will not operate to cure or waive any Event of Default.

8.05

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

8.06

Severance.

(a)

During the continuance of an Event of Default, Lender will have the right from time to time to partially foreclose any Security Instrument or the Lien of any of the other Loan Documents in any manner and for any amounts secured by the Loan Documents then due and payable as determined by


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Lender, including the following circumstances: (A) if Borrower defaults beyond any applicable grace period in the payment of one or more required payments of principal and interest, Lender may foreclose one or more of the Security Instruments or other Loan Documents to recover such delinquent payments, or (B) if Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose one or more of the Security Instruments or other Loan Documents to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgages and the other Loan Documents as Lender may elect. Notwithstanding one or more partial foreclosures, the collateral for the Loan will remain subject to the Security Instruments and the other Loan Documents to secure payment of the sums secured by the Loan Documents and not previously recovered.

(b)

During the continuance of an Event of Default, Lender will have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, Loan Documents and other security documents in such denominations as Lender will determine for purposes of evidencing and enforcing its rights and remedies provided under the Loan Documents. Borrower will execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender will request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney will do by virtue thereof; provided, however, Lender will not make or execute any such documents under such power until three days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power.

ARTICLE IX RELEASE; INDEMNITY.

9.01

Release. Borrower covenants and agrees that, in performing any of its duties under this Loan Agreement, none of Lender, Loan Servicer or any of their respective agents or employees will be liable for any losses, claims, damages, liabilities, or expenses that may be incurred by any of them as a result of such performance, except that no party will be released from liability for any losses, claims, damages, liabilities or expenses arising out of the willful misconduct or gross negligence of such party.

9.02

Indemnity.

(a)

General Indemnity. Borrower agrees to indemnify, hold harmless and defend Lender, including any custodian, trustee and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties, any prior owner or holder of the Note, the Loan Servicer, any prior Loan Servicer, the officers, directors, shareholders, partners, employees and trustees of each of the foregoing, and the heirs, legal representatives, successors and assigns of each of the foregoing (collectively, “Indemnitees”) against any and all losses, claims, damages, liabilities, and expenses, including Attorneys’ Fees and Costs, which may be imposed or incurred by any of them directly or indirectly arising out of, or in any way relating to, or as a result of: (i) any failure of any Mortgaged Property to comply with the laws, regulations, ordinances, codes or decrees of any Governmental Authority, including those pertaining to the Americans with Disabilities Act, zoning, occupancy and subdivision of real property, (ii) failure of Borrower or any Borrower Principal to comply with the Economic Sanction Laws or AML Laws, or (iii) any obligation of Borrower under any Lease, and (iv) any accident, injury or death to any natural person on any Mortgaged Property or any damage to personal property located on any Mortgaged Property, except that no such party will be indemnified from liability for any losses, claims, damages, liabilities or expenses arising out of the willful misconduct or gross negligence of such party.

(b)

Environmental Indemnity. Borrower agrees to indemnify, hold harmless and defend Indemnitees from and against all proceedings, claims, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including Attorneys’ Fees and Costs and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:

(i)

Any breach of any representation or warranty of Borrower in Section 5.05.


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(ii)

Any failure by Borrower to perform any of its obligations under Section 6.12.

(iii)

The existence or alleged existence of any Prohibited Activity or Condition.

(iv)

The presence or alleged presence of Hazardous Materials on or under any Mortgaged Property or in any of the Improvements.

(v)

The actual or alleged violation of any Hazardous Materials Law.

(c)

Indemnification Regarding ERISA Covenants. BORROWER WILL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER’S DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER SECTION 6.18. THIS INDEMNITY WILL SURVIVE ANY TERMINATION, SATISFACTION OR FORECLOSURE OF THE SECURITY INSTRUMENT.

(d)

Selection and Direction of Counsel. Counsel selected by Borrower to defend Indemnitees will be subject to the approval of those Indemnitees. In any circumstances in which the indemnity under this Article IX applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower (which will not be unreasonably withheld, delayed or conditioned) may settle or compromise any action or legal or administrative proceeding. However, unless an Event of Default has occurred and is continuing, or the interests of Borrower and Lender are in conflict, as determined by Lender, Lender will permit Borrower to undertake the actions referenced in this Article IX so long as Lender approves such action, which approval will not be unreasonably withheld or delayed. Borrower will reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith, consultants’ fees and Attorneys’ Fees and Costs.

(e)

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

(f)

Effect of Changes to Loan on Indemnification Obligations. Borrower’s obligation to indemnify the Indemnitees will not be limited or impaired by any of the following, or by any failure of Borrower or any Guarantor to receive notice of or consideration for any of the following:

(i)

Any amendment or modification of any Loan Document.

(ii)

Any extensions of time for performance required by any Loan Document.

(iii)

Any provision in any of the Loan Documents limiting Lender’s recourse to property securing the Indebtedness, or limiting the personal liability of Borrower or any other party for payment of all or any part of the Indebtedness.

(iv)

The accuracy or inaccuracy of any representations and warranties made by Borrower under any of the Loan Documents.


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(v)

The release of Borrower or any other Person, by Lender or by operation of law, from performance of any obligation under any Loan Document.

(vi)

The release or substitution in whole or in part of any security for the Indebtedness.

(vii)

Lender’s failure to properly perfect any Lien or security interest given as security for the Indebtedness.

(g)

Payments by Borrower. Borrower will, at its own cost and expense, do all of the following:

(i)

Pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding arising out of any matters against which Indemnitees are entitled to be indemnified under this Article IX.

(ii)

Reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Article IX.

(iii)

Reimburse Indemnitees for any and all expenses, including Attorneys’ Fees and Costs, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Article IX, or in monitoring and participating in any legal or administrative proceeding.

(h)

Other Obligations. The provisions of this Article IX will be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee will be entitled to indemnification under this Article IX without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Properties or any of them or any other security, pursued any rights against any Guarantor, or pursued any other rights available under the Loan Documents or applicable law. If Borrower consists of more than one Person, then the obligation of those Persons to indemnify the Indemnitees under this Article IX will be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Article IX will survive any repayment or discharge of the Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Lien of the Security Instrument. However, if Lender has never been a mortgagee-in-possession of, or held title to, the Mortgaged Properties or any of them, Borrower will have no obligation to indemnify the Indemnitees under this Article IX after the date of the release of record of the Lien of the Security Instrument by payment in full at the Maturity Date or by voluntary prepayment in full.

ARTICLE X MISCELLANEOUS PROVISIONS.

10.01

Waiver of Statute of Limitations, Offsets and Counterclaims. Borrower waives the right to assert any statute of limitations as a bar to the enforcement of this Loan Agreement or the Lien of the Security Instrument or to any action brought to enforce any Loan Document. Borrower waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or otherwise to offset any obligations to make the payments required by the Loan Documents. No failure by Lender to perform any of its obligations under the Loan Documents will be a valid defense to, or result in any offset against, any payments that Borrower is obligated to make under any of the Loan Documents.

10.02.

Governing Law; Consent to Jurisdiction and Venue. The parties intend that Lender will assign the Loan, the Loan Agreement, the Security Instruments, the Pledge Agreement and the other Loan Documents to the Federal Home Loan Mortgage Corporation, a congressionally-chartered government-sponsored enterprise having its principal place of business in McLean, Virginia. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Virginia. Borrower submits to the in personam jurisdiction of any federal or state court in (i) any state or jurisdiction in which any Mortgaged Property is located and (ii) the Commonwealth of Virginia with respect to any proceeding arising out of or relating to this Agreement. Borrower irrevocably waives, to the fullest extent permitted under applicable law, any objections Borrower may now or hereafter have to the venue of any suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Borrower


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acknowledges that the foregoing venue provision is integral to Lender’s realization of its rights hereunder. Borrower further acknowledges that it is not in a disparate bargaining position, that it is a commercial enterprise, with sophisticated financial, legal and economic experience, and that the venue selections contained in this Agreement are not unreasonable, unjust, inconvenient or overreaching.

10.03

Notice.

(a)

All Notices under or concerning this Loan Agreement will be in writing. Each Notice will be deemed given on the earliest to occur of: (i) the date when the Notice is received by the addressee, (ii) the first Business Day after the Notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery, or (iii) the third Business Day after the Notice is deposited in the United States mail with postage prepaid, certified mail, return receipt requested. Addresses for Notice are as shown in Article I.

(b)

Any party to this Loan Agreement may change the address to which Notices intended for it are to be directed by means of Notice given to the other party in accordance with this Section 10.03. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this Section 10.03, that it will acknowledge, in writing, the receipt of any Notice upon request by the other party and that any Notice that it rejects or refuses will be deemed for purposes of this Section 10.03 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service.

(c)

Any Notice under any other Loan Document that does not specify how Notices are to be given will be given in accordance with this Section 10.03.

10.04

Successors and Assigns Bound. This Loan Agreement will bind the respective successors and assigns of Borrower and Lender, and the rights granted by this Loan Agreement will inure to Lender’s successors and assigns.

10.05

Joint and Several (and Solidary) Liability. If more than one Person signs this Loan Agreement as Borrower, then the obligations of such Persons will be joint and several. For a Mortgaged Property located in Louisiana, if more than one Person signs this Loan Agreement as Borrower, then the obligations of such Persons will be joint and several and solidary, and wherever the phrase “joint and several” appears in this Loan Agreement, the phrase is amended to read “joint, several, and solidary.”

10.06

Relationship of Parties; No Third Party Beneficiary.

(a)

The relationship between Lender and Borrower will be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement will create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement will constitute Lender as a joint venturer, partner or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations or contracts of Borrower.

(b)

No creditor of any party to this Loan Agreement and no other Person will be a third party beneficiary of this Loan Agreement or any other Loan Document. Any arrangement between Lender and any Loan Servicer for loss sharing or interim advancement of funds (“Servicing Arrangement”) will constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness. Borrower will not be a third party beneficiary of any Servicing Arrangement. No payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

10.07

Subrogation. If the proceeds of the Loan, or subsequent advances under Section 8.02, are used to pay, satisfy or discharge a Prior Lien, then such Loan proceeds or advances will be deemed to have been advanced by Lender at Borrower’s request, and Lender will automatically, and without further action on its part, be subrogated to the rights, including Lien priority, of the owner or holder of the obligation secured by the Prior Lien, whether or not the Prior Lien is released.


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10.08

Severability. The invalidity or unenforceability of any provision of this Loan Agreement will not affect the validity or enforceability of any other provision, and all other provisions will remain in full force and effect. This Loan Agreement contains the entire agreement among the parties as to the rights granted and the obligations assumed in this Loan Agreement.

10.09

Amendments. This Loan Agreement may not be amended or modified except by a writing signed by the party against whom enforcement is sought.

10.10

Disclosure of Information; Authorization to Publicly Use Loan Information.

(a)

Borrower acknowledges that Lender may provide to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, ownership, purchase, participation or Securitization (if applicable) of the Loan, including any of the Rating Agencies, any entity maintaining databases on the underwriting and performance of commercial mortgage loans, as well as governmental regulatory agencies having regulatory authority over Lender, any and all information which Lender now has or may hereafter acquire relating to the Loan, a Mortgaged Property, Borrower or any Guarantor, as Lender determines necessary or desirable and that such information may be included in disclosure documents in connection with a Securitization (if applicable) or syndication of participation interests, including a prospectus, prospectus supplement, offering memorandum, private placement memorandum or similar document (each, a “Disclosure Document”) and also may be included in any filing with the Securities and Exchange Commission pursuant to the Securities Act or the Securities Exchange Act. To the fullest extent permitted under applicable law, Borrower irrevocably waives all rights, if any, to prohibit such disclosure, including any right of privacy.

(b)

Borrower agrees that Lender may publicly use, at Lender’s discretion, photographs of the Mortgaged Property, and basic transaction information (for example, the number of units in a Mortgaged Property and the Loan Amount) relating to the Loan.

10.11

Determinations by Lender. In any instance where the consent or approval of Lender may be given or is required, or where Lender is authorized to render any determination, judgment, or decision under this Loan Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision will be made or exercised by Lender (or its designated representative) at its option and in its discretion.

10.12

Sale of Note; Change in Loan Servicer; Loan Servicing. The Note or a partial interest in the Note (together with this Loan Agreement and the other Loan Documents) may be sold one or more times without prior Notice to Borrower. A sale may result in a change of the Loan Servicer. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, then Borrower will be given Notice of the change. The Loan Servicer may take all actions regarding the servicing of the Loan unless Borrower receives Notice to the contrary, including the collection of payments, the disbursement and application of Reserve Funds, the giving and receipt of Notice, inspections of the Mortgaged Properties, inspections of Books and Records, and the granting of consents and approvals. If Borrower receives conflicting Notices regarding the identity of the Loan Servicer or any other subject, then any such Notice from Lender will govern.

10.13

Reserved.

10.14

Lender’s Rights to Sell or Securitize. Borrower acknowledges that Lender, and each successor to Lender’s interest, may (without prior Notice to Borrower or Borrower’s prior consent), sell or grant participations in the Loan (or any part of the Loan), sell or subcontract the servicing rights related to the Loan, securitize the Loan or place the Loan in a trust. Borrower, at its expense, agrees to cooperate with all requests of Lender in connection with any of the foregoing including taking the following actions:

(a)

Executing any financing statements or other documents deemed necessary by Lender or its transferee to create, perfect or preserve the rights and interest to be acquired by such transferee.


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(b)

Delivering revised organizational documents, counsel opinions and executed amendments to the Loan Documents satisfactory to the Rating Agencies.

(c)

Providing updated financial information with appropriate verification through auditors’ letters, if required by Lender. (If Lender requires that Borrower’s updated financial information be accompanied by appropriate verification through auditors’ letters, then Lender will reimburse Borrower for the costs which Borrower reasonably incurs in connection with obtaining such auditors’ letters.)

(d)

Providing updated information on all litigation proceedings affecting Borrower or any Borrower Principal as required in Section 6.16.

(e)

Reviewing information contained in any Disclosure Document and providing a mortgagor estoppel certificate, written confirmation of Borrower’s indemnification obligations under this Loan Agreement, and such other information about Borrower, any Guarantor, any Pledgor, any Property Manager, or the Mortgaged Properties as Lender may require for Lender’s offering materials.

Notwithstanding anything set forth above in this Section 10.14, Borrower will not be required to execute any document that changes the interest rate, the Maturity Date or the Amortization Period set forth in the Note, or that modifies or amends any essential economic terms of the Loan.

10.15

Cooperation with Rating Agencies and Investors. If Lender decides to include the Loan as an asset of a Secondary Market Transaction, then Borrower will do all of the following:

(a)

At Lender’s request, meet with representatives of the Rating Agencies and/or investors to discuss the business and operations of the Mortgaged Properties.

(b)

Permit Lender or its representatives to provide related information to the Rating Agencies and/or investors.

(c)

Cooperate with the reasonable requests of the Rating Agencies and/or investors in connection with all of the foregoing.

10.16

Exhibits, Schedules, and Riders. This Loan Agreement incorporates all the attached exhibits, schedules, and riders that are listed in Article I or elsewhere in this Loan Agreement.

10.17

Reserved.

10.18

Time is of the Essence. Time is of the essence with respect to each covenant of this Loan Agreement.

10.19

Construction; Interpretation.

(a)

The captions and headings of the Articles and Sections of this Loan Agreement are for convenience only and will be disregarded in construing this Loan Agreement. Any reference in this Loan Agreement to an “Exhibit,” an “Article” or a “Section” will, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit attached to this Loan Agreement or to an Article or Section of this Loan Agreement.

(b)

Any reference in this Loan Agreement to a statute or regulation will be construed as referring to that statute or regulation as amended from time to time.

(c)

Use of the singular in this Loan Agreement includes the plural and use of the plural includes the singular. The use of one gender includes the other gender, as the context may require.


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(d)

As used in this Loan Agreement, the term “including” means “including, but not limited to” and the term “includes” means “includes without limitation.”

(e)

Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document in this Loan Agreement will be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in this Loan Agreement), and (ii) any reference in this Loan Agreement to any Person will be construed to include such Person’s successors and assigns.

(f)

Any reference in this Loan Agreement to “Lender’s requirements,” “as required by Lender,” or similar references will be construed, after Securitization, to mean Lender’s requirements or standards as determined in accordance with Lender’s and Loan Servicer’s obligations under the terms of the Securitization documents.

10.20

Right to Apply Proceeds in Connection with Releases. For so long as the Loan or any portion of the Loan is included in a Securitization, then each of the following will apply:

(a)

Notwithstanding anything to the contrary contained herein or in any other Loan Document, if any Mortgaged Property is released from the Lien of the Loan in connection with a casualty, Condemnation or Transfer and if the ratio of (A) the unpaid principal balance of the Loan to (B) the value of the Mortgaged Properties (taking into account only the related land and buildings and not any personal property or going-concern value), as determined by Lender in its discretion based on a commercially reasonable valuation method permitted in connection with a Securitization, is greater than 125% immediately after such casualty, Condemnation or Transfer and before any Restoration or Repair of any Mortgaged Property (but taking into account any planned Restoration or repair of the Mortgaged Property as if such planned Restoration or repair were completed), then Lender will apply any net proceeds or awards from such casualty, Condemnation or Transfer, in full, to the payment of the principal of the Indebtedness whether or not then due and payable, unless Lender has received an opinion of counsel that a different application of such net proceeds or awards will not cause such Securitization to fail to meet applicable federal income tax qualification requirements or subject such Securitization to any tax and the net proceeds or awards are applied in the manner specified in such opinion.

(b)

If neither Borrower nor Lender has the right to receive any or all of the net proceeds or awards as a result of the provisions of any agreement affecting any Mortgaged Property (including any condominium document or reciprocal easement agreement) and, therefore cannot apply such net proceeds or awards to the payment of the principal of the Indebtedness as set forth above, then Borrower will prepay the Indebtedness in an amount which Lender, in its discretion, deems necessary to ensure that the Securitization will not fail to meet applicable federal income tax qualification requirements or be subject to any tax as a result of the casualty, Condemnation, or Transfer.

ARTICLE XI DEFINED TERMS.

Capitalized terms used but not otherwise defined in this Loan Agreement have the following definitions:

“Affiliate” of any Person means (i) any other individual or entity that is, directly or indirectly, (A) in Control of the applicable Person, (B) under the Control of the applicable Person or (C) under common Control with the applicable Person; (ii) any individual that is a director or officer of the applicable Person or (iii) any individual that is a director or officer of any entity described in clause (i) of this definition.

“Allocated Loan Amount” means, with respect to each Mortgaged Property, an amount equal to the portion of the Loan made with respect to such Mortgaged Property, as set forth on Schedule I.

“Amortization Period” is defined in the Note.se

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. 1956 and 1957, as amended.


Loan Agreement – SFR		Page 48

“Assignment of Management Agreement” means each Assignment of Management Agreement and Subordination of Management Fees among Borrower, a Property Manager and Lender, executed pursuant to the terms of this Loan Agreement.

“Attorneys’ Fees and Costs” means: (i) fees and out of pocket costs of Lender’s and Loan Servicer’s attorneys, as applicable, including costs of Lender’s and Loan Servicer’s in-house counsel, support staff costs, costs of preparing for litigation, computerized research, telephone and facsimile transmission expenses, mileage, deposition costs, postage, duplicating, process service, videotaping and similar costs and expenses; (ii) costs and fees of expert witnesses, including appraisers; (iii) investigatory fees; and (iv) costs for any opinion required by Lender pursuant to the terms of the Loan Documents.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time.

“Bankruptcy Event” with respect to any Person, means the occurrence of any of the following:

(a)

Such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(b)

(c)

Any Mortgaged Property becomes an asset in a voluntary bankruptcy or becomes subject to any voluntary reorganization, receivership, insolvency proceeding, or other similar voluntary proceeding pursuant to any other federal or state law affecting debtor and creditor rights.

(d)

An order of relief is entered against such Person pursuant to the Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a Related Party. If such Person, any general partner of such person if such Person is a general partnership, any Guarantor, or any Related Party has solicited creditors to initiate or participate in such a proceeding, regardless of whether any of the creditors solicited actually initiates or participates in the proceeding, then such proceeding will be considered as having been initiated by a Related Party.

(e)

An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against such Person (by a party other than Lender) but only if such Person has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding. “Commercially reasonable efforts” will not require any direct or indirect interest holders in such Person to contribute or cause the contribution of additional capital to such Person.

(f)

If such Person is a general partnership, any of the following occur:

(i)

Any general partner of such Person voluntarily files for bankruptcy protection under the Bankruptcy Code.

(ii)

(iii)

(viii)

An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against any general partner of such Person (by a party other than Lender) but only if such Person or such general partner of such Person has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding.


Loan Agreement – SFR		Page 49

“Commercially reasonable efforts” will not require any direct or indirect interest holders in such Person or such general partner of such Person to contribute or cause the contribution of additional capital to such Person.

“Books and Records” is defined in Section 6.07(a).

“Borrower” means all Persons identified as “Borrower’’ on page 1 of this Loan Agreement, together with their successors and assigns.

“Borrower Principal” means any of the following: (i) any general partner of Borrower (if Borrower is a partnership), (ii) any manager or managing member of Borrower (if Borrower is a limited liability company), (iii) any Person (limited partner, member or shareholder) with a collective direct or indirect equity interest in Borrower equal to or greater than 25% (if Borrower is an entity) (iv) any trustee of Borrower (if Borrower is a trust), or (v) any Guarantor.

“Business Day” means any day other than a Saturday, a Sunday, or any other day on which Lender or the national banking associations are not open for business.

“Claim” is defined in Section 9.02(e).

“Closing Date” means the date on which Lender disburses the proceeds of the Loan to or for the account of Borrower.

“Commitment Letter” means the fully executed commitment letter or early rate lock application between Lender and Borrower issued in connection with the Loan.

“Condemnation” is defined in Section 6.11(a).

“Condemnation Prepayment Amount” is defined in Section 6.11(b).

“Control” means to possess, directly or indirectly through one or more intermediate entities, the power to direct or cause the direction of the management, operation, or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.

“Crowdfunding” means the practice of funding a project or venture by raising capital by either of the following methods:

(i)

Via general solicitation (i.e., marketing directed to the public at large, whether via the internet or otherwise) that (A) names Freddie Mac, or (B) names or contains any information about the Mortgaged Property.

(ii)

From unaccredited investors in a public offering (e.g., under the related exemptions of Title III or Title IV of the Jumpstart Our Business Startups (JOBS) Act.

“Default Rate” is defined in the Note.

“Disclosure Document” is defined in Section 10.10.

“Economic Sanctions Laws” means the foreign assets control regulations, 31 C.F.R. Chapter V, as amended, and any amending federal legislation or executive order relating thereto, as administered by OFAC.


Loan Agreement – SFR		Page 50

“Eligible Account” means an identifiable account which is separate from all other funds held by the holding institution that is either (i) an account or accounts maintained with the corporate trust department of a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution, or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

“Eligible Institution” means a federal or state chartered depository institution or trust company insured by the Federal Deposit Insurance Corporation, the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., P-1 by Moody’s Investors Service, Inc. and F-3 by Fitch, Inc. in the case of accounts in which funds are held for 30 days or less or, in the case of letters of credit or accounts in which funds are held for more than 30 days, the long term unsecured debt obligations of which are rated at least “A” by Fitch, Inc. and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and “A2” by Moody’s Investors Service, Inc. If at any time an Eligible Institution does not meet the required rating, then the Loan Servicer must move the Eligible Account within 30 days of such event to an appropriately rated Eligible Institution.

“Eligible Lease” means, unless otherwise approved by Lender, a written Lease that satisfies all of the following characteristics:

(i)

It is on a form approved by Lender.

(ii)

It is executed by an Eligible Tenant and Borrower, or Property Manager on behalf of Borrower (or, in the case of a Lease existing on the Closing Date, such Lease has been assigned to Borrower).

(iii)

It has a rental rate and terms consistent with existing local market rates and terms.

(iv)

As of the date the Lease was executed, the Lease had an initial term of at least 6 months and not more than 2 years.

(v)

It complies with all applicable law in all material respects and includes all disclosures required by applicable law.

(vi)

It covers 100% of the square footage of the applicable Mortgaged Property or Unit.

(vii)

It does not include any purchase option, right of refusal, right of first offer or other similar interest in any Property in favor of any Tenant or other Person.

“Eligible Tenant” means a bona fide third-party lessee of a Mortgaged Property who satisfies each of the following criteria:

(i)

Borrower or Property Manager has verified, based on bona fide written documentation, that the tenant has sufficient financial resources to satisfy its obligations under the Lease for the Mortgaged Property.

(ii)

The tenant is not subject to an ongoing Bankruptcy Event as such date of initial screening (or if not so initially screened, as of the Closing Date).

(iii)

The tenant is not a Loan Party, Affiliate of any Loan Party, or any Immediate Family Member of any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor provision.

“Fixtures” is defined in the Security Instrument.


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“FHFA” means the Federal Housing Finance Authority.

“FHFA SCP List” means the Suspended Counterparty List maintained by the FHFA which is currently published at https://www.fhfa.gov/SupervisionRegulation/LegalDocuments/suspendedcounterpartyprogram.

“Freddie Mac” means the Federal Home Loan Mortgage Corporation.

“Governmental Authority” means any board, commission, department, agency or body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, which has or acquires jurisdiction over any Mortgaged Property, or the use, operation or improvement of any Mortgaged Property, or over Borrower.

“Guarantor” means the Person(s) required by Lender to guaranty all or a portion of Borrower’s obligations under the Loan Documents, as set forth in the Guaranty. The required Guarantors as of the Effective Date are set forth in Article I.

“Guaranty” means the Guaranty (whether one or more) executed by Guarantor and/or any replacement or supplemental guaranty executed pursuant to the terms of this Loan Agreement.

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

“Hazardous Materials Event” is defined in Section 6.12(c).

“Hazardous Materials Law” and “Hazardous Materials Laws” means any and all federal, state and local laws, ordinances, regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees in effect now or in the future, including all amendments, that relate to Hazardous Materials or the protection of human health or the environment and apply to Borrower or to any Mortgaged Property. Hazardous Materials Laws include the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., and their state analogs.

“HOA” means a homeowners or condominium association, board, corporation or similar entity with authority to create a Lien on a Mortgaged Property as a result of the non-payment of HOA Fees that are payable with respect to such Mortgaged Property.

“HOA Fees” means all homeowner’s and condominium dues, fees, assessments and impositions, and any other charges levied or assessed or imposed against a Mortgaged Property, or any part thereof, by an HOA.

“HOA Reserve Fund” is defined in Section 4.02(a).

“Immediate Family Members” means a Person’s spouse, parent (including step-parent), child (including stepchild), grandchild (including step-grandchild) or sibling (including step-siblings).

“Improvements” is defined in the Security Instrument.

“Indebtedness” means (i) the principal of, (ii) interest at the fixed or variable rate set forth in the Note on the principal of, and (iii) all other amounts due at any time under, the Note, this Loan Agreement or any other Loan Document, including prepayment charges, late charges, default interest, and advances to protect the security of the Security Instrument as provided in Section 8.02.


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“Insurance” means Property Insurance, liability insurance and all other insurance that Lender requires Borrower to maintain pursuant to this Loan Agreement.

“Insurance Reserve Fund” is defined in Section 4.02(a).

“Land” means the land described in Exhibit A to the Security lnstrument(s).

“Leases” is defined in the Security lnstrument(s).

“Lender” means the entity identified as “Lender” on page 1 of this Loan Agreement, or any subsequent holder of the Note.

“Lien” means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance on any Mortgaged Property or any direct or indirect ownership interest in Borrower.

“Loan” is defined on page 1 of this Loan Agreement.

“Loan Documents” means the Note, the Security lnstrument(s), the Pledge Agreement, this Loan Agreement, the Guaranty, any Assignment of Management Agreement, all other guaranties, all indemnity agreements, all collateral agreements, UCC filings and any other documents now or in the future executed by Borrower, any Guarantor or any other Person in connection with the Loan.

“Loan Party” means Borrower, each Guarantor and the Pledgor.

“Loan Servicer” means the entity that from time to time is designated by Lender to collect payments and deposits and receive Notices under the Note, the Security lnstrument(s), the Pledge Agreement this Loan Agreement and any other Loan Document, and otherwise to service the Loan for the benefit of Lender.

“Manager” or “Managers” means a Person who is named or designated as a manager or managing member or otherwise acts in the capacity of a manager or managing member of a limited liability company in a limited liability company agreement or similar instrument under which the limited liability company is formed or operated.

“Material Adverse Effect” means a significant detrimental effect on: (i) the Mortgaged Properties taken as a whole, (ii) the business, prospects, profits, operations or condition (financial or otherwise) of Borrower, (iii) the enforceability, validity, perfection or priority of the Lien of any Loan Document, or (iv) the ability of Borrower to perform any obligations under any Loan Document.

“Maturity Date” is defined in the Note.

“Mold” means mold, fungus, microbial contamination or pathogenic organisms.

“Mortgaged Property” means, individually, and “Mortgaged Properties” means, collectively, the residential real properties encumbered by the Security Instruments.

“Non-U.S. Equity Holder” means any Person with a collective equity interest (whether direct or indirect) of 10% or more in Borrower, and which is either (a) an individual who is not a citizen of the United States, or (b) an entity formed outside the United States.

“Note” means the Note (including any Amended and Restated Note, Consolidated, Amended and Restated Note, or Extended and Restated Note) evidencing the Indebtedness executed by Borrower in favor of Lender and dated as of the Effective Date, including all schedules, riders, allonges and addenda.

“Notice” or “Notices” means all notices, demands, Lender approvals, and other communication required under the Loan Documents, provided in accordance with the requirements of Section 10.03.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.


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“OFAC Lists” means either one of the following:

(i)

The OFAC Specially Designated Nationals and Blocked Persons List.

(ii)

The OFAC Consolidated Sanctions List.

“Other Charges” means, (i) all rent and other payments owing to any ground lessor or to any holder of any superior interest in a Mortgaged Property, (ii) HOA Fees and (iii) any other charges levied or assessed or imposed against a Property, or any part thereof, other than Taxes.

“Payment Date” has the meaning given to it in the Note.

“Person” means any natural person, sole proprietorship, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, limited liability limited partnership, joint venture, association, joint stock company, bank, trust, estate, unincorporated organization, any federal, state, county or municipal government (or any agency or political subdivision thereof), endowment fund or any other form of entity.

“Personalty” is defined in the Security lnstrument(s).

“Pledge Agreement” the Pledge Agreement (whether one or more) executed by Pledgor.

“Pledgor” means the Person who own 100% of the direct interests in Borrower, which interest is pledged to the Lender pursuant to the Pledge Agreement. The required Pledgor as of the Effective Date is set forth in Article I.

“Preapproved lntrafamily Transfer” is defined in Section 7.04.

“Prepayment” is defined in the Note.

“Principal” is defined in the Note.

“Prior Lien” means a pre-existing mortgage, deed of trust or other Lien encumbering the Mortgaged Property.

“Priority Repairs” are identified in Exhibit B.

“Prohibited Activity or Condition” means each of the following:

(i)

(ii)

The transportation of any Hazardous Materials to, from or across a Mortgaged Property.

(iii)

Any occurrence or condition on a Mortgaged Property, which occurrence or condition is or may be in violation of Hazardous Materials Laws.

(A)

Prepackaged supplies, cleaning materials, and petroleum products customarily used in the operation and maintenance of comparable properties.

(B)

Cleaning materials, personal grooming items, and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential units in the Mortgaged Properties.

(C)

Petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Mortgaged Property’s parking areas.


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“Prohibited Parties List” means any one or more of the following:

(i)

The OFAC Lists.

(ii)

The FHFA SCP List.

“Property Document” means each agreement relating to a Mortgaged Property and each other instrument binding on any Mortgaged Property, including any reciprocal easement agreement, declaration of covenants, conditions and restrictions and any condominium or home owner’s association governing documents, rules and regulations.

“Property Improvement” is defined in Section 6.09(e)(v)

“Property Jurisdiction” means the jurisdiction in which the Land is located for any particular Mortgaged Property.

“Property Manager” or “Property Managers” means the Person(s) that manage the Mortgaged Properties as of the Effective Date as listed in Article I, or other residential rental property manager(s) approved by Lender to manage the Mortgaged Properties.

“Rating Agencies” means Fitch, Inc., Moody’s Investors Service, Inc., or Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., Kroll Bond Rating Agency, Inc. or any successor entity of the foregoing, or any other nationally recognized statistical rating organization.

“Regulatory Agreement” means any recorded or unrecorded agreement with a Regulatory Agreement Agency that encumbers any Mortgaged Property and which imposes use, occupancy and/or rent restrictions on any Mortgaged Property and/or its operation.

“Regulatory Agreement Agency” means a Governmental Authority, acting through any authorized representative, or any quasi-governmental authority, that is entitled to enforce the provisions of a Regulatory Agreement that encumbers any Mortgaged Property.

“Related Party” means all the following:

(i)

Borrower.

(ii)

Any general partner of Borrower if Borrower is a general partnership.

(iii)

Any Guarantor.

(iv)

Any Person that holds, directly or indirectly, any ownership interest (including any shareholder, member or partner) in Borrower, any general partner of Borrower if Borrower is a general partnership, any Guarantor, or any Person that has a right to manage Borrower, any general partner of Borrower if Borrower is a general partnership, or any Guarantor.

(v)

Any Person in which Borrower, any general partner of Borrower if Borrower is a general partnership, or any Guarantor has any ownership interest (direct or indirect) or right to manage.

(vi)

Any Person in which any partner, shareholder, or member of Borrower, any general partner of Borrower if Borrower is a general partnership, or any Guarantor has an ownership interest or right to manage.

(vii)

Any Person in which any Person holding an interest in Borrower, any general partner of Borrower if Borrower is a general partnership, or any Guarantor also has any ownership interest.

(viii)

Any creditor of Borrower that is related by blood, marriage or adoption to Borrower or any Guarantor.

(ix)

Any creditor of Borrower or any general partner of Borrower if Borrower is a general partnership that is related to any partner, shareholder or member of, or any other Person holding an interest in, Borrower, any general partner of Borrower if Borrower is a general partnership, or any Guarantor.


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“Release Amount” means one of the following, as applicable:

(i)

For a Release Property where there is no continuing Event of Default, 115% of the Allocated Loan Amount for such Mortgaged Property.

(ii)

For a Release Property where there is a continuing Event of Default, the greater of 115% of the Allocated Loan Amount for such Mortgaged Property and 100% of Transfer Proceeds for such Mortgaged Property.

(iii)

For a Mandatory Release Property, 100% of the Allocated Loan Amount for such Mortgaged Property.

“Release Cap” – means the number of Mortgaged Properties that are eligible for release under Section 7.05 and set forth in Article I.

“Release Property” is defined in Section 7.05.

“Release Property Processing Fee” means a nonrefundable fee of $400 for Lender’s review of a proposed Release Property Transfer.

“Rent(s)” is defined in the Security Instrument(s).

“Rent Schedule” means a written schedule for the Mortgaged Properties showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender. The Rent Schedule should be prepared using the template available from Lender, which may be revised from time to time, or in a format otherwise acceptable to Lender.

“Repairs” means all repairs made to the Mortgaged Properties, including all Priority Repairs.

“Replacement Cost” means the estimated replacement cost of the Improvements, Fixtures, and Personalty, excluding any deduction for depreciation, all as determined annually by Borrower using customary methodology and sources of information acceptable to Lender. Replacement Cost will not include the cost to reconstruct foundations or site improvements, such as driveways, parking lots, sidewalks, and landscaping.

“Required Rent to Debt Service Ratio” means the ratio set forth in Article I.

“Reserve Fund” means the Tax Reserve Fund, Insurance Reserve Fund, Special Purpose Reserve Fund, Capital Replacement and Repair Reserve Fund, HOA Reserve Fund, and any other account established pursuant to Article IV.

“Restoration” is defined in Section 6.10(i).

“Secondary Market Transaction” means: (i) any sale or assignment of this Loan Agreement, the Note and the other Loan Documents to one or more investors as a whole loan, (ii) a participation of the Loan to one or more investors, (iii) any deposit of the Loan Documents with a trust or other entity which may sell certificates or other instruments to investors evidencing an ownership interest in the assets of such trust or other entity, or (iv) any other sale, assignment or transfer of the Loan or any interest in the Loan to one or more investors.

“Securitization” means a transaction in which the Note or any portion of the Note is assigned to a REMIC or grantor trust.

“Security Instrument” means the mortgage(s), deed(s) of trust, deed(s) to secure debt or other similar security instrument(s) encumbering one or more Mortgaged Properties and securing Borrower’s performance of its Loan obligations, including Borrower’s obligations under the Note and this Loan Agreement (including any Amended and Restated Security Instrument, Consolidation, Modification and Extension Agreement, Extension and Modification Agreement or similar agreement or instrument amending and restating existing security instruments).


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“Tax Code” means the Internal Revenue Code of the United States, 26 U.S.C. Section 1 et seq.

“Tax Reserve Fund” is defined in Section 4.02(a).

“Taxes” means all taxes, assessments, vault rentals and other charges, if any, whether general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a Lien on the Land or the Improvements, including any payments made in lieu of Taxes.

“Transfer” means any of the following: (i) a sale, assignment, transfer or other disposition or divestment of any direct or indirect interest in Borrower, a Person that Controls Borrower, or a Mortgaged Property (whether voluntary, involuntary or by operation of law), (ii) the granting, creating or attachment of a Lien, encumbrance or security interest (whether voluntary, involuntary or by operation of law), (iii) the issuance or other creation of an ownership interest in a legal entity, including a partnership interest, interest in a limited liability company or corporate stock, (iv) the withdrawal, retirement, removal or involuntary resignation of a partner in a partnership or a member or Manager in a limited liability company, (v) the merger, dissolution, liquidation, or consolidation of a legal entity or the reconstitution of one type of legal entity into another type of legal entity and (vi) a change of Guarantor.

“Transfer” does not include any of the following: (i) a conveyance of a Mortgaged Property at a judicial or non-judicial foreclosure sale under the Security Instrument, (ii) a Mortgaged Property becoming part of a bankruptcy estate by operation of law under the Bankruptcy Code or (iii) the filing or recording of a Lien against a Mortgaged Property for local taxes and/or assessments not then due and payable.

“Transfer Date” means the date upon which a Transfer of a Mortgaged Property is consummated.

“Transfer Expenses” means, with respect to the Transfer of any Property, the reasonable expenses of Borrower incurred in connection therewith (not to exceed six percent (6.00%) of all gross amounts realized), for any of the following: (i) third party real estate commissions, (ii) the closing costs of the purchaser of such Property actually paid by Borrower and (iii) Borrower’s miscellaneous closings costs, including title, escrow and appraisal costs and expenses.

“Transfer Fee” means a fee paid when the Transfer is completed. Unless otherwise specified, the Transfer Fee will be 1% of the outstanding principal balance of the Indebtedness as of the date of the Transfer.

“Transfer Proceeds” means, with respect to the Transfer of any Property, the gross sales price for such Property (including any earnest money, down payment or similar deposit included in the total sales price paid by the purchaser), less Transfer Expenses.

“Transfer Processing Fee” means a nonrefundable fee of $15,000 for Lender’s review of a proposed or completed Transfer.

“UCC” means the Uniform Commercial Code as promulgated in the applicable jurisdiction.

“Unit” means each separate legal address comprising all or part of a Mortgaged Property.

“Work” is defined in Section 6.14(b)


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BORROWER:

NREA VB I LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory

NREA VB II LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory

NREA VB III LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory

NREA VB IV LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory

NREA VB V LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory

NREA VB VI LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory


Loan Agreement – SFR		Page S-1


NREA VB VII LLC, a Delaware limited liability company

By:		/s/ Brian Mitts
		Brian Mitts
		Authorized Signatory


Loan Agreement – SFR		Page S-2


LENDER:

KEYBANK NATIONAL ASSOCIATION, a national banking association

By:		/s/ Sharon D. Callahan
		Sharon D. Callahan
		Vice President


Loan Agreement – SFR		Page S-3

RIDER TO LOAN AGREEMENT

MULTIPLE ENTITIES COMPRISING BORROWER AND PLEDGOR

[Modified SFR + MF]

A.	A new Section 5.28 is added as follows:

5.28

Representations and Warranties of each Borrower Entity. Each Borrower Entity represents and warrants as follows:

(a)

The Land is operated as single-family or multi-family rental properties, as applicable.

(b)

The ownership interests in each Borrower Entity are identical or nearly identical in all respects and the making of the Loan provides a direct benefit to each Pledgor Entity, the owners of the Pledgor Entities and to each Borrower Entity.

(c)

The Loan is of substantial and material benefit to each of the Borrower Entities separately and to all of the Borrower Entities together and each Borrower Entity acknowledges that Lender would not have made separate loans to the Borrower Entities.

B.	Section 6.13 is deleted and replaced with the following:

6.13

Borrower and Pledgor Entity Requirements and Limitations. For purposes of this Section 6.13, the terms “Borrower,” “itself” and “it” will each refer to each of the Borrower Entities on an individual basis. For purposes of this Section 6.13, the terms “Pledgor,” “itself” and “it” will each refer to each of the Pledgor Entities on an individual basis.

(a)

Until the Indebtedness is paid in full, each Borrower Entity and each Pledgor Entity will satisfy each of the following requirements:

(i)

(ii)

It will not merge or consolidate with any other Person.

(iii)

It will not take any action to dissolve, wind-up, terminate or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change its legal structure; to transfer or permit the direct or indirect transfer of any membership or equity interests, other than Transfers permitted under this Loan Agreement; to issue additional membership or equity interests, or to seek to accomplish any of the foregoing.

(iv)

It will not, except with respect to assets which are jointly owned with the other Borrower Entities in connection with the Loan and in connection with the operation of the Mortgaged Property as a single-family or multi-family rental project, as applicable, under common management and control, maintain its assets in a way difficult to segregate and identify.

(v)

Borrower will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than the Mortgaged Properties and such Personalty as may be necessary for the operation of the Mortgaged Properties and will conduct and operate its business as presently conducted and operated. Each Pledgor will not acquire, own, hold, lease, operate, manage, maintain, develop or improve any assets other than its ownership interest in Borrower.

(vi)


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(vii)

(1)

Must not be evidenced by a promissory note.

(2)

Must be paid within 60 days of the date incurred.

(3)

In the aggregate, at any one time, must not exceed 3% of the Loan Amount.

Pledgor will not incur or assume any debt.

(viii)

It will hold all its assets in its own name and will not (except with respect to the other Borrower Entities as permitted under the Loan Documents in connection with the operation of the Mortgaged Property as a single-family or multi-family rental project, as applicable, under common management and control) commingle its assets with the assets of any other Person.

(ix)

It will identify its assets on its financial statements separate from those of any other Person (except with respect to the other Borrower Entities as permitted under the Loan Documents in connection with the operation of the Mortgaged Property as a single-family or multi-family rental project, as applicable, under common management and control).

(x)

Except for the terms of the Pledge Agreement, it will not (except with respect to assets which are jointly owned with the other Borrower Entities in connection with the Loan and in connection with the operation of the Mortgaged Property as a single-family or multi-family rental project, as applicable, under common management and control) guaranty the debts or obligations of, hold itself out to be responsible for the debts of, pledge its assets for the benefit of or to secure the obligations of, or hold out its credit as being available to satisfy the obligations of, any other Person.

(xi)

Borrower will pay (or cause the Property Manager to pay on behalf of a Borrower Entity from a Borrower Entity’s funds) its own liabilities and those of the other Borrower Entities as permitted by the Loan Documents and in connection with the operation of the Mortgaged Property as a single-family or multi-family rental project, as applicable, under common management and control (including salaries of its own employees) from its own funds or the funds of another Borrower Entity; provided, however, that this requirement will not be deemed to require additional capital contributions by Borrower Entity’s or Pledgor Entity’s members, or any Guarantor.

(xii)

(xiii)

It will not dissolve, merge, liquidate, consolidate with any other Person or sell, transfer, dispose, or encumber (except with respect to the Loan Documents) all or substantially all of its assets.

(xiv)

It will not make any loans or advances to any third party (including any affiliate of any Loan Party).

(xv)


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(xvi)

(xvii)

It will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that this requirement will not be deemed to require additional capital contributions by Borrower Entity’s or Pledgor Entity’s members, or any Guarantor.

(b)

Reserved.

(c)

No Borrower Entity or Pledgor Entity will change its jurisdiction of formation or name without receiving Lender’s prior written consent and promptly providing Lender such information and replacement Uniform Commercial Code financing statements as Lender may reasonably request in connection with such a change.

(d)

Each Borrower Entity and Pledgor Entity will at all times elect to be treated as a “partnership” or “disregarded entity” that is not taxable as a corporation for state and U.S. federal tax purposes.

(e)

Each Borrower Entity is and will continue to be a single member limited liability company wholly owned and controlled by each respective Pledgor Entity.

(f)

Pledgor is and will continue to be a limited liability company formed in Delaware.

C.	A new Section 6.22 is added as follows:

6.22

Covenants of and Additional Provisions for each Borrower Entity.

(a)

Each Borrower Entity acknowledges and agrees that each Borrower Entity and its respective successors and assigns are jointly and severally liable for all of the obligations and liabilities of Borrower under the Loan Documents, and all of the terms and conditions of the Loan Documents applicable to Borrower apply to each separate Borrower Entity and its respective successors and assigns jointly and severally. The requirements of the Loan Documents applicable to Borrower apply to each of the Borrower Entities individually, and to all of the Borrower Entities together.

(b)

Except in accordance with the Loan Documents, under no circumstances will any Borrower Entity attempt to transfer or substitute any one parcel of the Land, nor in any way to operate the Mortgaged Property other than as a single-family or multi-family rental project, as applicable, under common management and control.

(c)

Without in any way limiting the full joint and several liability of each Borrower Entity, by the execution of this Loan Agreement, the Borrower Entities agree among themselves that in the event a court determines that a Borrower Entity has paid a disproportionate (based upon the value of such Borrower Entity’s parcel(s) to the total value of the Mortgaged Property) share of the Indebtedness, the other Borrower Entities will contribute such amounts as are necessary to readjust to a proportionate share. Upon the request of Lender, each Borrower Entity will execute such additional documentation as Lender in its absolute and sole discretion may require to evidence the agreement set forth in this Section.

(d)

If the Land is currently encumbered by reciprocal (between or among the parcels comprising the Land and the Borrower Entities) easements or covenants pertaining to the ownership, maintenance, or operation of the Land and/or Improvements, all such easements and covenants will be subject to the lien, operation, and effect of the Security Instrument; provided that in the event of a foreclosure of the Security Instrument or deed in lieu thereof, Lender, in Lender’s sole discretion, may make any or all of such easements or covenants superior to the lien of the Security Instrument.


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(e)

Each Borrower Entity acknowledges that Lender will not separately release any parcel from the lien, operation and effect of the Security Instrument except in accordance with the Loan Documents.

D.	Section 7.02 is modified to add the following new subsection:

(h)

The Transfer of any interest in the Mortgaged Property between or among any of the Borrower Entities, unless consented to by Lender pursuant to the terms of the Loan Agreement.

E.	Article IX is amended to add the following new subsection:

9.03

Multiple Entities Comprising Borrower. The Land is comprised of single-family or multi-family rentals, and one of the Borrower Entities separately owns each of the single-family or multi-family rentals, as applicable. Each Borrower Entity acknowledges that Lender will not separately release any parcel from the lien, operation and effect of the Security Instrument except in accordance with the Loan Documents.

F.	The following definitions are added to Article XII:

“Borrower Entity” and “Borrower Entities” means, singularly and collectively, as the context requires:

NREA VB I LLC, a Delaware limited liability company

NREA VB II LLC, a Delaware limited liability company

NREA VB Ill LLC, a Delaware limited liability company

NREA VB IV LLC, a Delaware limited liability company

NREA VB V LLC, a Delaware limited liability company

NREA VB VI LLC, a Delaware limited liability company

NREA VB VII LLC, a Delaware limited liability company

“Co-Owner Borrower” and “Co-Owner Borrowers” mean, respectively, Borrower Entity and Borrower Entities.

“Pledgor Entity” and “Pledgor Entities” means, singularly and collectively, as the context requires:

NREA VB Pledgor I LLC, a Delaware limited liability company

NREA VB Pledgor II LLC, a Delaware limited liability company

NREA VB Pledgor Ill LLC, a Delaware limited liability company

NREA VB Pledgor IV LLC, a Delaware limited liability company

NREA VB Pledgor V LLC, a Delaware limited liability company

NREA VB Pledgor VI LLC, a Delaware limited liability company

NREA VB Pledgor VII LLC, a Delaware limited liability company

G.	The following Article VIII definitions are delated in their entirety and replaced with the following:

“Loan Party” means each Borrower Entity, each Guarantor, and each Pledgor Entity.


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Loan Agreement Rider - SFR

Substitutions (3-20-2018)

A.	Article I is modified by adding a “Property Substitution Cap” table:


ARTICLE 1 Property Substitution Cap
Property Substitution Cap		366 Mortgaged Properties
Aggregate Release and Substitution Cap		732 Mortgaged Properties
Additional Permitted Substitute Property MSAs		None
(See Section 7.07 for Mortgaged Property substitution provisions.)

B.	The following new Section 7.01(I) is added:

(I)

A Substitute Property Transfer that satisfies the requirements of Section 7.07.

C.	Section 7.05(a)(vi) is modified as shown below:

(vi)

The sum of the Mortgaged Properties released in connection with this and all prior Release Property Transfers and Substitute Property Transfers does not exceed either the Release Cap or the Aggregate Release and Substitution Cap specified in Article I.

D.	The following new Section 7.07 is added:

7.07

Mortgaged Property Substitutions.

(a)

The Transfer of one or more of the Mortgaged Properties (each a “Replaced Property”) and the simultaneous acquisition by Borrower of one or more replacement properties (each a “Substitute Property” and collectively, the “Substitute Properties”) will be considered a “Substitute Property Transfer” if each of the conditions set forth in this Section 7.07(a) is satisfied.

(i)

The Substitute Property Transfer occurs on or before a date that is six months prior to the Maturity Date.

(ii)

Borrower may request a proposed Substitute Property Transfer no more than twice in any calendar year.

(iii)

No Event of Default has occurred and is continuing, except that if the Substitute Property Transfer will cure the Event of Default, then a Replaced Property may be released and substituted with a Substitute Property pursuant to the requirements of this Section 7.07.

(iv)

Each Substitute Property must satisfy the following conditions:

(A)

It is a residential real property of a similar property type as the Replaced Property (such as 2-4 family home, townhome, or detached single-family residential dwelling), unless otherwise approved by Lender.

(B)

It is not a housing cooperative or manufactured housing.

(C)

It is occupied by an Eligible Tenant under an Eligible Lease.

(v)

Borrower has submitted to Lender, not less than 60 days prior to the proposed Substitute Property Transfer date, all the following:


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(A)

A Substitute Property Transfer request substantially in the form attached to this Loan Agreement as Exhibit E.

(B)

Evidence satisfactory to Lender that the conditions of this Section 7.07 are or will be satisfied in connection with the Substitute Property Transfer.

(C)

The Substitute Property Processing Fee.

(vi)

The sum of the Mortgaged Properties released in connection with this and all prior Substitute Property Transfers and Release Property Transfers does not exceed either the Substitution Cap or the Aggregate Release and Substitution Cap specified in Article I.

(vii)

The rent for the Substitute Property (or Substitute Properties) must equal or exceed the rent for the Replaced Property (or Replaced Properties).

(A)

If any Replaced Property is vacant, then annualized market rent for such Replaced Property (as determined by Lender) will be used rather than in-place rent.

(B)

If the Replaced Property was subject to a HUD Section 8 voucher and the Substitute Property is also subject to a HUD Section 8 voucher, Lender in its discretion may accept the maximum rent permitted in accordance with HUD guidelines under the replacement voucher as equaling or exceeding the rent for the Replaced Property under this Section 7.07(a)(vii).

(viii)

Lender has obtained, at Borrower’s expense, one or more appraisals acceptable in all respects to Lender dated no more than 180 days prior to the Substitution Date for all Substitute Properties and Replaced Properties that are part of the proposed Substitute Property Transfer (collectively, “Substitute Property Transfer Appraisals”).

(ix)

The Substitute Property Transfer Appraisals must show that the aggregated value of the Substitute Properties is equal to or greater than the greater of the following:

(A)

The aggregated value of the Replaced Properties on the Effective Date.

(B)

The aggregated value of the Replaced Properties at the time of the Substitute Property Transfer request.

(x)

The Substitute Property Appraisals must show that each Substitute Property has a minimum condition rating of C4 and a minimum quality rating of Q5, provided that Lender may approve a condition rating of C5 in its discretion.

(xi)

Each Substitute Property must either be in (A) a Metropolitan Statistical Area (“MSA”) that contains at least five Mortgaged Properties as of the Effective Date or (B) an “Additional Permitted Substitute Property MSA” specified in Article 1 that will contain at least five Mortgaged Properties after the proposed Substitute Property Transfer.

(xii)

Any remaining Properties after the release of such Replaced Property must be in a MSA that contains at least five Mortgaged Properties after the proposed Substitute Property Transfer, which can include the Mortgaged Properties after the proposed Substitute Property Transfer.

(xiii)

Borrower must deposit with Lender such additional amount necessary to accumulate with Lender the entire sum required to pay, when due, Taxes, Insurance premiums, and HOA Fees for the Substitute Properties.


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(xiv)

Borrower must perform any repairs that Lender determines are necessary with respect to any Substitute Property prior to the Substitute Property Transfer date and fund any additional Capital Replacement and Repair Reserves required by Lender related to the Substitute Properties on or prior to the Substitute Property Transfer date.

(xv)

Borrower, Pledgor, Guarantor, and any new Property Manager approved by Lender must execute such additional documents as Lender may require to evidence and acknowledge the Substitute Property Transfer (“Substitute Property Transfer Loan Documents”). Such Substitute Property Transfer Loan Documents will become part of the Loan Documents defined in Article XI.

(xvi)

Borrower must deliver to Lender on or prior to the Substitute Property Transfer date an opinion of counsel that meets the following requirements:

(A)

The counsel providing the opinion is acceptable to Lender.

(B)

The opinion is addressed to Lender.

(C)

The opinion is paid for by Borrower.

(D)

The opinion is in form and substance satisfactory to Lender.

(E)

The opinion confirms each of the following:

(1)

The Substitute Property Transfer Loan Documents were duly authorized, executed, and delivered by Borrower.

(2)

The execution and delivery of the Substitute Property Transfer Loan Documents and the performance by Borrower, Guarantor, and Pledgor (as applicable) of its obligations under such documents will not cause a breach or a default under any agreement, document, or instrument to which Borrower, Guarantor, or Pledgor (as applicable) is a party or to which it or the Mortgaged Properties are bound.

(xvii)

Lender must receive one or more lender’s policies of title insurance satisfactory to Lender with respect to each Substitute Mortgage Property.

(xviii)

Lender has had an opportunity to inspect each Substitute Property, and Borrower has provided such other information with respect to the Substitute Properties as Lender may require.

(xix)

Lender has received satisfactory evidence that each Substitute Property is insured in accordance with the requirements of the Loan Documents.

(xx)

The Replaced Properties must be Transferred in exchange for value to a Person that is not the Pledgor or the Guarantor.

(xxi)

Borrower pays or reimburses Lender, upon demand, for all costs and expenses, including all Attorneys’ Fees and Costs, incurred by Lender in connection with the Substitute Property Transfer; provided, however, that Lender will not be entitled to collect a Transfer Processing Fee or a Transfer Fee.

(xxii)

Borrower satisfies any other conditions of Lender to meet Lender’s then-current underwriting requirements for single family rental.


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(b)

Notwithstanding the foregoing, if the Loan is included in a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code (a “REMIC Trust”), no substitution will be permitted unless (i) either (A) immediately after such substitution the ratio of the aggregate unpaid principal balance of the Loan to the aggregate value of the remaining Mortgaged Properties (as determined by Lender in its sole discretion using any commercially reasonable method permitted to a REMIC Trust, excluding the value of any personal property (other than fixtures) or going concern value, (if any)) is equal to or less than 125% or (B) the ratio of the unpaid principal balance of the Loan to the value of the Mortgaged Properties (including the Substitute Property or Substitute Properties and excluding the Replaced Property or Replaced Properties) will not be greater than the ratio of the unpaid principal balance of the Loan to the value of the Replaced Properties immediately before the release, or (ii) Lender receives an opinion of counsel acceptable to Lender that the substitution will not cause the REMIC Trust holding the Loan to fail to maintain its status as a REMIC Trust as a result of the substitution of the Substitute Property or Substitute Properties for the Replaced Properties.

E.	Article XI is modified to add the following definitions:

“Substitution Cap” – means the number of Mortgaged Properties set forth in Article 1 that are eligible for a Substitute Property Transfer under Section 7.07.

“Substitute Property” is defined in Section 7.07.

“Substitute Property Processing Fee” means a nonrefundable fee of $500.00 per proposed Substitute Property for Lender’s review of the proposed Substitute Property Transfer.


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Schedule I

List of Mortgaged Properties

and Allocated Loan Amounts

[Omitted]

Schedule II

Basic Capital Replacements

[Omitted]

Exhibit A

Disbursement Request

[Omitted]

Exhibit B

Loan Agreement Modifications

[Omitted]

Exhibit C

Form of Release Property Transfer Request

[Omitted]

Exhibit D

Borrower’s Organizational Chart

[Omitted]