10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 0-53962

Resource Real Estate Investors 7, L.P.

(Exact name of registrant as specified in its charter)

Delaware	26-2726308
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA  19112

(Address of principal executive offices) (Zip code)

(215) 231-7050

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No þ

There is no public market for the Registrant' securities.

Documents Incorporated by Reference: None

RESOURCE REAL ESTATE INVESTORS 7, L.P.

INDEX TO ANNUAL REPORT

ON FORM 10-K

			Page
PART I
	Item 1:	Business	4
	Item 1A:	Risk Factors	5
	Item 1B:	Unresolved Staff Comments	5
	Item 2:	Properties	5
	Item 3:	Legal Proceedings	5
	Item 4:	Mine Safety Properties	5
PART II
	Item 5:	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
	Item 6:	Selected Financial Data	6
	Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
	Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	11
	Item 8:	Financial Statements and Supplementary Data	12
	Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
	Item 9A:	Controls and Procedures	27
	Item 9B:	Other Information	27
PART III
	Item 10:	Directors, Executive Officers and Corporate Governance	28
	Item 11:	Executive Compensation	30
	Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
	Item 13:	Certain Relationships and Related Transactions, and Director Independence	30
	Item 14:	Principal Accounting Fees and Services	32
PART IV
	Item 15:	Exhibits and Financial Statement Schedules	33
SIGNATURES			34

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PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this Annual Report on Form 10-K (this “Report”) include “forward-looking statements.” Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.

Forward-looking statements contained in this Report are based on our beliefs, assumptions and expectations for our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Forward-looking statements we make in this Report are subject to various risks and uncertainties that could cause actual results to vary from our forward-looking statements, including:

• changes in our industry, interest rates or the general economy;

• decrease in tenant occupancy rates;

• increased rates of tenant default

• availability, terms and deployment of debt funding for any property we may acquire;

• increase in operating expenses at our properties;

• increase in capital expenditures to maintain or enhance our properties;

• the timing of cash flows, if any, from our investments and payments for debt service;

• the degree and the nature of our competition in the geographic areas in which our properties are located; and

• availability and retention of qualified personnel to manage and operate out properties.

We caution you not to place undue reliance on these forward-looking statements which speak only as of the date of this Report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

As used herein, the terms “we,” “us,” or “our” refer to Resource Real Estate Investors 7, L.P.

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ITEM 1.        BUSINESS

General

Resource Real Estate Investors 7, L.P., is a Delaware limited partnership which was formed on March 28, 2008 and commenced operations on June 16, 2008. We previously owned in fee, operated and invested in multifamily residential rental properties, which we refer to as the Properties. We currently do not own any real property or real estate debt investments and do not anticipate owning any real estate debt investments. We have disposed of all Properties and are in the process of liquidating the partnership.

Our general partner, Resource Capital Partners, Inc. ("RCP", the "General Partner", or "GP"), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs, or TICs. Our General Partner operated and managed our Properties on our behalf, and was responsible for evaluating, managing, refinancing and selling our Properties on our behalf. Our General Partner is an indirect wholly owned subsidiary of Resource America, Inc. (or "RAI"), a company operating in the real estate, financial fund and commercial finance management sectors.

On September 8, 2016, RAI was acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities. C-III indirectly controls RCP and all of the units of the Partnership currently owned by RCP.

Our General Partner has complete and exclusive discretion in the management of our business. On February 12, 2016, by written notice to the partners, the General Partner elected to extend the partnership's term for one year to March 28, 2017. We will terminate on March 28, 2017, unless we are sooner dissolved or terminated.

Our Management

As we do not have any officers, directors or employees, we relied entirely on the officers and employees of our General Partner and its affiliates for the management of our former Properties. Our General Partner and its affiliates, Resource Real Estate Management, LLC and Resource Real Estate, Inc., also conduct business activities of their own in which we have no economic interest. Employees of our General Partner and its affiliates who provide us with services are not required to work full-time on our affairs. These employees devote significant time to the affairs of our General Partner and its affiliates and are compensated by our General Partner and its affiliates for the services rendered to them. There may be significant conflicts between us and our General Partner and its affiliates regarding the availability of those employees to manage us and our former Properties.

Real Estate Manager

Resource Real Estate Management, LLC ("Resource Real Estate Management"), a wholly owned subsidiary of our General Partner, managed or supervised the management of our former Properties under a real estate management agreement with us or our subsidiary holding legal title to a particular Property. Resource Real Estate Management is a Delaware limited liability company that was formed in 2005 for the purpose of managing the real estate investments of our General Partner and its affiliates either for their own account or for other real estate programs. In October 2007, Resource Real Estate Management, Inc., d/b/a Resource Residential, a subsidiary of US Residential Group LLC ("USRG"), a Dallas based property manager that is a wholly owned subsidiary of C-III, was formed to manage residential real estate investments for Resource Real Estate Management. For a discussion of the management fees payable under these arrangements, see Item 13 "Certain Relationships and Related Transactions and Director Independence".

Distribution Allocations

Distributable cash, which includes both distributable cash from operations as well as from capital transactions, will be distributed as described below.

Distributable cash from operations will be distributed in the following order of priority:

• first, 100% to the limited partners until they have each received distributions from us, including distributions of distributable cash from capital transactions, equal to their respective preferred return of 8.25% if they subscribed for their units on or before December 31, 2007, or 8% if they subscribed for their units after December 31, 2007, which we refer to as their Preferred Return; and

• thereafter, 80% to the limited partners and 20% to our General Partner, as a Promote.

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Distributable cash from capital transactions, which includes cash received from the sale or refinancing of a Property, or the sale or repayment in full of all outstanding principal and interest due and owing to us on a real estate debt investment, will be distributed in the following order of priority:

• first, 100% to our limited partners until they have each received distributions from us, including distributions of distributable cash from operations, equal to their respective Preferred Return;

• second, 100% to our limited partners until their respective adjusted capital contribution has been reduced to zero; and

• thereafter, 80% to our limited partners and 20% to our General Partner.

An adjusted capital contribution is the amount originally paid for the limited partnership units, less previous distributions of distributable cash from capital transactions.

Redemption of Units

We are permitted, in our General Partner’s sole discretion, to redeem units upon a unitholder’s request. However, we have no obligation to redeem units at any time, and we can decline to redeem units for any reason. For example, if our General Partner determines that we do not have the necessary cash flow, taking into account future distributions to our other limited partners, investments, and foreseeable operating expenses, a unitholder’s request may be declined. In addition, our General Partner may not approve the redemption of units if it concludes that the redemption might cause our total unit transfers in the year, subject to certain exceptions, to exceed 2% of our total capital or profits interests. All of these determinations are subjective and will be made in our General Partner’s sole discretion. We will also determine the redemption price based on provisions set forth in the First Amended and Restated Agreement of Limited Partnership. To the extent the formula for arriving at the redemption price has any subjective determinations, they will fall within the sole discretion of our General Partner. If we lack the requisite liquidity to redeem the units, our General Partner, in its sole discretion, may purchase the units on generally the same terms as we would have redeemed the units. As of the date of this Report, 5,000 units have been redeemed. During the years ended December 31, 2016 and 2015, we did not receive any redemption requests.

Available Information

We file annual, quarterly and current reports with the Securities and Exchange Commission, or SEC. The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The internet address of the SEC site is http://www.sec.gov.

ITEM 1A.        RISK FACTORS

Omitted as permitted under rules applicable to smaller reporting companies.

ITEM 1B.        UNRESOLVED STAFF COMMENTS

Omitted as permitted under rules applicable to smaller reporting companies.

ITEM 2.        PROPERTIES

See Item 7 - “Overview.”

ITEM 3.        LEGAL PROCEEDINGS

We are a party to various routine legal proceedings arising out of the ordinary course of our business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

ITEM 4.         MINE SAFETY PROPERTIES

Not applicable.

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PART II

ITEM 5.        MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES

Our limited partnership units are not publicly traded. There is no established market for our limited partnership units and it is unlikely that any will develop. As of December 31, 2016 there were 594 holders of record of our limited partnership units.

We have paid distributions monthly. During 2016, we paid the General Partner a total of $2.9 million: $157,000 represented investment management fees and $2.7 million represented the promote due to the sales of four of the Properties. Total distributions paid to the General and Limited Partners were $39.7 million and $17.1 million in 2016 and 2015, respectively. The following table details these distributions by month:

	December 31, 2016				December 31, 2015
	Distributions		Per Unit		Distributions		Per Unit
January	$	76,532	$	0.023	$	136,871	$	0.042
February	76,577		0.023		136,871		0.042
March	86,453		0.026		9,067,732		2.773
April	76,577		0.023		126,669		0.039
May	76,577		0.023		126,669		0.039
June	76,577		0.023		126,669		0.039
July	76,577		0.023		126,670		0.039
August	76,577		0.023		126,676		0.039
September	76,577		0.023		126,677		0.039
October	28,576,633		8.740		126,677		0.039
November	135,966		0.042		126,677		0.039
December	10,327,881		3.159		6,775,463		2.072
Total distributions for the year	$	39,739,504	$	12.151	$	17,130,321	$	5.241

We do not have any equity compensation plans.

ITEM 6.        SELECTED FINANCIAL DATA

Selected financial data has been omitted as permitted under rules applicable to smaller reporting companies.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to our financial statements and should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Report.  Statements contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are not historical facts may be forward-looking statements.  Such statements are subject to certain risks and uncertainties, which could cause actual results to materially differ from those projected.  See “Cautionary Note Regarding Forward-Looking Statements.” 

Overview

We are a Delaware limited partnership that was formed on March 28, 2008 and commenced operations on June 16, 2008.  Through our wholly owned subsidiaries, we previously owned in fee, operated and invested in multifamily residential rental properties. As of December 31, 2016, we did not own any real property or real estate debt investments.

During the year ended December 31, 2016, we sold our four remaining multifamily properties (the "Properties"). As of December 31, 2016, we no longer own any multifamily residential rental Properties. The following table presents our former multifamily residential rental properties:

Subsidiary / Property	Purchase Date	Disposition Date
RRE Tamarlane Holdings, LLC, or Tamarlane (1)	07/31/2008	12/01/2015
RRE Bent Oaks Holdings, LLC, or Bent Oaks (2)	12/10/2008	09/12/2016
RRE Cape Cod Holdings, LLC, or Cape Cod (3)	12/10/2008	11/21/2016
RRE Woodhollow Holdings, LLC, or Woodhollow (4)	12/12/2008	09/12/2016
RRE Woodland Hills Holdings, LLC, or The Hills (5)	12/19/2008	03/19/2015
RRE Woodland Village Holdings, LLC, or Village (6)	03/07/2012	09/30/2016

(1) Tamarlane was a 115 unit multifamily apartment complex in Maine.

(2) Bent Oaks was a 146 unit multifamily apartment complex in Texas.

(3) Cape Cod was a 212 unit multifamily apartment complex in Texas.

(4) Woodhollow was a 108 unit multifamily apartment complex in Texas.

(5) The Hills was a 228 unit multifamily apartment complex in Georgia.

(6) Woodland Village was a 308 unit multifamily apartment complex in South Carolina.

Results of Operations

We generated our income from the net revenues we received from our Properties. In addition to the rental revenues, we also generated funds from the sales or refinancing of our Properties.

Our operating results and cash flows from our Properties were affected by five principal factors:

• occupancy and rental rates,

• property operating expenses,

• interest rates on the related financing, and

• capital expenditures.

• net proceeds from property dispositions

Prior to their sales, the amount of rental revenues from our Properties was dependent upon their occupancy rates and concessions granted.  We sought to maximize our occupancy rates through aggressive property-level programs, including, in particular, our Lease Rent Optimizer, or LRO, program which includes rent concessions. Under our LRO program, we sought to price our rents for apartment units on a daily basis, based upon inventory in the marketplace and competitors’ pricing. Our Properties experienced an overall decrease in the average occupancy rate during the year endedDecember 31, 2016 of approximately 0.59%, with an average occupancy of 93.5%, as compared to an average occupancy rate of 94.1% during the same

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period of 2015. Our Properties also experienced an overall decrease in the average effective rent per square foot of $0.21 during the year ended December 31, 2016 compared to the same period in 2015 for the same properties.

We sought to control operating expenses through our General Partner’s automated purchase order system that compares actual to budgeted expenses and requires management approval of variances, and through the use of third-party service providers to seek best available pricing.

Year EndedDecember 31, 2016 Compared to Year EndedDecember 31, 2015

The following table sets forth the results of our operations for the periods indicated (in thousands, except per unit data):

	December 31,						Increase (Decrease)
	2016			2015			Amount			Percent
Revenues:
Rental income	$	6,359		$	10,341		$	(3,982	)	(39	)%
Expenses:
Rental operating	3,788			5,385			(1,597		)	(30	)%
Management fees – related parties	450			768			(318		)	(41	)%
General and administrative	463			503			(40		)	(8	)%
Depreciation and amortization	856			1,872			(1,016		)	(54	)%
Total expenses	5,557			8,528			(2,971		)	(35	)%
Income before other income (expenses)	802			1,813			(1,011		)	(56	)%
Other income (expenses):
Interest expense, net	(1,223		)	(1,957		)	734			(38	)%
Loss on extinguishment of debt	(2,379		)	—			(2,379		)	100	%
Gain on sale of rental properties	33,965			17,645			16,320			92	%
Loss on disposal of fixed assets	(2		)	(16		)	14			(88	)%
Total other income (expenses)	30,361			15,672			14,689			94	%
Net income	$	31,163		$	17,485		$	13,678		78	%
Weighted average number of limited partner units outstanding	3,270			3,270
Net income per weighted average limited partner unit, basic and diluted	$	9.53		$	5.35

Revenues

We attribute the $4.0 million decrease in revenues principally to the sale of Bent Oaks, Woodhollow, Woodland Village and Cape Cod during the year ended 2016 as well as the sale of the Hills and Tamarlane during the year ended 2015.

Expenses

We attribute the decrease in expenses set forth below, principally to the sale of Properties:

• a $1.6 million decrease in rental operating expenses primarily due to:

▪ $85,000 overall decrease in insurance expense;

▪ $445,000 decrease in operating expenses; and

▪ $1.1 million decrease in real estate tax expense.

• a $318,000 decrease in management fees corresponding to the decrease in revenues attributable to the sale of Properties.

• a $1.0 million decrease in depreciation and amortization due to the disposal of assets and sale of Properties.

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Other income (expense)

The $14.7 million increase in other income (expense) is due primarily to the gains on sale of the Properties during 2016. Other income also increased due to a $734,000 decrease in interest expense, net, as a result of property sales, offset by a $2.4 million increase in defeasance costs as a result of the prepayment of the mortgages in conjunction with the sale of Properties.

The following table sets forth our gains on sale of Properties included in Other income (expense) (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		9,122
Cape Cod	San Antonio, TX	11/21/2016	15,700		9,040
Tamarlane - additional gain recognized					10
			$	64,535	$	33,965
2015 Dispositions:
Hills	Decatur, GA	3/19/2015	$	25,200	$	9,603
Tamarlane	Portland, ME	12/1/2015	18,300		8,042
			$	43,500	$	17,645

Liquidity and Capital Resources

The following table sets forth our net sources and uses of cash (in thousands):

	Years Ended
	December 31,
	2016			2015
Net cash provided by operating activities (1)	$	27		$	368
Net cash provided by investing activities	37,310			19,510
Net cash used in financing activities	(42,469		)	(17,659		)
Net (decrease) increase in cash	$	(5,132	)	$	2,219

(1) Includes changes in operating assets and liabilities.

We have retained a portion of the proceeds from the sales of the Properties to ensure adequate operating liquidity for the remaining term of the Partnership.

During the year ended December 31, 2016, we recognized net income of $31.2 million. Our results are substantially affected by gains of $9.1 million, $6.7 million, $9.1 million, and $9.0 million realized on the sales of Bent Oaks, Woodhollow , Woodland Village, and Cape Cod, respectively. In comparison to the same period in 2015 when we recognized net income of $17.5 million, our 2015 results were primarily affected by gains of $9.6 million and $8.0 million realized on the sales of the Hills and Tamarlane, respectively. Our non-cash expenses for the years ended December 31, 2016 and 2015 included $856,000 and $1.9 million, respectively, of depreciation and amortization. Also included in non-cash expenses are amortization of deferred financing costs, losses on disposal of fixed assets, and loss on extinguishment of debt. Excluding these non-cash expenses, our operations generated $696,000 and $1.9 million, respectively, of positive adjusted cash flow from operations for the years ended December 31, 2016 and 2015, respectively.  We define adjusted cash flow from operations, a non-GAAP liquidity measure, as net cash provided by operating activities as adjusted for net changes in operating assets and liabilities. Adjusted cash flow from operations is not a measure under U.S. generally accepted accounting principles ("GAAP") and should not be considered an alternative to cash flow from operations.  

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The following table reconciles net cash provided by operating activities to adjusted cash flow from operations, a non-GAAP measure, as described in the paragraph above (in thousands):

	Years Ended
	December 31,
	2016		2015
Net cash provided by operating activities	$	27	$	368
Net changes in operating assets and liabilities	669		1,486
Adjusted cash flow from operations (non-GAAP)	$	696	$	1,854

The following table sets forth the capital expenditures incurred during the year ended December 31, 2016, which are discretionary in nature (in thousands):

Subsidiaries	Capital Expenditures
Bent Oaks	$	26
Cape Cod	38
Woodhollow	23
Village	216
Total	$	303

As of December 31, 2016, we no longer owned any Properties and we anticipate the dissolution of the Partnership to be completed during 2017.

We have no mortgage financing outstanding as of December 31, 2016. For more information regarding mortgage financing with respect to each Property, see Note 4 of the notes to our consolidated financial statements.

Our payables to related parties primarily consist of investment management fees due to our General Partner, payable monthly, equal to 1% of the gross offering proceeds, net of any limited partnership interest owned by the General Partner. The General Partner must subordinate up to 100% of its annual investment management fee to the receipt by the limited partners of their Preferred Return. The limited partners received their Preferred Return during the year ended December 31, 2016 due to the sales of the Bent Oaks, Cape Cod, Woodhollow and Woodland Village. As a result, $157,000 of the accrued subordinated investment management fee was paid during the year ended December 31, 2016.

Redemption of Units

We are permitted, in our General Partner’s sole discretion, to redeem units upon a unitholder’s request.  However, we have no obligation to redeem units at any time, and we can decline to redeem units for any reason.  See Item 1, "Redemption of Units." Cumulatively through December 31, 2016, a total of 5,000 units have been redeemed at an aggregate price of $46,710. During the years ended December 31, 2016 and 2015, we did not receive any redemption requests.

Legal Proceedings

We are a party to various routine legal proceedings arising out of the ordinary course of our business.  Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to certain accrued liabilities. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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We have identified the following policies as critical to our business operations and the understanding of our results of operations.

Property Acquisitions. We allocated the purchase price of acquired properties to the acquired tangible assets and liabilities, consisting of land, building, tenant improvements, long-term debt and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, the value of unamortized lease origination costs and the value of tenant relationships, based in each case on their relative fair values. The value of in-place leases is amortized over the average remaining term of the respective lease on a straight line basis.

Impairment. We reviewed the carrying value of each Property to determine if circumstances that indicate impairment in the carrying value of the investment exist or that depreciation periods should be modified. If we determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, we would record an impairment charge to reduce the carrying amount for that asset to its estimated fair value. We have not recognized any impairments of our Properties for the years endedDecember 31, 2016 and 2015.

Revenue Recognition. We derived our revenue primarily from rental of residential housing units with lease agreement terms of generally one year or less. We recognized rent as income on a straight-line basis over the term of the related lease. Additionally, any incentives included in the lease were amortized on a straight-line basis over the term of the related lease.

Included within rental income are other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which were recognized when earned.

Off-Balance Sheet Arrangements

As of December 31, 2016 and 2015, we did not have any off-balance sheet arrangements or obligations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Omitted as permitted under rules applicable to the small reporting companies.

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ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of

Resource Real Estate Investors 7, L.P.

We have audited the accompanying consolidated balance sheets of Resource Real Estate Investors 7, L.P. (a Delaware partnership) and subsidiaries (the “Partnership”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, changes in partners’ capital, and cash flows for each of the two years in the period ended December 31, 2016. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a)2. These financial statements and financial statement schedule are the responsibility of the Partnership’s management.Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Partnership's internal control over financial reporting.Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting.Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Resource Real Estate Investors 7, L.P. and subsidiaries as of December 31, 2016 and 2015 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

March 28, 2017

13

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,
	2016		2015
ASSETS
Rental properties, at cost:
Land	$	—	$	4,201
Buildings and improvements	—		31,920
Personal property	—		1,551
Identifiable intangible assets	—		1,497
	—		39,169
Accumulated depreciation and amortization	—		(9,634		)
Total rental properties, net	—		29,535
Cash	1,570		6,702
Restricted cash	—		1,600
Accounts receivable	59		70
Accounts receivable due from related parties	121		171
Prepaid expenses and other assets	—		71
Total assets	$	1,750	$	38,149
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage notes payable	$	—	$	25,630
Accounts payable and accrued expenses	46		574
Real estate taxes payable	—		1,132
Accrued interest	—		116
Payables to related parties	5		138
Prepaid rents	—		114
Security deposits	—		170
Total liabilities	51		27,874
Partners’ capital	1,699		10,275
Total liabilities and partners’ capital	$	1,750	$	38,149

The accompanying notes are an integral part of these consolidated financial statements.

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RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

	Years Ended
	December 31,
	2016			2015
Revenues:
Rental income	$	6,359		$	10,341
Expenses:
Rental operating	3,788			5,385
Management fees – related parties	450			768
General and administrative	463			503
Depreciation and amortization	856			1,872
Total expenses	5,557			8,528
Income before other income (expenses)	802			1,813
Other income (expenses):
Interest expense, net	(1,223		)	(1,957		)
Loss on extinguishment of debt	(2,379		)	—
Gain on sale of rental properties	33,965			17,645
Loss on disposal of fixed assets	(2		)	(16		)
Total other income (expenses)	30,361			15,672
Net income	$	31,163		$	17,485
Weighted average number of limited partner units outstanding	3,270			3,270
Net income per weighted average limited partner unit, basic and diluted	$	9.53		$	5.35

The accompanying notes are an integral part of these consolidated financial statements.

15

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

(in thousands, except units)

	General			Limited Partners
	Partner			Units	Amount			Total
Balance at January 1, 2015	$	1		3,269,655	$	9,920		$	9,921
Distributions	—			—	(17,131		)	(17,131		)
Net income	—			—	17,485			17,485
Balance at December 31, 2015	1			3,269,655	10,274			10,275
Distributions	(2,773		)	—	(36,966		)	(39,739		)
Net income	3,112			—	28,051			31,163
Balance at December 31, 2016	$	340		3,269,655	$	1,359		$	1,699

The accompanying notes are an integral part of this consolidated financial statement.

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RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended
	December 31,
	2016			2015
Cash flows from operating activities:
Net income	$	31,163		$	17,485
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales of rental properties	(33,965		)	(17,645		)
Loss on extinguishment of debt	2,379			—
Depreciation and amortization	856			1,872
Amortization of deferred financing costs	261			126
Losses on disposal of fixed assets	2			16
Changes in operating assets and liabilities:
Restricted cash	119			36
Accounts receivable	95			11
Prepaid expense and other assets	(29		)	26
Accounts receivable due from related parties	50			(72		)
Accounts payable and accrued expenses	(451		)	244
Real estate taxes payable	(206		)	144
Accrued interest	(34		)	(25		)
Payables to related parties	(133		)	(1,872		)
Prepaid rents	(76		)	25
Security deposits	(4		)	(3		)
Net cash provided by operating activities	27			368
Cash flows from investing activities:
Capital expenditures	(303		)	(663		)
Restricted cash	(126		)	288
Proceeds from sale of rental properties, net	37,739			19,885
Net cash provided by investing activities	37,310			19,510
Cash flows from financing activities:
Distributions to limited partners	(39,739		)	(17,131		)
Principal payments on mortgage notes payable	(351		)	(528		)
Payment of defeasance costs on extinguishment of debt	(2,379		)	—
Net cash used in financing activities	(42,469		)	(17,659		)
Net (decrease) increase in cash	(5,132		)	2,219
Cash at beginning of period	6,702			4,483
Cash at end of period	$	1,570		$	6,702
Non-cash Investing and Financing Activities
Settlement of mortgage notes payable with proceeds from sale of rental properties	$	25,540		$	22,272

The accompanying notes are an integral part of these consolidated financial statements.

17

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Investors 7, L.P. (“R-7” or the “Partnership”) is a Delaware limited partnership which, until November 21, 2016, owned and operated multifamily residential rental properties. The Partnership was formed on March 28, 2008 and commenced operations on June 16, 2008.  The Partnership's general partner, Resource Capital Partners, Inc. (“RCP”, the “General Partner”, or “GP”), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs.  RCP contributed $1,000 in cash as its minimum capital contribution to the Partnership.  In addition, during the year ended December 31, 2016 and 2015, RCP held a 5.62% limited partnership interest in the Partnership. RCP is an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a company operating in the real estate, financial fund management and commercial finance sectors.

On September 8, 2016, RAI was acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities. C-III indirectly controls RCP and all of the general and limited units of the Partnership currently owned by RCP.

The General Partner, in its discretion, may extend the Partnership's term for up to an aggregate of two years. The General Partner has complete and exclusive discretion in the management of the Partnership's business. Pursuant to the Partnership's limited partnership agreement, the Partnership's term was set to expire on March 28, 2016. On February 12, 2016, by written notice to the partners, the General Partner elected to extend the term for one year to March 28, 2017.

The First Amended and Restated Agreement of Limited Partnership (the "Agreement") provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LP’s have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

As of December 31, 2016 the Partnership had disposed of all real estate assets and is in the process of liquidating its operations.

18

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, as follows:

Subsidiaries	Purchase Date	Disposition Date
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”)(1)	07/31/2008	12/01/2015
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)(2)	12/10/2008	09/12/2016
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)(3)	12/10/2008	11/21/2016
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)(4)	12/12/2008	09/12/2016
RRE Woodland Hills Holdings, LLC, or Woodland Hills Apartments (“The Hills”)(5)	12/19/2008	03/19/2015
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)(6)	03/07/2012	09/30/2016

(1) Tamarlane was a 115 unit multifamily apartment complex in Maine.

(2) Bent Oaks was a 146 unit multifamily apartment complex in Texas.

(3) Cape Cod was a 212 unit multifamily apartment complex in Texas.

(4) Woodhollow was a 108 unit multifamily apartment complex in Texas.

(5) The Hills was a 228 unit multifamily apartment complex in Georgia.

(6) Woodland Village was a 308 unit multifamily apartment complex in South Carolina.

All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and adjusts the balance quarterly.  Actual results could differ from those estimates.

Supplemental Disclosure of Cash Flow Information

During the years endedDecember 31, 2016 and 2015, the Partnership paid $1.1 million and $1.9 million, respectively, in cash for interest.

Advertising

The Partnership expenses advertising costs as they are incurred.  Advertising costs, which are included in rental operating expenses, totaled $105,000 and $124,000 for the years endedDecember 31, 2016 and 2015, respectively.

Deferred Financing Costs

Costs incurred to obtain financing were capitalized and were being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership recorded deferred financing costs as a direct reduction of the related mortgage notes payable.

Concentration of Credit Risk

19

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

Financial instruments, which potentially subject the Partnership to concentration of credit risk, consist of periodic temporary deposits of cash. At December 31, 2016, the Partnership had $1.9 million of deposits at various banks, of which $1.3 million was over the insurance limit of the Federal Deposit Insurance Corporation. No losses have been experienced on such deposits.

Income Taxes

The Partnership evaluated the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership did not have any unrecognized tax benefits, nor interest and penalties, recorded in the consolidated balance sheets or consolidated statements of operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership was subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership had significant business operations.  The Partnership was not currently undergoing any examinations by taxing authorities. The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2016.

Revenue Recognition

Revenue was primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognized revenue in the period that rent was earned, which was on a monthly basis.  The Partnership recognized rent as income on a straight-line basis over the term of the related lease. Additionally, any incentives included in the lease were amortized on a straight-line basis over the term of the related lease.

Included within rental income were other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which were recognized when earned or received.

Long-Lived Assets

The Partnership reviewed long-lived assets for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable.  If it was determined that an asset’s estimated future cash flows would not be sufficient to recover its carrying amount, an impairment charge would be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership had estimated that the future cash flows from its Properties would be sufficient to recover their carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for either of the years ended December 31, 2016 or 2015.

Tenant Receivables

Tenant receivables were stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determined its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the industry as a whole.  The Partnership wrote off receivables when they became uncollectible.  At December 31, 2016 and 2015, there were no balances in allowances for uncollectible receivables.

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Adoption of New Accounting Standards

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for

20

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption had no impact on the Partnership's consolidated financial statements.

In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU 2015-01"). The amendments in ASU 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. On January 1, 2016, the Partnership adopted ASU 2015-01; the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02; the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued No. ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable.

In September 2015, FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). which is intended to improve financial

reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU 2016-02 is effective for fiscal years, and interim periods

21

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

within those fiscal years, beginning after December 15, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which provides guidance on the classification of restricted cash in the statement of cash flows. ASU 2016-18 is effective for us for our fiscal year beginning November 1, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 850): Clarifying the Definition of

Business" ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. ASU 2017-01 is effective for us beginning January 1, 2018 but early adoption is allowed. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

NOTE 3 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements.  A summary of the components of restricted cash follows (in thousands):

	Years Ended
	December 31,
	2016		2015
Real estate taxes	$	—	$	1,034
Insurance	—		180
Capital improvements	—		386
Total	$	—	$	1,600

22

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

NOTE 4 - MORTGAGE NOTES PAYABLE

The following is a summary of mortgage notes payable (in thousands, except percentages):

	December 31, 2016						December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net		Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—	$	—	$	5,731	$	(50	)	$	5,681
Cape Cod	—		—		—		5,951		(51		)	5,900
Woodhollow	—		—		—		4,916		(43		)	4,873
Village	—		—		—		9,293		(117		)	9,176
Total	$	—	$	—	$	—	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt.

Bent Oaks and Woodhollow were sold on September 12, 2016. Woodland Village was sold on September 30, 2016. Cape Cod was sold on November 21, 2016. Proceeds from these sales were used to repay the outstanding borrowings. During the year ended December 31, 2016, the Partnership incurred losses of $2.4 million on extinguishment of debt due to defeasance prepayment costs.

Deferred financing costs included unamortized costs incurred to obtain financing which were amortized over the term

of the related debt. Accumulated amortization as of December 31, 2016 and December 31, 2015 was $0 and $486,000, respectively.

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In the ordinary course of its business operations, the Partnership had ongoing relationships with several related entities.

Substantially all of the receivables from related parties represent insurance deposits held in escrow by Resource Real Estate, Inc ("RRE") for self insurance which, if unused, will be returned to the Partnership. The Partnership's properties participate in insurance pools with other properties directly and indirectly managed by RAI for both the property insurance and general liability. RRE holds the deposits in escrow to fund future insurance claims. The pool for property insurance covers losses up to $2.5 million and the pool for the general liability covers losses up to the first $50,000 of each general liability incident. Catastrophic insurance would cover losses in excess of the insurance pools up to $140 million. Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership's financial condition and operating results. In the year ended December 31, 2016, the Partnership paid approximately $137,000 into the insurance pools.

     RCP was entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds, net of any amounts otherwise attributable to LP interests owned by RCP.  During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.  As of December 31, 2016 and 2015, the amount of unpaid subordinated investment management fees totaled $0 and $15,000, respectively. During the year ended December 31, 2016, the Partnership paid investment management fees totaling $157,000 due to the LP's Preferred Return threshold having been satisfied during the year ended December 31, 2016.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”), was entitled to receive property and debt management fees. RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties. As of December 31, 2016 and 2015, property management fees due totaled $0 and $62,000, respectively. Because the Partnership had not acquired any real estate debt investments, there were no debt management fees as of December 31, 2016 and 2015.

During the ordinary course of business, RCP and RREMI advanced funds for ordinary operating expenses on behalf of the Properties, which were substantially repaid within a few days. As of December 31, 2016 and 2015, advances for ordinary operating expenses due totaled $7,000 and $61,000, respectively. Total reimbursable operating expenses incurred during the years ended December 31, 2016 and 2015 were $1.2 million and $1.7 million, respectively. Reimbursable expenses include payroll and miscellaneous operating expenses. Reimbursable operating expenses are included in property operating expenses in the consolidated statements of operations.

23

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

During the year ended December 31, 2016 and 2015, total LP distributions paid to RCP, excluding investment management fees and Promote, were $1.9 million and $940,000, respectively.

During 2016, the General Partner received $2.9 million, $157,000 relates to investment management fees and $2.7 million represented the promote due to the sales of the four remaining Properties.

    The Partnership pays investment management fees and property management fees to related parties. These expenses

are summarized as follows (in thousands):

	Years Ended   December 31,
	2016		2015
RCP:
Investment management fees 1	$	142	$	251
RREML:
Property management fees - 5% of gross cash receipts 2	308		517
	$	450	$	768

(1) RCP was entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML was entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In analyzing the fair value of its financial instruments disclosed or accounted for on a fair value basis, the Partnership followed the fair value hierarchy, which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Partnership determined fair value based on quoted prices when available or, if quoted prices were not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the financial instruments.  The fair value of cash, tenant receivables and accounts payable approximate their carrying values due to their short term nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or can be corroborated with observable market data for substantially the entire contractual term of the asset.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset and are consequently not based on market activity, but rather through particular valuation techniques.

The following methods and assumptions were used to estimate the fair value of the Partnership’s financial instruments:

Ÿ Mortgage notes payable.  Rates currently available to the Partnership for debt with similar terms and remaining maturities, which are Level 2 inputs, are used to estimate the fair value of existing debt.

The carrying amounts and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

24

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

	December 31, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable:
Bent Oaks	—		—		$	5,731	$	6,121
Cape Cod	—		—		5,951		6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	—	$	—	$	25,891	$	27,003

NOTE 7 - DISPOSITION OF PROPERTIES

The following table presents details of the Partnership's disposition activities during the years ended December 31, 2016 and 2015 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		9,122
Cape Cod	San Antonio, TX	11/21/2016	15,700		9,040
Tamarlane - additional gain recognized					10
			$	64,535	$	33,965
2015 Dispositions:
Hills	Decatur, GA	3/19/2015	$	25,200	$	9,603
Tamarlane	Portland, ME	12/1/2015	18,300		8,042
			$	43,500	$	17,645

25

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

DECEMBER 31, 2016

The table below presents the revenues and net income attributable to properties sold for the year ended December 31, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold		Net Income Attributable to Properties Sold
Multifamily Community	For the year ended December 31, 2016		For the year ended December 31, 2016
2016 Dispositions:
Bent Oaks	$	1,240	$	8,367
Woodhollow	1,031		6,002
Cape Cod	1,819		8,509
Woodland Village	2,266		8,637
	$	6,356	$	31,515
	For the year ended December 31, 2015		For the year ended December 31, 2015
2015 Dispositions:
Hills	$	602	$	9,740
Tamarlane	1,808		8,374
	$	2,410	$	18,114

NOTE 8 - SUBSEQUENT EVENTS

On January 30, 2017, the Partnership distributed $874,000 to the Partners.

The Partnership has evaluated subsequent events through the date these consolidated financial statements were issued and determined that no events have occurred, other than those disclosed above, which would require an adjustment to or disclosure in the consolidated financial statements.

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ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.     CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our General Partner, including its principal executive officer and its chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of the principal executive officer and chief financial officer of our General Partner, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based upon that evaluation, the principal executive officer and chief financial officer of our General Partner concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Management's Report on Internal Controls over Financial Reporting

Our General Partner is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our General Partner assessed the effectiveness of our internal control over financial reporting as of December 31, 2016. In making this assessment, the General Partner used the criteria set forth in the 2013 version of the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our General Partner concluded that, as of December 31, 2016, our internal control over financial reporting is effective.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to the Dodd-Frank Wall Street Consumer Protection Act, which exempts smaller reporting companies from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our year endedDecember 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.     OTHER INFORMATION

None.

PART III

ITEM 10.        DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We do not have any officers, directors or employees. Rather, our General Partner manages our activities and supervises our real estate investments using its affiliates under the provisions of our Limited Partnership Agreement which governs its conduct. Officers of our General Partner and its affiliates may spend a substantial amount of time managing its business and affairs and may face a conflict regarding the allocation of their time between our business and affairs and their other business interests.

Directors and Executive Officers of Our General Partner

The following table sets forth information with respect to the executive officers, directors and key personnel of our General Partner:

NAME	AGE	POSITION OR OFFICE
Jeffrey P. Cohen	48	Director and Chief Executive Officer
Alan F. Feldman	53	Director and Senior Vice President
David E. Bloom	52	Director and Senior Vice President
Kevin M. Finkel	45	President
Steven R. Saltzman	53	Vice President of Finance and Chief Financial and Accounting Officer
Darshan V. Patel	46	Chief Legal Officer
Lawrence S. Block	50	Vice President and Assistant Secretary
Shelle Weisbaum	49	Vice President and Secretary

Jeffrey P. Cohen has been a director since September 2016. Mr. Cohen has served as Executive Vice President of Resource America since September 2016. Mr. Cohen has served as an Executive Managing Director of C-III Capital Partners LLC since January 2011 and has primary responsibility for its mergers and acquisitions activity and previously served as President from February 2010 to January 2011. Mr. Cohen has also served as the President of Island Capital Group since September 2006 and has been a principal of Island Capital Group since it was established in 2003. Prior to joining Island Capital Group in 2003, Mr. Cohen was an Executive Vice President of Insignia Financial Group from 1997 to 2003. Before joining Insignia, Mr. Cohen served as a corporate attorney with the New York City law firm of Rogers & Wells (now Clifford Chance) from 1993 to 1997 where he primarily worked on matters relating to mergers and acquisitions, capital markets, and corporate finance. Mr. Cohen is a Trustee of Dean College in Franklin, MA and serves on its Executive Committee and Investment Committee. Mr. Cohen brings to the board of directors extensive industry experience and strategic planning, executive management and financing experience. In addition, the board of directors will benefit from the depth and breadth of his experience in investments, mergers and acquisitions and corporate finance as well as his understanding of complex financial transactions.

Alan F. Feldman has served as a Director and Senior Vice President since 2004.  Mr. Feldman also has served as Chief Executive Officer of Resource Real Estate, a subsidiary of Resource America, since 2004, President and a Director of Resource Real Estate Management since 2005 and a Senior Vice President of Resource America since 2002.  Mr. Feldman was President of Resource Properties, a subsidiary of Resource America, from 2002 to 2005.  From 1998 to 2002, Mr. Feldman was a Vice President at Lazard Freres & Co., an investment banking firm, specializing in real estate mergers and acquisitions, asset and portfolio sales and recapitalization.  From 1992 through 1998 Mr. Feldman was an Executive Vice President of the Pennsylvania Real Estate Investment Trust and its predecessor, The Rubin Organization, where he was responsible for the firm’s 20 million square feet of managed retail properties.  From 1990 to 1992 Mr. Feldman was a Director at Strouse, Greenberg & Co., a regional full service real estate company.  From 1986 through 1988, Mr. Feldman was an engineer at Squibb Corporation.  Mr. Feldman’s extensive experience and knowledge in the real estate business is an asset to our General Partner’s board.

David E. Bloom has served as a Director since 2002, President from 2002 to 2006 and Senior Vice President since 2006. Mr. Bloom also has served as President and a Director of Resource Real Estate since 2004, and as a Senior Vice President of Resource America, a position he has held since September 2001. Mr. Bloom joined Resource America from Colony Capital, LLC, a Los Angeles-based real estate fund, where he was a Senior Vice President as well as a Principal of Colony Capital Asia Pacific from 1999 to 2001. While at Colony, Mr. Bloom was responsible for the identification, evaluation and consummation of new investments, and he actively participated in the firm’s equity and debt raising efforts. From 1998 to 1999, Mr. Bloom was a Director at Sonnenblick-Goldman Company, a New York based real estate investment bank. From 1992 to 1998, Mr. Bloom practiced law in the real estate and corporate departments of Wilkie Farr & Gallagher in New York and Drinker Biddle & Reath in Philadelphia.

28

Prior to practicing law, Mr. Bloom began his real estate career in 1987 as an Acquisitions and Development Associate with Strouse, Greenberg & Company, a regional full-service real estate company. Mr. Bloom’s extensive experience and knowledge in the real estate business is an asset to our General Partner’s board.

Kevin M. Finkel has served as President since 2006 and Senior Vice President from 2003 to 2006, Senior Vice President of RAI since 2013 and Vice president of RAI from 2006-2006. Mr. Finkel also has served as Executive Vice President since 2008 and Director of Acquisitions since 2004 of Resource Real Estate. Mr. Finkel joined Resource America in 2002, and has been a Vice President of Resource America since 2006. Prior to joining Resource America, Mr. Finkel was an investment banker at Barclays Capital from 1998 to 2000 and at Deutsche Bank Securities from 1994 to 1998.

Steven R. Saltzman has served as Vice President of Finance and Chief Financial and Accounting Officer since August 2003. Mr. Saltzman also has served as Vice President and Controller of Resource Real Estate since 2004 and Vice President of Finance of Resource Real Estate Management since 2006. From 1999 to 2003, Mr. Saltzman was Controller at WP Realty, Inc., a regional developer and property manager specializing in community shopping centers.  Mr. Saltzman began his real estate career in 1988 as a Property Controller at The Rubin Organization, a predecessor to the Pennsylvania Real Estate Investment Trust.  Mr. Saltzman began his professional career at Price Waterhouse from 1985 to 1988. 

Darshan V. Patel has served as Chief Legal Officer since 2002.  Mr. Patel also has served as Vice President of Resource America since 2005 and Associate General Counsel for Resource America since 2001. From 1996 to 1998, Mr. Patel was associated with the law firm of Glynn & Associates practicing litigation and real estate law. 

Lawrence S. Block has served as Vice President and Assistant Secretary since September 2016. Mr. Block has served as SVP & Assistant Secretary of Resource America since September 2016. Since January, 2011, Mr. Block has been a Managing Director, Counsel and Chief Compliance Officer for Island Capital Group LLC, a real estate merchant banking firm; Managing Director, Counsel and Chief Compliance Officer for C-III Capital Partners LLC and its affiliates, including C-III Investment Management LLC, an SEC-registered investment adviser; and President and Chief Compliance Officer of Anubis Securities LLC, a registered broker-dealer. From March 2005 through January 2011, Mr. Block was Executive Vice President, General Counsel and Chief Compliance Officer for The Kenmar Group, an alternative investment firm. From January 1998 through March 2005, Mr. Block was Managing Director, General Counsel and Chief Compliance Officer for Lipper & Company L.P., an alternative investment firm. Mr. Block was a senior associate at the law firm Cadwalader, Wickersham & Taft in New York from 1996 through 1998 and an associate at the law firm Proskauer Rose LLP from 1992 to 1996. Mr. Block received a B.S. degree in Business Administration with a concentration in Accounting from the University of North Carolina at Chapel Hill in 1989 and a J.D. from the University of Pennsylvania School of Law in 1992.

Shelle Weisbaum has served as Vice President and Secretary since September 2016. Ms. Weisbaum has also served as Senior Vice President, since January 2014, and General Counsel and Secretary, since August 2007, of Resource Real Estate. Previously she held the position of Vice President of Resource Real Estate from August 2007 to December 2013. She has also served as Vice President and Secretary of Resource Real Estate Management, LLC since August 2007. Ms. Weisbaum joined Resource Real Estate in October 2006 from Ledgewood Law, a Philadelphia-based law firm, where she practiced commercial real estate law from 1998 to 2006 as an associate and later as a partner of the firm. Prior to Ledgewood, from 1987 to 1998, Ms. Weisbaum was Vice President and Assistant General Counsel at the Philadelphia Stock Exchange. Ms. Weisbaum received a Bachelor of Science degree in Business Administration from Boston University and a Juris Doctor degree from Temple University.

Code of Business Conduct and Ethics

Because we do not directly employ any persons, we rely on a Code of Business Conduct and Ethics adopted by Resource America that applies to the principal executive officer, principal financial officer and principal accounting officer of our General Partner, as well as to persons performing services for us generally. You may obtain a copy of this code of ethics by a request to our General Partner, Resource Capital Partners, at One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112.

Audit Committee Financial Expert

Neither we nor our General Partner’s Board of Directors has a standing audit committee; our General Partner’s entire Board of Directors acts as the audit committee. Our General Partner’s Board of Directors does not currently have any member who qualifies as an audit committee financial expert. We believe that the cost related to retaining such a financial expert at this time is prohibitive for a small entity such as ours, and that it would reduce amounts otherwise distributable to our LPs.

29

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, which we refer to as the Exchange Act, requires the directors and executive officers of our General Partner, our General Partner, and holders greater than 10% of our limited partnership interests to file reports with the SEC. SEC regulations require us to identify anyone who filed a required report late during the most recent fiscal year. Based on our review of these reports, we believe that the filing requirements for all of these reporting persons were complied with during 2016.

ITEM 11.        EXECUTIVE COMPENSATION

We have no directors or officers and we do not directly employ any persons to manage or operate our business. Our affairs are managed by our General Partner and its affiliates. As compensation for its services, we pay our General Partner various fees as set forth in Item 13.

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

RELATED STOCKHOLDER MATTERS

The following table sets forth the number and percentage of our limited partnership interests owned by beneficial owners of 5% or more of our limited partnership interests as well as the beneficial ownership of our General Partner, and its officers and directors, as of March 28, 2017. Under the terms of the Partnership Agreement, our affairs are managed by our General Partner. We do not have any officers or directors. This information is reported in accordance with the beneficial ownership rules of the SEC under which a person is deemed to be the beneficial owner of a security if that person has or shares voting power or investment power with respect to such security or has the right to acquire such ownership within 60 days.

Title of Class	Name and address of beneficial owner (1)	Amount and nature of beneficial ownership (2)	Percent of Class
Units of limited partnership interest	Resource Capital Partners, Inc.	183,768 units	5.62	%
Units of limited partnership interest	Jeffrey P. Cohen, CEO and Director	−	−
	Alan F. Feldman, Senior Vice President and Director	−	−
	Kevin M. Finkel, President	−	−
	Steven R. Saltzman, Vice President - Finance	−	−
	David E. Bloom, Senior Vice President and Director	−	−
	Darshan V. Patel, Chief Legal Officer and Assistant Secretary	−	−
	Lawrence S. Block, Vice President & Assistant	−	−
	Shelle Weisbaum, Vice President & Secretary	−	−
	All directors and executive officers as a group	−	−

(1) The address for each beneficial owner is One Crescent Drive, Suite 203, Philadelphia, Pennsylvania 19112.

(2) Beneficial ownership for officers and directors excludes amounts that may be attributable to them as a result of the units beneficially owned by Resource Capital Partners.

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND

DIRECTOR INDEPENDENCE

We pay our General Partner and its affiliates the following fees for their services.

Property Management Fees

We pay Resource Real Estate Management, an affiliate of our General Partner, a monthly property management fee in an amount equal to 5% of our gross cash receipts from the operation of our Properties. This fee is for Resource Real Estate Management’s services in managing the Properties or obtaining and supervising subcontractor Property managers, which may be affiliates of Resource Real Estate Management or independent third-parties. Resource Real Estate Management is permitted to manage the Properties through a property management affiliate or subcontract the management of the Properties out to unaffiliated third-party subcontractors. If Resource Real Estate Management subcontracts the management of the Properties, then it will pay all management fees payable to the subcontractor managers of our Properties. For the years ended December 31, 2016 and 2015, Resource Real Estate Management earned $308,000 and $517,000 respectively, in real estate property management fees. We do

30

not anticipate any further property management fees as the Partnership no longer owns real estate assets.

Investment Management Fees

We pay our General Partner or its affiliates an annual investment management fee payable from our revenues in an amount equal to 1% of the gross offering proceeds from the offering that have been, and continue to be, deployed in real estate investments. The investment management fee is for our General Partner’s professional services rendered in our administration, including, but not limited to, the preparation and distribution of our required quarterly and annual reports to our limited partners. Since the annual investment management fee is for our General Partner’s professional services, it is in addition to the reimbursements we pay our General Partner for certain administrative expenses that it and its affiliates incur on our behalf as described below in “Reimbursement of Administrative Expenses and Direct Costs.” Up to 100% of our General Partner’s annual investment management fee is subordinated to our limited partners’ receipt of their Preferred Return. Our General Partner is entitled at any time to an additional share of our cash distributions to recoup any investment management fees or distributions that were previously subordinated to the extent that our cash distributions to our limited partners exceeded their Preferred Return. For the year ended December 31, 2016 and December 31, 2015, our General Partner earned $142,000 and $251,000 respectively, in investment management fees. During the year ended December 31, 2016 the Partnership paid $157,000 in investment management fees to the General Partner due to receipt by the LP's of their Preferred Return.

Cash Distributions to Our General Partner

Our General Partner will receive distributions from us from the following sources:

• distributable cash from operations;

• distributable cash from capital transactions; and

• cash distributions to the partners upon our liquidation.

Cash distributions from our operations will be first paid to our limited partners until they have received distributions totaling their Preferred Return and thereafter, 80% to our limited partners and 20% to our General Partner.

Cash distributions from capital transactions, which include cash we receive from the sale or refinancing of a Property or the sale or repayment in full of all outstanding principal and interest due and owing to us on a real estate debt investment, are distributed in the following order:

• first, 100% to our limited partners until they receive distributions, including distributions of distributable cash from operations, totaling their Preferred Return;

• second, 100% to our limited partners until their respective adjusted capital contributions (amount originally paid for a limited partnership interest less previous distributions of distributable cash from capital transactions) have been reduced to zero; and

• thereafter, 80% to our limited partners and 20% to our General Partner.

When we dissolve and liquidate, we will distribute the liquidation proceeds in the following order of priority:

• first, to the payment of our creditors in the order of priority provided by law, except obligations to partners or their affiliates;

• next, to establish any reserve that our General Partner (or any other person effecting the winding up) determines is reasonably necessary for any contingent or unforeseen liability or obligation;

• next, to the payment of all unpaid fees (other than our General Partner’s right to reimbursement of any fees previously subordinated to distributions to our limited partners) and other obligations owed by us to our General Partner and its affiliates (other than expense reimbursements), such as loans to us, in proportion to, and to the extent of, the unpaid fees, advances and other obligations to our General Partner and its affiliates under the Partnership Agreement;

• next, to the payment of all expense reimbursements (other than our General Partner’s right to reimbursement of any fees previously subordinated to distributions to our limited partners) to which our General Partner or its affiliates may be entitled under the Partnership Agreement;

• next, to the partners in proportion to, and to the extent of, the positive balances of their capital accounts;

• next, 100% to our limited partners until they have received their respective Preferred Returns;

• next, to our General Partner as reimbursement for any fees previously subordinated to distributions to our limited partners; and

31

• thereafter, 80% to our limited partners and 20% to our General Partner.

During 2016, the General Partner received a total of $2.9 million. Of the $2.9 million, $157,000 relates to investment management fees and $2.7 million represented the promote due to the sales of the four remaining Properties.

Director Independence

Because we are not listed on any national securities exchange or inter-dealer quotation system, we have elected to use the NASDAQ National Stock Market’s definition of “independent director” in evaluating whether any of our General Partner’s directors are independent. Under this definition, the board of directors of our General Partner has determined that our General Partner does not have any independent directors, nor are we required to have any.

Parent Entities

See Item 1, “Business - General”

ITEM 14.        PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees. The aggregate fees billed by our independent auditors, Grant Thornton LLP for the years ended December 31, 2016 and 2015 for professional services rendered were $180,000 and $139,000, respectively.

Audit-Related Fees. We did not incur any audit related fees from Grant Thornton LLP during 2016 and 2015.

Tax Fees. We did not incur any fees for tax services from Grant Thornton LLP during 2016 and 2015.

All Other Fees. We did not incur any other fees from Grant Thornton LLP during 2016 and 2015.

Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor. As a limited partnership, we do not have an audit committee. Our General Partner’s Board of Directors, acting as a committee of the whole, reviews and approves in advance any audit and any permissible non-audit engagement or relationship between us and our independent auditors.

32

PART IV

ITEM 15.        EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Annual Report on Form 10-K/A:

1.Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2016 and 2015

Consolidated Statements of Operations for the

Years Ended December 31, 2016 and 2015

Consolidated Statements of Changes in Partners’ Capital for the Years Ended

December 31, 2016 and 2015

Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and 2015

Notes to Consolidated Financial Statements - December 31, 2016

2.Financial Statement Schedules

Schedule III Investments in Real Estate

3.Exhibits

Exhibit No.	Description
3.1	Amended and Restated Agreement of Limited Partnership. (1)
3.2	Certificate of Limited Partnership. (1)
4.1	Forms of letters sent to limited partners confirming their investment. (1)
10.1	Agreement of Purchase and Sale - Casco Bay Portfolio (Tamarlane) (2)
10.2	Agreement of Purchase and Sale - Hills (2)
10.3	Agreement of Purchase and Sale - Bent Oaks (3)
10.4	Agreement of Purchase and Sale - Woodhollow (3)
10.5	Agreement of Purchase and Sale - Woodland Village (3)
10.6	Agreement of Purchase and Sale - Cape Cod
10.7	Reinstatement of and Amendment to Agreement of Purchase and Sale - Cape Cod
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	The following information from the Partnership's annual report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Changes in Partners' Capital; and (iv) Consolidated Statements of Cash Flows.

(1) Filed previously as an exhibit to the Partnership’s registration statement on Form 10 for the year ended December 31, 2008 and by this reference incorporated herein.

(2) Incorporated by reference to the Partnership's Annual Report on Form 10-K filed March 29, 2016.

(3) Incorporated by reference to the Partnership's Quarterly Report on Form 10-Q filed August 12, 2016.

33

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
March 28, 2017	By:         /s/ Kevin M. Finkel
	Kevin M. Finkel
	President
	(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Jeffrey P. Cohen	Director and CEO	March 28, 2017
JEFFREY P. COHEN
/s/ Alan F. Feldman	Director and Senior Vice President	March 28, 2017
ALAN F. FELDMAN
/s/ David E. Bloom	Director and Senior Vice President	March 28, 2017
DAVID E. BLOOM
/s/ Kevin M. Finkel	President	March 28, 2017
KEVIN M. FINKEL	(Principal Executive Officer)
/s/ Steven R. Saltzman	Vice President - Finance	March 28, 2017
STEVEN R. SALTZMAN	(Principal Financial and Accounting Officer)

34

Resource Real Estate Investors 7, L.P.

SCHEDULE III

Real Estate and Accumulated Depreciation

December 31, 2016

(dollars in thousands)

Column A

Column B

Column C

Column D

Column E

Column F

Column G

Column H

Column I

Description

Encumbrances

Initial cost to Company

Cost capitalized subsequent to acquisition

Gross amount at which carried at close of period

Accumulated depreciation

Date of construction

Date acquired

Life on which depreciation in latest income is computed

Buildings and land improvements

Improvements carrying costs

Buildings and land improvements total

Real estate owned:

$

—

$

—

$

—

$

—

$

—

	2016			2015
Investments in Rental Properties:
Balance at the beginning of the period	$	39,169		$	71,844
Additions during period:
Improvements	305			663
Deductions during period:
Disposals	(39,474		)	(33,338		)
Balance at the end of the period	$	—		$	39,169
Accumulated Depreciation
Balance at the beginning of the period	$	(9,634	)	$	(16,255	)
Sales	10,482			8,453
Disposals	8			40
Depreciation	(856		)	(1,872		)
Balance at the close of period	$	—		$	(9,634	)

35

EX-10.6

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of August 22, 2016 (the “Effective Date”), by and between RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company, having an address at c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103 (“Seller”), and WESTMOUNT REALTY CAPITAL, LLC, a Texas limited liability company, having an address at 700 N. Pearl Street, Suite N1650, Dallas, TX 75201 (“Buyer”).

WITNESSETH:

In consideration of the covenants and provisions contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to all of the terms and conditions of this Agreement, all of Seller’s right, title and interest in and to the project commonly known as “Cape Cod Apartments” containing approximately 212 apartment units located at 13030 Blanco Road, San Antonio, TX 78216 and consisting of the following (collectively, the “Property”):

(a)Real Property. All of that certain tract of land more fully described on Exhibit A to this Agreement (the “Land”) together with all improvements thereon (the “Improvements”), and all appurtenances thereto (including, without limitation, all easements, rights‑of‑way, water rights, privileges, licenses, and other rights and benefits belonging to, running with the owner of, or in any way relating to the aforesaid tract of land and all trees, shrubbery and plants); together with all rights, title and interest of Seller in and to any land lying in the bed of any street, opened or proposed, in front of or abutting or adjoining the aforesaid tract of land, and all right, title and interest of Seller in and to any unpaid award for the taking by eminent domain of any part of the aforesaid tract of land or for damage to such tract of land by reason of a change of grade of any street (collectively, the “Real Property”);

(b)Personal Property. All fixtures, furniture, equipment, supplies and other tangible and intangible personal property attached or appurtenant to, or located in or on, or used solely in connection with the Real Property, which are owned by Seller excluding, however, any “Thin Client Solutions” hardware and software and any items upon which appears the “Resource Residential” logo, including without limitation, any door rugs, portable movie screens, marketing brochures and other literature (collectively, the “Personal Property”);

(c)Leases. The Seller’s interest in all leases, tenancies, licenses and other agreements for the use or occupancy of any portion of the Property in effect on the date of this Agreement and all guaranties in connection therewith (the “Leases”); and

(d)Contracts. To the extent assignable, the Seller’s interest in all leasing, service, supply and maintenance contracts relating to the Land, Improvements, or Personal Property (collectively, the “Contracts”), but only to the extent Buyer elects to have such Contracts assigned to it in accordance with Section 5(c) hereof.

2.Purchase Price; Deposit. The purchase price (the “Purchase Price”) for the Property, subject to adjustments as provided in this Agreement, shall be SIXTEEN MILLION AND 00/100 DOLLARS ($16,000,000.00), and shall be paid as follows:

(a)One Hundred Seventy-Five Thousand and 00/100 Dollars ($175,000.00) (the “Initial Deposit”) to be paid within two (2) business days after the Effective Date in immediately available funds and delivered to Chicago Title Insurance Company, 3700 Buffalo Speedway, Suite 400, Houston, TX 77098, Attention: Sue Jacobson, Phone: (713) 898-5000, Facsimile: (713) 658-1029; Email: Sue.Jacobson@ctt.com (“Escrow Holder” or “Title Company”).

(b)If Buyer has not terminated this Agreement as provided herein, an additional deposit in the amount of Three Hundred Twenty-Five Thousand and 00/100 Dollars ($325,000.00) (together with the Initial Deposit, the “Deposit”) shall be paid on or before the expiration of the Inspection Period in immediately available funds and delivered to Escrow Holder.

(c)The Deposit shall be held by Escrow Holder in one or more interest bearing federally‑insured money market accounts acceptable to both Seller and Buyer, or in short‑term United States Government obligations having a maturity date which is not later than the Closing Date (as hereinafter defined). As used in this Agreement, “Deposit” shall mean and include the Deposit as defined in Subsection 2(b) above and any interest earned thereon. If requested by Escrow Holder, Buyer shall execute and deliver a Form W-9 to Escrow Holder. Failure by Buyer to deliver the Deposit as provided above shall be a material default hereunder and shall render this Agreement terminable or, alternatively, voidable at the option of the Seller.

(d)The balance of the Purchase Price, as adjusted in accordance herewith, shall be paid at Closing by wire transfer of immediately available funds and delivered to Escrow Holder.

(e)Concurrent with its deposit of the Deposit with the Escrow Holder, Buyer shall deposit with the Escrow Holder the additional amount of Fifty Dollars ($50.00) (the “Independent Contract Consideration”) which Seller and Buyer agree shall be paid to Seller if this Agreement is terminated for any reason. Moreover, Seller and Buyer agree and acknowledge that the Independent Contract Consideration has been bargained for and agreed as additional consideration for Seller’s execution and delivery of this Agreement and for Buyer’s rights of review, inspection and termination provided herein. At Closing, the Independent Contract Consideration shall not be applied to the Purchase Price.

3.Disposition of Deposit; Defaults.

(a)Held in Escrow. The Deposit shall be held in escrow and disbursed by Escrow Holder strictly in accordance with the terms of this Agreement.

(b)Upon Default.

(I)If Buyer, without the right to do so and in default of its obligations under this Agreement, fails to complete Closing or otherwise defaults under or breaches this Agreement, Seller shall have the right to be paid the Deposit as liquidated damages. The parties have agreed that Seller’s actual damages, in the event of a Buyer default would be extremely difficult or impracticable to determine. After negotiation, the parties have agreed that, considering all the circumstances existing on the date of this Agreement, the amount of the Deposit is a reasonable estimate of the damages that Seller would incur in such event. Each party specifically confirms the accuracy of the statements made above and the fact that each party was represented by counsel who explained, at the time this Agreement was made, the consequences of this liquidated damages provision. The right of Seller to be paid the Deposit shall be Seller’s sole and exclusive remedy for Buyer’s failure to purchase the Property or Buyer’s breach of a representation or warranty.

(II)If Seller, without the right to do so and in default of its obligations under this Agreement, fails to complete Closing or otherwise defaults under or materially breaches this Agreement, Buyer shall have the right to (i) terminate this Agreement, in which event Buyer shall be entitled to the return of the Deposit as its sole and exclusive remedy and neither Seller nor Buyer shall have any further obligations under this Agreement, except those matters expressly provided in this Agreement to survive termination, or (ii) institute a civil court action for specific performance (but not damages); provided that Buyer shall commence its action of specific performance against Seller within forty five (45) days after the scheduled Closing Date. UNDER NO CIRCUMSTANCES MAY BUYER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH BUYER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS OR ITS OBLIGATIONS UNDER THIS AGREEMENT. BUYER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST ANY PROPERTY UNLESS AND UNTIL IT HAS FILED AN ACTION SEEKING SPECIFIC PERFORMANCE.

(c)Upon Closing. If Closing is completed hereunder, Escrow Holder shall pay the Deposit to Seller as a credit against the Purchase Price.

(d)Upon Termination by Buyer. If Buyer terminates this Agreement as a result of Seller’s default or pursuant to the exercise of any right of termination permitted by this Agreement, upon the earlier to occur of: (i) receipt by Escrow Holder of written joint instructions from Seller and Buyer or (ii) entry of a final and unappealable adjudication determining which party is entitled to receive the Deposit, the Deposit shall be distributed in accordance with such written instructions or adjudication.

(e)Hard Deposit. Buyer hereby acknowledges and agrees that the Initial Deposit shall be considered a “hard” deposit that is non-refundable to Buyer except as expressly set forth in this Section 3(e). Notwithstanding any provision herein to the contrary, the Initial Deposit shall be paid to Seller upon any termination of this Agreement by either party; provided, however, that Buyer shall be entitled to a return of the Initial Deposit in the case of a termination by Buyer: (I) under Section 3(b)(ii) (Seller Default), or (II) prior to expiration of the “Title, Survey, ESA Period” if Buyer is not satisfied with the Hard Deposit Due Diligence Deliveries in its sole discretion. For purposes of this Section, the “Hard Deposit Due Diligence Deliveries” shall mean: (i) the Title Commitment (as defined in Section 6(a)), together with copies of all documents referenced therein to the extent available in the public records; (ii) Seller’s existing survey of the Property; and (iii) Seller’s most recent environmental report(s) prepared for Seller with respect to the Property. Seller shall deliver to Buyer the Hard Deposit Due Diligence Deliveries within one (1) business day after the Effective Date. For purposes of this Section, the “Title, Survey, ESA Period” shall mean the period of time commencing on the Effective Date and expiring at 6:00 p.m. (Eastern) on the fifth (5^th) business day after Buyer’s receipt of the Hard Deposit Due Diligence Deliveries. This provision shall survive termination of this Agreement.

4.Closing. The consummation of the purchase and sale of the Property (the “Closing”) shall take place on or before October 17, 2016 or at earlier date as mutually agreed to in writing by the parties (the “Closing Date”). The Closing shall be conducted through an escrow with the Escrow Holder, with escrow fees to be paid equally by Seller and Buyer. IT IS AGREED THAT TIME IS OF THE ESSENCE OF THIS AGREEMENT. Notwithstanding the foregoing, Buyer shall have the option to extend the Closing Date by up to fifteen (15) days, provided that at least three (3) business days prior to the then-scheduled Closing Date: (i) the option is exercised by delivery of a written extension notice to Seller, and (ii) an additional Fifty Thousand and 00/100 Dollars ($50,000.00) is tendered to the Escrow Agent no later than 5:00 p.m. (Eastern), in which case such additional $50,000 shall be deemed part of the Deposit as defined above.        

5.Inspection and Title Review.

(a)Inspection Period. Buyer and its authorized agents and representatives shall have the right to enter upon the Land and Improvements (including all of the apartment units, but subject to the rights of tenants under the Leases and in accordance with applicable law) at all reasonable times during normal business hours to inspect and conduct reasonably necessary inspections and tests on the Property at its sole cost and expense, including, without limitation, engineering and hazardous material inspections; provided, however, any intrusive physical testing will be conducted by Buyer only after obtaining Seller’s prior written consent. The right granted in the immediately preceding sentence may be exercised during the period commencing on the Effective Date and ending on the earlier to occur of the Closing Date or termination of this Agreement. Buyer shall bear the cost of all inspections and tests, and Buyer shall give reasonable notice to the management of any inspection or test to be conducted on the Property. Buyer hereby indemnifies and holds Seller and the Property harmless as to all loss, property damage, bodily injury, cost or expense resulting from Buyer’s inspections and tests of the Property, including, without limitation, claims for services rendered by third parties conducting such inspections and tests. Buyer shall also restore the Land and Improvements to the condition in which the same were found before any such entry upon the Property and inspection or examination was undertaken. Such agreement to repair and restore, and to indemnify and hold harmless Seller shall expressly survive closing or any termination of the Agreement. Buyer shall maintain, or shall cause its contractors to maintain, public liability and property damage insurance insuring Buyer (and naming Seller as an additional insured party) against any liability arising out of any entry or inspections of the Property or work performed about the Property pursuant to the provisions hereof and shall deliver certificates of insurance evidencing such coverage to Seller prior to any entry by Buyer or its contractors on the Property.

(b)Document Review. Except as otherwise set forth in Section 3(e) above with respect to the timing for delivery of the Hard Deposit Due Diligence Deliveries, within three (3) business days after the Effective Date, Seller shall deliver to Buyer (or make available for inspection at the Property) copies of the items listed on Schedule 5(b) attached hereto and made a part hereof, but only to the extent such items are in Seller’s possession or control (collectively, “Documents”); provided that Leases shall be available for inspection at the Property only. Except as otherwise expressly set forth in this Agreement, Seller makes no representations or warranties, either express or implied, and shall have no liability with respect to the accuracy or completeness of the information, data or conclusions contained in any information provided to Buyer, and Buyer shall make its own independent inquiry regarding the economic feasibility, physical condition and environmental state of the Property during the period beginning on the Effective Date and ending at 5:00 p.m. (Eastern) on September 16, 2016 (the “Inspection Period”).

(c)Assignment or Termination of Contracts. Buyer shall assume all Contracts at Closing subject to this Section 5(c). Prior to the expiration of the Inspection Period, Buyer may advise Seller in writing of any Contracts that it elects to have terminated upon Closing and Seller shall provide timely notices of termination; provided, however, that Seller shall not terminate, and Buyer expressly agrees to assume, all Contracts that are not cancellable by their terms or which cannot be terminated without cost or penalty to Seller. At Closing, Seller shall assign and Buyer shall assume all Contracts that have not terminated as of the Closing Date, including without limitation, any remaining rights and obligations under Contracts under which the notice required to terminate such Contracts, though delivered, will not have run prior to Closing. Notwithstanding the foregoing, all existing agreements for management of the Property shall be terminated as of the Closing Date.

(d)Right of Termination. If Buyer determines that the Property is not suitable in Buyer’s sole discretion, then Buyer may terminate this Agreement by written notice to Seller on or before 6:00 p.m. (Eastern) on the last day of the Inspection Period and this Agreement shall be null and void for all purposes (except for provisions that expressly survive hereunder) and the Initial Deposit shall be paid to Seller (subject to Section 3(e)). In the event that Buyer does not deliver notice of termination of this Agreement prior to the expiration of the Inspection Period, Buyer shall be deemed to have waived its right to terminate under this Section 5(d) and the Deposit shall be non-refundable to Buyer except in accordance with the terms of Section 3(b)(ii) above.

6.Condition of Title.

(a)     Commitment to Insure. Within three (3) business days after the Effective Date, Seller shall deliver to Buyer a copy of Seller’s Owner’s Policy of title insurance and Buyer shall promptly order a commitment from the Title Company (the “Title Commitment”) to provide a standard owner’s title insurance policy for the Property in an amount equal to the Purchase Price (the “Title Policy”); and (ii) Seller shall deliver to Buyer a copy the most recent ALTA/ACSM Land Title Survey of the Property in Seller’s possession, if any (the “Existing Survey”). Buyer, at its option and expense, may obtain a new survey, or an update of the Existing Survey of the Real Property (the “Survey”).

(b)    During the Inspection Period, Buyer shall review title to the Real Property as disclosed by the Title Commitment and, if obtained, the Survey. Seller shall have no obligation to cure title objections except to satisfy and remove liens of an ascertainable amount created by Seller, which liens Seller shall cause to be released at the Closing or affirmatively insured over by the Title Company. Seller further agrees to remove any exceptions or encumbrances to title which are created by Seller after the Effective Date of this Agreement without Buyer’s written consent. Buyer may terminate this Agreement under this Section 6(b) and receive a refund of the Deposit (i) at any time prior to the expiration of the Inspection Period, solely on account of a title or survey objection of Buyer set forth in written notice to Seller which title objection Seller has not agreed in writing to cure, (ii) if the Title Company revises the Title Commitment after the expiration of the Inspection Period to add or modify exceptions in a material adverse manner, if such additions or modifications are not acceptable to Buyer and are not removed by the Closing Date, or (iii) if Seller fails to cure a title objection that Seller is obligated to cure hereunder or has otherwise agreed to cure in writing. Seller shall execute at Closing an affidavit as to authority, the rights of tenants in occupancy and the status of mechanics’ liens (and sufficient to remove from the Title Policy any exception for mechanics’ liens filed against the Real Property which relate to any matters occurring prior to the Closing Date) in form acceptable to Seller as the Title Company shall require for the issuance of the Title Policy. The Title Policy may be delivered after Closing if that is customary in the locality.

7.Delivery of Possession. Actual sole and exclusive physical possession of the Property shall be given to Buyer at Closing unoccupied and free of any leases, claims to or rights of possession other than the rights of tenants under Leases by delivery of the keys to the Property and Seller’s special or limited warranty deed (the “Deed”) in the form attached hereto as Exhibit B, and Seller’s bill of sale in the form of Exhibit C to this Agreement duly executed by Seller (the “Bill of Sale”).

8.Apportionments. All property related items of income and expense, including but not limited to the following, shall be apportioned between Seller and Buyer as of 11:59 p.m. on the day prior to the Closing Date (the “Pro Ration Date”) as follows:

(a)Taxes.     All real estate taxes, charges, and assessments affecting the Property (collectively, “Taxes”) shall be prorated on a per diem basis as of the Pro Ration Date, applying any discount for early payment applicable as of the Pro Ration Date, and on the basis of the actual fiscal year for which such taxes are assessed, and Buyer shall assume liability for payment of Taxes accruing in the year in which Closing occurs.  In the event that the amount of Taxes for the current year is unknown at Closing, the Taxes shall be prorated based on the mill rate for taxes assessed for the immediately preceding year, taking into account the current appraised value for the Property issued by the County Appraisal District, and Buyer shall notify Seller of any necessary adjustment to such proration within thirty (30) days when correct tax figures are known, and thereafter any necessary adjustments shall be made. Buyer hereby acknowledges and agrees that Seller has or may file appeals (the “Appeals”) with respect to the current fiscal year and also with respect to prior year(s) ad valorem property taxes applicable to the Property (the “Appealed Taxes”). Seller shall be entitled, in Seller’s sole discretion, to continue to pursue such Appeals after the Closing Date. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to prior years, Seller shall be entitled to the full amount of any rebate, refund or reduction resulting from such Appeal. In the event that any such Appeal is successful in reducing the amount of Appealed Taxes payable with respect to the current fiscal year, Seller and Buyer shall prorate the net proceeds of any rebate, refund or reduction resulting from such Appeal relating to the current fiscal year, after payment of Seller’s third party costs incurred in connection with the Appeal. This provision shall expressly survive Closing and the recordation of the Deed.

(b)Rents.     All lease payments, rentals and other income from the Property shall be prorated as of the Closing Date, Seller being charged and credited for all of same up to such date and Buyer being charged and credited for all of same on and after such date. No proration shall be made for delinquent rents existing as of the Closing Date. With respect to such delinquent rents, Buyer shall make a reasonable attempt to collect the same for Seller’s benefit after the Closing Date in the usual course of operation of the Property and such collections, if any, less any cost of collection and any portion thereof attributable to any period prior to the Closing Date shall be remitted to the Seller promptly upon receipt by Buyer; provided, however, nothing contained herein shall require Buyer to institute any lawsuit or other collection procedures to collect such delinquent rents. All amounts collected from tenants owing delinquent rents shall be applied first to satisfy current rental periods and second to satisfy obligations arising from past rental periods, in inverse order of maturity. Buyer need not attempt to collect rent which is more than six (6) months’ past due. At the Closing, Seller shall pay to Buyer in cash the amount of any prepaid rents paid to Seller by tenants for periods subsequent to the Closing Date.

(c)Other.All normal and customarily proratable items including without limitation operating expenses, personal property taxes, minimum water and sewer rentals, payments due under the Contracts which are to be assigned to Buyer, prepaid license fees and other charges for licenses and permits for the Real Property which will remain in effect for Buyer’s benefit after Closing and municipal rubbish removal charges, shall be apportioned pro rata between Seller and Buyer on a per diem basis based upon a calendar year. Seller shall be responsible for all management company fees and leasing commissions applicable to the Property, and no proration shall be made of such fees and commissions. Seller shall terminate employees of such Seller engaged in the management of the Property effective as of the Closing Date and shall be responsible for severance pay, wages and benefits, if any, that may be due and owing to employees in connection with such termination or otherwise due to such employees.

(d)Security Deposits. The total sum of all tenant security deposits currently held by Seller, together with all interest earned thereon as of the Closing Date, shall be transferred to Buyer at Closing by operation of a credit against the Purchase Price.

(e)Utility Meter Readings. Seller shall obtain readings of the water, electric, gas and other utility meters servicing the Real Property (other than meters measuring exclusively utility consumption which is to be paid in full by tenants under Leases) to a date no sooner than two (2) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings, adjusted to include a reasonable estimate of the additional charges due for the period from the dates of the respective readings until the Closing Date. If Seller is unable to obtain readings of any meters prior to the Closing Date, Closing shall be completed without such readings and upon the obtaining thereof, Seller shall pay the charges incurred prior to the Closing Date as reasonably determined by both Buyer and Seller based upon such readings, and at Closing, Seller shall deposit with the Title Company an amount reasonably estimated to represent the anticipated obligation of Seller under this sentence.

(f)RUBS. In addition to any other prorations described in this Agreement, any ratio utility billing systems (“RUBS”) applicable to the Property, for the following categories of utilities and other reimbursements: (i) electricity, (ii) gas, (iii) water / sewer, (iv) trash, (v) pest control and (vi) other, attributable to the uncollected or trailing collections two calendar months prior to Closing will be reflected as a credit to Seller at Closing and will be calculated for closing purposes on the uncollected or trailing collections monthly periods based on the monthly average actual trailing RUBS for six months prior to Closing according to the income statements prepared by Seller and provided to Buyer.  A subsequent cash adjustment of RUBS between Seller and Buyer will be made when actual figures are available, but in all events within 90 days after the Closing Date.  Seller and Buyer each agree to provide such information as the other may reasonably request regarding RUBS and the billing, collection, and payment thereof.

(g)True-up. Subsequent to the Closing, if at any time during the 30-day period following Closing the actual amount of any pro-rated items that were based upon estimations at Closing, including without limitation, utilities and other operating expenses with respect to the Property for the month in which the Closing occurs, are determined, the parties agree to adjust the proration of utilities and other operating expenses and, if necessary, to refund or repay such sums as shall be necessary to effect such adjustment. For clarification, this Section 8(g) shall not apply to Taxes, Rents or RUBS which shall be pro-rated and paid under Sections 8(a), 8(b) and 8(f) respectively. This provision shall survive Closing and recordation of the Deed.

(h)Closing Costs. Seller shall pay (i) ½ of all escrow fees; (ii) premium for a basic TLTA T-1 owner’s policy(s) of title insurance; and (iii) all of Seller’s legal costs and expenses. Buyer shall pay (i) title premiums for any endorsements to the owner’s policy of title insurance, together with all costs and premiums relating to any loan policy of title insurance and endorsements for the benefit of Buyer’s lender, if any (ii) cost of the Survey, (iii) ½ of all escrow fees, (iv) all other closing and recording costs with respect to the conveyance of the Property, (v) all costs, fees, recordation taxes and assessments with respect to any financing, and (vi) Buyer’s legal costs and expenses. All other costs and expenses incurred in connection with the transaction contemplated hereby and not specifically allocated herein shall be paid by the party incurring the same. It is contemplated by the parties that no realty transfer taxes, including without limitation, any state or local transfer taxes or recordation charges, will be due as a result of this transaction.

(i)Up Front Payments. Any one-time inducement payments or other non-refundable fees, royalties or other payments made or paid to the owner of the Property under any Contract assumed by Buyer at Closing, including, but not limited to, any payments made to the owner of the Property under any cable agreement (“Up Front Payments”), shall not be apportioned pro rata between Seller and Buyer and Buyer shall not receive any credit from Seller at closing for any portion of any One-Time Payment attributable or allocable to any period of time from and after Closing.

(j)Any credit due to Buyer pursuant to Section 8 shall be applied as a credit against the Purchase Price, and any credit due to Seller pursuant to Section 8 shall be paid by Buyer to Seller at Closing as an addition to the Purchase Price.

9.Property Condition. THE PROPERTY IS BEING SOLD IN AN “AS IS,” “WHERE IS” CONDITION AND “WITH ALL FAULTS” AS OF THE EFFECTIVE DATE, SUBJECT TO NORMAL WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY AS SET FORTH HEREIN. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT OTHER THAN THE SPECIFIC REPRESENTAIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, AND THOSE IN THE DEED, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY OTHER REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED AND/OR UNDERTAKEN BY SELLER OR BY ANY PARTNER, OFFICER, DIRECTOR, PERSON, FIRM, AGENT, ATTORNEY OR REPRESENTATIVE ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER AS TO, CONCERNING OR WITH RESPECT TO (I) THE CONDITION OR STATE OF REPAIR OF THE PROPERTY; (II) THE COMPLIANCE OR NONCOMPLIANCE OF THE PROPERTY WITH ANY APPLICABLE LAWS, REGULATIONS OR ORDINANCES (INCLUDING, WITHOUT LIMITATION, ANY APPLICABLE ZONING, BUILDING, HANDICAPPED ACCESSIBILITY, OR DEVELOPMENT LAWS, CODES, RULES AND REGULATIONS); THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (III) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED WITHIN THE PROPERTY; (IV) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON; (V) THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL OF THE PROPERTY; (VI) ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE CONDITION, STATE OF REPAIR, COMPLIANCE, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE PROPERTY OR ANY PORTION THEREOF; OR (VII) WHETHER THE PROPERTY CONTAINS ASBESTOS OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES OR PERTAINING TO THE EXTENT, LOCATION OR NATURE OF SAME, OR THE CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION, WATER, SOIL, AND GEOLOGY. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE EXHIBITS HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT. BUYER SHALL NOT RELY UPON ANY STATEMENT OR REPRESENTATION BY OR ON BEHALF OF SELLER UNLESS SUCH STATEMENT OR REPRESENTATION IS SPECIFICALLY SET FORTH IN THIS AGREEMENT.

BUYER WAIVES AND RELEASES SELLER FROM ANY PRESENT OR FUTURE CLAIMS ARISING FROM OR RELATING TO THE PRESENCE OR ALLEGED PRESENCE OF ASBESTOS, OR ANY OTHER HARMFUL, HAZARDOUS OR TOXIC SUBSTANCES IN, ON, UNDER OR ABOUT THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY CLAIMS UNDER OR ON ACCOUNT OF (I) THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS THE SAME MAY HAVE BEEN OR MAY BE AMENDED FROM TIME TO TIME; (II) ANY OTHER FEDERAL, STATE OR LOCAL LAW, ORDINANCE, RULE OR REGULATION, NOW OR HEREAFTER IN EFFECT, THAT DEALS WITH OR OTHERWISE IN ANY MANNER RELATES TO ENVIRONMENTAL MATTERS OF ANY KIND; OR (III) THIS AGREEMENT OR THE COMMON LAW. THE TERMS AND PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE CLOSING HEREUNDER.

BUYER ACKNOWLEDGES THAT BUYER IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THIS TYPE OF PROPERTY. BUYER IS ACQUIRING THE PROPERTY “AS IS,” “WHERE IS” AND “WITH ALL FAULTS,” IN ITS PRESENT STATE AND CONDITION, WITHOUT REPRESENTATION OR WARRANTY BY SELLER OR ANY OF ITS REPRESENTATIVES OR AGENTS AS TO ANY MATTERS WHATSOEVER EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, NO PATENT OR LATENT CONDITION AFFECTING THE PROPERTY IN ANY WAY, WHETHER OR NOT KNOWN OR DISCOVERABLE OR HEREAFTER DISCOVERED, SHALL AFFECT BUYER’S OBLIGATIONS HEREUNDER, NOR SHALL ANY SUCH CONDITION GIVE RISE TO ANY RIGHT OF DAMAGES, RESCISSION OR OTHERWISE AGAINST SELLER.

10.Representations and Warranties of Seller. Except, in all cases, for any fact, information or condition disclosed in the Documents, Title Commitment, Existing Survey, Survey, Contracts or which is otherwise known to Buyer prior to Closing, Seller makes the following representations and warranties to Buyer, which representations and warranties are true and correct as of the date of this Agreement (the “Seller Representations”):

(a)Seller is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware, with all legal power and authority to undertake, observe and perform all of Seller’s agreements and obligations hereunder.

(b)Seller has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Seller and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Seller enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Seller has the power and authority to do so. This Agreement and all documents executed by Seller that are to be delivered to Buyer at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Seller, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Seller is a party; and

(c)No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby.

(d)Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended and no withholding from the Purchase Price is required.

(e)To Seller’s knowledge, there are no actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened with respect to the Property or Seller except for matters fully covered by Seller’s current insurance policies (subject to Seller’s deductible).

(f)To Seller’s current, actual knowledge, as of the Effective Date, Seller has received no written notice of any pending or threatened condemnation or similar proceeding or assessment affecting the Land, or any part thereof.

(g)To Seller’s current, actual knowledge, there are no attachments, executions, assignments for the benefit of creditors or voluntary or involuntary proceedings in bankruptcy or under any other debtor relief laws contemplated by or pending or threatened against Seller or the Land.

(h)To Seller’s knowledge, the rent roll attached hereto as Exhibit “D” (the “Rent Roll”) is true, correct and genuine in all material respects as of the date shown thereon. To Seller’s current, actual knowledge, as of the Effective Date, there are no parties in possession of any portion of the Land as lessees or tenants at sufferance, except as set forth in the Rent Roll.

(i)As of the Effective Date, Seller has received no written notice of any existing condition with respect to the Land or its operation which violates any government code or regulation.

(j)As of the Effective Date, Seller has received no written notice of any pending, or to the knowledge of Seller, threatened government proceeding which would impair or curtail direct access to and from the Property.

(k)To Seller’s knowledge, Seller has not received written notice of any material default under any of the Contracts that will not be terminated on the Closing Date.

Seller and Buyer agree that Seller’s Representations shall survive Closing for a period of six (6) months (the “Survival Period”) and Seller shall have no liability after the Survival Period with respect to any of the Seller Representations contained herein. Any representations or warranties made to “Seller’s knowledge” shall not be deemed to imply any duty of inquiry. Buyer hereby waives any right Buyer may have to commence any action(s) to enforce any alleged breach and/or violation of any representations of Seller as set forth in this Agreement or to seek damages in connection therewith in the event that Buyer obtains actual knowledge of any such alleged breach and/or violation prior to Closing and fails to give Seller notice thereof before the Closing Date.

Notwithstanding the foregoing, if Buyer becomes aware of an intentional material breach of Seller’s representations and warranties in Section 10 prior to Closing, Buyer’s sole and exclusive remedy will be to (i) waive the default by Seller and close the transaction contemplated hereby, without any reduction in the Purchase Price, or (b) if such breach is not cured within 10 days after written notice thereof from Buyer to Seller (and the Closing Date shall be extended to the extent necessary to allow Seller the full 10-day period to cure such breach) terminate this Agreement by written notice to Seller prior to Closing, whereupon the Deposit (including the Initial Deposit), shall be immediately refunded to Buyer together with reimbursement to Buyer for Buyer’s third party costs up to a maximum amount of $150,000.

11.Representations and Warranties of Buyer. Buyer, to induce Seller to enter into this Agreement and to complete Closing, makes the following representations and warranties to Seller, which representations and warranties are true and correct as of the date of this Agreement, and shall be true and correct at and as of the Closing Date in all respects as though such representations and warranties were made both at and, as of the date of this Agreement, and except as otherwise set forth herein, at and as of the Closing Date.

(a)Buyer is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Texas with all legal power and authority to undertake, observe and perform all of Buyer’s agreements and obligations hereunder.

(b)Buyer has full power, authority and legal right to execute, deliver and comply with this Agreement, and all actions of the Buyer and other authorizations necessary or appropriate for the execution and delivery of and compliance with this Agreement have been taken or obtained and this Agreement constitutes the valid and legally binding obligation of the Buyer enforceable against it in accordance with its terms; and the individual executing this Agreement and each of the documents executed in connection herewith on behalf of the Buyer has the power and authority to do so. This Agreement and all documents executed by Buyer that are to be delivered to Seller at Closing (i) are, or at the time of Closing will be, duly authorized, executed and delivered by Buyer, and (ii) do not, and at the time of Closing will not, violate any provision of any agreement or judicial order to which Buyer is a party.

(c)No consents are required to be obtained from, and no filings are required to be made with, any governmental authority or third party in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby.

(d)Neither Buyer nor any of its affiliates is, nor will they become, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) or other governmental action and does not, to its actual knowledge, engage in any dealings or transactions or be otherwise associated with such persons or entities.

(e)Buyer acknowledges that the Property may be subject to the federal Americans With Disabilities Act (the "ADA") and the federal Fair Housing Act (the "FHA"). The ADA requires, among other matters, that tenants and/or owners of "public accommodations" remove barriers in order to make the Property accessible to disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons. Seller makes no warranty, representation or guarantee of any type or kind with respect to the Property's compliance with the ADA or the FHA (or any similar state or local law), and Seller expressly disclaims any such representation. Buyer acknowledges that it is solely responsible for determining whether the Property complies with the ADA and the FHA. The provisions of this Section 11(e) shall survive indefinitely the Closing or earlier termination of this Agreement and shall not be merged into the Deed or other closing documents.

(f)It is expressly acknowledged by Buyer that this transaction is not subject to any financing contingency and no financing for this transaction shall be provided by Seller.

(g)Buyer is a sophisticated and experienced Buyer of commercial properties including without limitation, apartment projects, and has participated in and is familiar with the acquisition, development, redevelopment, ownership, management, and operation of real estate projects similar to the Property. Buyer has or will have under the terms of this Agreement adequate opportunity to complete and will have completed all physical, financial, legal and regulatory investigations and examinations relating to the Property that it deems necessary, and will acquire the same solely on the basis of such investigations and examinations and the title insurance protection afforded by the Title Policy and not on the basis of any information provided or to be provided by Seller.

12.Operations Prior to Closing. Between the date of the execution of this Agreement and Closing:

(a)Operations and Management. During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Property, substantially in the same manner as it did before the Effective Date. Seller shall maintain the physical condition of the Property in substantially its current condition, reasonable wear and tear and damage by fire and other casualty excepted.

(b)Compliance with Obligations. Seller shall comply in all material respects with the obligations of Seller under the Leases, the Contracts and all other agreements and contractual arrangements by which Seller and/or the Property are bound or affected. Seller shall maintain its current insurance policy in full force and effect and shall pay all required premiums and other charges.

(c)New Contracts; New Leases. Seller shall not enter into any contract for or on behalf of or affecting the Property which cannot be terminated upon no more than thirty (30) days’ prior notice or without charge, cost, penalty or premium, and, after expiration of the Inspection Period, shall not renew, fail to give a notice which, in the absence of which, will result in an automatic renewal of, modify, cancel or terminate any Contracts except in accordance with notices given by Buyer under Section 5(c). Notwithstanding anything to the contrary set forth herein, Seller may enter into new leases or renewal leases for all or any portion of the Property in accordance with its current leasing parameters and procedures.

13.Casualty.

(a)Destruction. If at any time prior to the Closing Date any portion of the Property should sustain damage by fire or other casualty (a “Casualty”), Seller shall promptly give written notice (“Casualty Notice”) thereof to Buyer, which notice shall include Seller’s estimate of the time and cost necessary to repair or remedy the damage caused by such Casualty. If the Property is the subject of a Casualty which is material, Buyer shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller and Escrow Holder given within ten (10) days after receipt of the Casualty Notice from Seller). For purposes hereof, a “material” Casualty is one where the cost of restoring the Improvements to their condition prior to the Casualty will equal or exceed ten percent (10%) of the Purchase Price. If Buyer does not terminate this Agreement, the proceeds of any insurance with respect to the Property paid to Seller between the date of this Agreement and the Closing Date shall be paid over to Buyer at the time of Closing (less any amount expended by Seller under Section 13(b) below) and all unpaid claims and rights in connection with losses to the Property shall be assigned to Buyer at Closing, and the amount of the deductible required to be paid under the Seller’s applicable insurance policy or policies will be paid to Buyer, without in any manner affecting the Purchase Price.

(b)Repairs. If the Property is the subject of a Casualty, but Buyer does not terminate this Agreement pursuant to the provisions of Section 13(a)above, then Seller shall cause all temporary repairs to be made to the Property as shall be required to prevent further deterioration and damage to the Property prior to the Closing Date. Seller shall have the right to be reimbursed from the proceeds of any insurance with respect to the Property paid between the date of this Agreement and the Closing Date for the cost of all such repairs made pursuant to this Section 13(b). Except for the obligation of Seller to repair the Property set forth in this Section 13(b), Seller shall have no other obligation to repair any Casualty, damage or destruction in the event Buyer does not elect to terminate this Agreement pursuant to the provisions of Section 13(a), and in such event, Buyer shall accept the Property at Closing as damaged or destroyed by the Casualty.

14.Eminent Domain. If any condemnation or eminent domain (a “Taking”) affects all or any part of the Property prior to Closing, or if any proceeding for a Taking is commenced prior to Closing, or if notice of the contemplated commencement of a Taking is given prior to Closing, Seller shall deliver written notice of such Taking to Buyer and Buyer, to the extent such Taking is material, shall have the right, at its sole option, of terminating this Agreement (by written notice to Seller within ten (10) days after receipt by Buyer of written notice from Seller of the Taking). For purposes hereof, a “material” Taking shall mean a Taking of all or any portion of the Property which causes (i) a material reduction in the size of the Property or a material interference with the use and operation of the Property, (ii) a material reduction in the number of parking spaces available at the Property, (iii) a material adverse effect on the ingress and egress to and from the Property, or (iv) a material reduction in the gross income that it is anticipated will be generated at the Property. If Buyer does not terminate this Agreement, the Purchase Price shall be reduced by the total of any awards or damages received by Seller, and Seller shall, at Closing, be deemed to have assigned to Buyer all of Seller’s right, title and interest in and to any awards or damages to which Seller may have become entitled or may thereafter be entitled by reason of any exercise of the power of eminent domain or condemnation with respect to or for the Taking of the Property or any portion thereof.

15.Items to be Delivered at Closing.

(a)By Seller. At Closing, Seller shall deliver to Buyer the following:

(I)Deed. The Deed;

(II)Bill of Sale. The Bill of Sale for the transfer of the Personal Property;

(III)Assignments of Leases and Contracts. Assignments in the form of Exhibit Eand Exhibit F, respectively, of Seller’s interest in the Leases and the Contracts (to the extent not required to be terminated before Closing) to be assigned to Buyer, assigning to Buyer or Buyer’s assignee all of the lessor’s and Seller’s rights, title and interest in the Leases and such Contracts;

(IV)Keys. All keys, security cards and security codes to the Property in Seller’s possession;

(V)Title Company Affidavits. Such affidavits reasonably required by the Title Company to delete the so-called “standard exceptions” (other than the standard survey exceptions) and date the Title Policy no earlier than the date of Closing;

(VI)Updated Rent Roll. A rent roll in the form of Exhibit D of the rents and other charges and payments due from tenants under the Leases, including without limitation any which are in arrears, all dated as of the Closing Date and certified by Seller as true and correct to the best of Seller’s knowledge;

(VII)State Forms. Any forms required by the County or State in connection with the conveyance of the Property and the recordation of the Deed;

(VIII)Plans and Specifications. To the extent in Seller’s possession, all plans and specifications for the improvements which constitute a part of the Property and all alterations and additions thereto, and project manuals for the Property;

(IX)Books and Records. Duplicate copies of all books, records and operating reports in Seller’s possession which are necessary to insure continuity of operation of the Property;

(X)FIRPTA. If Seller is not a foreign person or entity within the meaning of Sections 1445 and 7701 of the IRS Code, a form as required by Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”) in the form attached as Exhibit G hereto; and

(XI)Tenant Notice Letter. A letter to the tenants of the Property indicating that the Property has been sold to Buyer and directing that all future rental payments be sent to Buyer in the form attached as Exhibit H hereto (the “Tenant Notice Letter”); and

(XII)Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

(XIII)Other Documents. Any other documents required to be delivered pursuant to any other provisions of this Agreement.

(b)By Buyer. At Closing, Buyer shall deliver to Seller the following:

(I)Purchase Price. The balance of the Purchase Price;

(II)Assumption Agreements. Assumption agreements, in the form of Exhibit E and Exhibit F respectively, of the Leases and of the Contracts to be assigned to Buyer, duly executed and acknowledged by Buyer;

(III)Tenant Notice Letter. A counterpart to the Tenant Notice Letter duly executed by Buyer;

(IV)Resolutions; Title Company Affidavits, Etc. Resolutions and certificates as required to evidence good standing and the due authorization of the execution and performance of this Agreement and the documents to be delivered pursuant hereto together with all affidavits, indemnities and other agreements required by the Title Company; and

(V)Other Documents. Any other document required to be delivered pursuant to any other provisions of this Agreement.

16.Brokerage. Buyer and Seller represent and warrant to the other that it has dealt with no broker, finder or other intermediary in connection with this sale other than CBRE, Inc. (“Broker”). Seller agrees to pay all brokerage commissions due to Broker in connection herewith. Buyer and Seller each agree to indemnify, defend and hold the other harmless from and against all claims, demands, causes of action, loss, damages, liabilities costs and expenses (including without limitation attorneys’ fees and court costs) which the indemnified party may incur arising by reason of the above representation being false.

17.    Indemnity. Buyer agrees to indemnify, defend and hold harmless Seller from and against, and to reimburse Seller with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Seller by reason of or arising out of any Lease, Contract, claim for damages or any other claim with respect to or accruing on or after the Closing Date. Seller agrees to indemnify, defend and hold harmless Buyer from and against, and to reimburse Buyer with respect to, any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including without limitation reasonable attorney’s fees and court costs) asserted against or incurred by Buyer by reason of or arising out of any Lease, Contract, claim for damages or any other claim accruing prior to the Closing Date. The provisions of this Section 17 shall survive Closing and recordation of the Deed.

1.Confidentiality. Buyer shall not disclose any Confidential Information (as defined below) to any party other than (a) persons within Buyer’s organization, Buyer’s affiliates, persons who may invest in, or co-purchase with Buyer, or person with which Buyer has contracted, including attorneys, accountants, appraisers, engineers, environmental consultants and other professionals engaged for this contemplated transaction who are advised of the confidential nature of the Confidential Information, (b) potential lenders and agents of potential lenders who are advised of the terms of this Agreement related to the Confidentiality Information, (c) as necessary to consummate the terms of this Agreement or any financing relating thereto, and (d) subject to the last sentence of this paragraph, as required by law or court order. “Confidential Information” means the terms of this Agreement and all due diligence information (including the Documents) provided to Buyer by Seller other than information of public record or generally known to the public. Buyer will destroy any electronic or paper documents constituting the Confidential Information, or return it to Seller if appropriate, if the Closing does not occur or this Agreement is terminated by Buyer or Seller before Closing. The confidentiality provisions of this Section 18 shall not apply to any disclosures made by Buyer as required by law, by court order, or in connection with any subpoena served upon Buyer or in connection with the filing of any Lis Pendens by reason of Buyer’s election to pursue a claim of specific performance; provided Buyer shall provide Seller with written notice before making any such disclosure. Buyer’s obligations under this Section 18 shall survive termination of this Agreement.

2.No Other Representations. Buyer acknowledges that neither Seller nor anyone acting, or purporting to act, on behalf of Seller, has, except as expressly set forth in this Agreement, made any representation or warranty with respect to the Property.

3.Assignability. Subject to the paragraph immediately following, Buyer shall not have the right to assign its interest in this Agreement without Seller’s advance written consent, which consent may be withheld in Seller’s sole and absolute discretion. Buyer hereby agrees that any assignment by Buyer, if consented to by Seller, shall not relieve Buyer of its obligations and liabilities hereunder. Additionally, it shall be a condition of any such assignment that the assignee assumes, in a written instrument delivered to Seller (in form and content reasonably acceptable to Seller), all obligations of Buyer hereunder. Seller’s approval of any assignment of Buyer’s interest in this Agreement shall not constitute a waiver of Seller’s right to approve any subsequent assignments.

Notwithstanding the terms of this Paragraph 20, Buyer shall have the right to assign its rights and obligations under this Agreement without Seller’s consent, to an entity with limited liability, in which the principals or affiliates of Buyer own an investment interest. Buyer shall give notice of any such proposed assignment to Seller not less than three (3) business days prior to the scheduled the Closing Date. Upon such assignment, Buyer shall furnish a copy to Seller and the assignee shall succeed to all of the rights of Buyer under this Agreement (including without limitation Buyer’s rights with respect to the Deposit) and shall assume all of Buyer’s obligations under the Agreement. No such assignment shall relieve Buyer of any liability under the Agreement in the event of a default by Buyer or its assignee.

4.Notices.

(a)All notices, demands, requests or other communications from each party to the other required or permitted under the term of this Agreement shall be in writing and, unless and until otherwise specified in a written notice by the party to whom notice is intended to be given, shall be sent to the parties at the following respective addresses:

if intended for Buyer:        Westmount Realty Capital, LLC

700 N. Pearl Street, Suite N1650

Dallas, TX 75201

Attn: Stephen H. Kanoff

Facsimile No.: (214) 946-5171

Email: skanoff@westmountrc.com

With a copy to:            Coats Rose, P.C.

14755 Preston Road, Suite 600

Dallas, Texas 75254

Attn: David E. Brusilow, Esq.

Facsimile No.: (972) 702-0662

Email: brusilow@coatsrose.com

A

if intended for Seller:        RRE Cape Cod Holdings, LLC

c/o Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Luke Perl, Transaction Manager

Facsimile No.: (215) 761-0452

Email: LPerl@Resourcerei.com

With a copy to:            Resource Real Estate, Inc.

1845 Walnut Street, 18^th Floor

Philadelphia, PA 19103

Attn: Shelle Weisbaum, General Counsel

Facsimile No.: (215) 761-0452

Email: sweisbaum@resourcerei.com

And with a copy to:        Ledgewood, P.C.

Two Commerce Square

2001 Market Street, Suite 3400

Philadelphia, PA 19103

Attn: Stacy C. Bedwick, Esquire

Facsimile No.: (215) 735-2513

Email: sbedwick@ledgewood.com

Notices may be given on behalf of any party by its legal counsel.

(b)Each such notice, demand, request or other communication shall be deemed to have been properly given for all purposes if (i) delivered to a nationally recognized overnight courier service for next business day delivery, to its addressee at such party’s address as set forth above or (ii) delivered via facsimile transmission to the facsimile number listed above or via electronic mail to the email address listed above,.

(c)Each such notice, demand or request shall be deemed to have been given upon the earlier of (i) actual receipt or refusal by the addressee or (ii) deposit thereof with the courier if sent pursuant to section (b)(ii) above.

5.Additional Escrow Provisions.

(a)Deposit. Title Company agrees to deposit the Deposit in an interest bearing account, subject to the receipt from Buyer of a form W-9 for the purposes of investing said funds and to hold and disburse said funds, and any interest earned thereon, as hereinafter provided. Upon written notification from Seller or Buyer in accordance with the terms of this Agreement, Title Company shall release the funds in accordance with and pursuant to the written instructions. In the event of a dispute between any of the parties hereto sufficient in the sole discretion of Title Company to justify its doing so, Title Company shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged.

(b)Escrow Holder. Seller and Buyer covenant and agree that in performing any of its duties under this Agreement, Title Company shall not be liable for any loss, costs or damage which it may incur as a result of serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Title Company shall not incur any liability with respect to (i) any action taken or omitted to be taken in good faith upon advice of its counsel given with respect to any questions relating to its duties and responsibilities, or (ii) to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in this Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Title Company shall in good faith believe to be genuine, to have been signed or presented by a proper person or persons and to conform with the provisions of this Agreement.

(c)Indemnity. Seller and Buyer hereby agree to indemnify and hold harmless Title Company against any and all losses, claims, damages, liabilities and expenses, including without limitation, reasonable costs of investigation and attorneys' fees and disbursements which may be imposed upon or incurred by Title Company in connection with its serving as Escrow Holder hereunder, except for any loss, costs or damage arising out of its willful default, gross negligence or failure to adhere to the terms or conditions of this Agreement. The provisions of this Section shall survive termination of this Agreement.

6.Miscellaneous.

(a)Entire Agreement; Governing Law. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof, supersedes all prior or other negotiations, representations, understandings and agreements of, by or among the parties, express or implied, oral or written, which are fully merged herein. The express terms of this Agreement control and supersede any course of performance and/or customary practice inconsistent with any such terms. Any agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Agreement unless such agreement is in writing and signed by the party against whom enforcement of such change, modification, discharge or abandonment is sought. This Agreement shall be governed by and construed under the laws of the State where the Real Property is located.

(b)Liability. Notwithstanding anything to the contrary contained herein, Seller’s shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Seller and the partners or members of Seller assume no personal liability for any obligations entered into on behalf of Seller and its individual assets shall not be subject to any claims of any person relating to such obligations.  The foregoing shall govern any direct and indirect obligations of Seller under this Agreement. This provision shall expressly survive Closing and recordation of the Deed or termination of this Agreement.

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

(d)Provisions Separable. The provisions of this Agreement are independent of and separable 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 provision may be invalid or unenforceable in whole or in part.

(e)Gender, etc. Words used in this Agreement, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

(f)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 be binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected on this Agreement as the signatories. Electronically transmitted counterparts of this Agreement or signature pages hereof shall have the same force and effect as originals.

(g)Exhibits. All exhibits attached to this Agreement are incorporated by reference into and made a part of this Agreement.

(h)No Waiver. Neither the failure nor any delay on the part of either party to this Agreement 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 any 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.

(i)Headings. The headings incorporated in this Agreement are for convenience in reference only, are not a part of this Agreement and do not in any way limit or add to the terms and provisions of this Agreement.

(j)Interpretation. No provision of this Agreement is to be interpreted for or against either party because that party or that party’s legal representative or counsel drafted such provision.

(k)Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the final day of any time period provided in this Agreement shall end on a Saturday, Sunday or legal holiday, then the final day shall extend to 5:00 p.m. Eastern time of the next full business day (provided further, however, that if the final day of any time period provided in this Agreement, prior to the expiration of which time period Buyer has an express termination right hereunder, shall end on a Saturday, Sunday or legal holiday, then the final day shall extend to 6:00 p.m. Eastern time of the next full business day). For the purposes of this Section, the term “holiday” shall mean a day other than a Saturday or Sunday on which banks are closed in the state in which the Real Property is located.

(l)Attorney’s Fees. In connection with any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all costs incurred, including reasonable attorney’s fees. For purposes of this Agreement, “prevailing party” shall include, without limitation, a party obtaining substantially the relief sought, whether by compromise, settlement or otherwise.

(m)No Recording of Agreement. Neither Seller nor Buyer shall cause or permit this Agreement to be filed of record in any office or place of public record and, if Buyer or Seller shall fail to comply with the terms hereof by recording or attempting to record the same, such act shall not operate to bind or cloud title to the Real Property.

(n)Negotiations. Seller shall have the right at all times prior to the expiration of the Inspection Period, to solicit backup offers and enter into discussions, negotiations, or any other communications concerning or related to the sale of the Property with any third party; provided, however, that such communications are subject to the terms of this Agreement and that Seller shall not enter into any contract with a third party for the sale of the Property unless such contract is contingent on the termination of this Agreement without the Property having been conveyed to Buyer.

(o)WAIVER OF JURY TRIAL. BUYER WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT, (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE BUYER AND SELLER IN RESPECT OF THIS AGREEMENT OR RELATED TRANSACTIONS, IN EACH CASE WHETHER NOW EXISTING OR LATER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BUYER AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SELLER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BUYER TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

(p)1031 Exchange. Buyer or Seller may desire to exchange, for other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated thereunder, fee title in the Real Property. Each of Buyer and Seller expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in Treasury Reg. §1.1031(k)-1(g)(4) on or before Closing and each party hereby agrees to fully cooperate with the other party, at no cost to such party, in the furtherance of any such like-kind exchange pursuant to Code §1031 contemplated by either party hereto.

(q)Reporting Person. Each of Seller and Buyer hereby designate the Escrow Holder as the “Reporting Person” as such term is utilized in Section 6045 of the Internal Revenue Code of 1986, as amended, and regulations thereunder. Seller agrees to provide the Title Company with such information as may be required for the Escrow Holder to file a Form 1099 or other required form relative to the Closing with the Internal Revenue Service. A copy of the filed Form 1099 or other filed form shall be provided to Seller and Buyer simultaneously with its being provided to the Internal Revenue Service.

7.Texas Disclosures. By its signature to this Agreement, Buyer hereby acknowledges its receipt of the following notices at or before the execution of this Agreement:

(a)Notice Regarding Possible Liability for Additional Taxes. If for the current ad valorem tax year the taxable value of the Property that is the subject of this Agreement is determined by a special appraisal method that allows for appraisal of the Property at less than its market value, the Buyer may not be allowed to qualify the Property for that special appraisal in a subsequent tax year and the Property may then be appraised at its full market value. In addition, the transfer of the Property or a subsequent change in the use of the Property may result in the imposition of an additional tax plus interest as a penalty for the transfer or the change in the use of the Property. The taxable value of the Property and the applicable method of appraisal for the current tax year is public information and may be obtained from the Bexar County Appraisal District.

(b)Notice Regarding Possible Annexation. If the Property that is the subject of this Agreement is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of a municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality's extraterritorial jurisdiction or is likely to be located within a municipality's extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

(c)Property Located in a Certificated Service Area of a Utility Service Provider. The Property that you are about to purchase may be located in a certificated water or sewer service area, which is authorized by law to provide water or sewer service to the properties in the certificated area. If the Property is located in a certificated area there may be special costs or charges that you will be required to pay before you can receive water or sewer service. There may be a period required to construct lines or other facilities necessary to provide water or sewer service to the Property. You are advised to determine if the Property is in a certificated area and contact the utility service provider to determine the cost that you will be required to pay and the period, if any, that is required to provide water or sewer service to the Property.

(d)Notice Regarding District. If the Property is situated in a utility or other statutorily created district providing water, sewer, drainage, or flood control facilities and services, Chapter 49, Texas Water Code, requires Seller to deliver and Buyer to sign the statutory notice relating to the tax rate, bonded indebtedness, or standby fees of the district before final execution of this Agreement.

(e)Notice Regarding Coastal Property. If the Property adjoins or shares a common boundary with the tidally influenced submerged lands of the state, Section 33.135, Texas Natural Resources Code, requires a notice regarding coastal area property to be included as part of this Agreement.

(f)Lead Disclosure. If apartments or other residential units are on the Property and the units were built before 1978, federal law requires a lead-based paint and hazard disclosure statement to be made part of this Agreement.

(g)Mold Remediation. Section 1958.154, Texas Occupations Code, requires Seller to provide Buyer a copy of any mold remediation certificate issued for the Property during the five (5) years preceding the date the Seller sells the Property.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement as a sealed instrument as of the day and year first above written.

SELLER:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By: _________________________________

Name:

Title:

BUYER:

WESTMOUNT REALTY CAPITAL, LLC, a Texas limited liability company

By: _________________________________

Name: Stephen H. Kanoff

Title: Manager

Taxpayer ID Number: ____________________

JOINDER OF ESCROW HOLDER

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, the Escrow Holder named in the annexed Agreement, hereby agrees to be bound by the provisions of the annexed Agreement relating to the holding and disbursement of all monies paid to the undersigned in escrow, and to disburse such sums strictly in accordance with the terms of the Agreement.

Intending to be legally bound, the undersigned has caused this Joinder to be executed by its duly authorized representative the ____day of ____________________, 2016.

CHICAGO TITLE INSURANCE COMPANY

By:_________________________

Name:

Title:

EXHIBIT A

[LEGAL DESCRIPTION OF REAL PROPERTY]

EXHIBIT B

When recorded, return to:Attention:

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

SPECIAL WARRANTY DEED

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company (“Grantor”), whose address is c/o Resource Real Estate, Inc., 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) paid to Grantor and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has GRANTED, BARGAINED, SOLD and CONVEYED and does hereby GRANT, BARGAIN, SELL and CONVEY unto , a (“Grantee”), whose address is ___________________________________, that certain tract of land situated in Bexar County, Texas, as more fully described on Exhibit A attached hereto and made a part hereof for all purposes, together with (a) all improvements located thereon, (b) all rights, benefits, privileges, easements, tenements, hereditaments and appurtenances there unto belonging or in any wise, pertaining thereto, and (c) all of Grantor’s right, title and interest in and to adjacent strips, gores, streets, roads, alleys and rights-of-way (said land, improvements, rights, benefits, privileges, easements, tenements, hereditaments, appurtenances and interests being hereinafter referred to as the “Real Property”).

This conveyance is made and accepted subject to all matters set out herein above and in Exhibit B, attached hereto and incorporated herein by reference (“Permitted Exceptions”) but only to the extent the Permitted Exceptions are valid, existing and affect the Real Property.

TO HAVE AND TO HOLD the Real Property, together with all rights and appurtenances pertaining thereto, unto Grantee and Grantee’s successors and assigns forever, and Grantor does hereby bind itself and its successors and assigns to WARRANT and FOREVER DEFEND, all and singular, subject to the Permitted Exceptions, the Real Property unto Grantee and Grantee’s successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Grantor, but not otherwise.

All ad valorem taxes for the year in which the conveyance occurs have been prorated between Grantor and Grantee and Grantee shall be obligated to pay same.

DATED effective as of the ___ day of ________, 2016.

GRANTOR:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By:__________________________

Name:

Title:

Acknowledgment

STATE OF     §

§

COUNTY OF     §

BEFORE ME, the undersigned, a Notary Public in and for said County and State, on this day personally appeared ______________, known to me to be the _______________ of RCP Cape Cod Manager, LLC, a Delaware limited liability company, manager of RRE Cape Cod Holdings, LLC, the limited liability company that executed the foregoing instrument, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the said limited liability company, and that he/she executed the same as the act of such limited liability company for the purposes and consideration therein expressed and in the capacity therein stated.

GIVEN UNDER MY HAND AND SEAL OF OFFICE this _____ day of ___________, 2016.

__________________________________________

Notary Public

My Commission Expires:______________

Exhibit A – Legal Description

Exhibit B - Permitted Exceptions

EXHIBIT A TO DEED

EXHIBIT B TO DEED

PERMITTED EXCEPTIONS

EXHIBIT C

BILL OF SALE AND ASSIGNMENT

THIS BILL OF SALE AND ASSIGNMENT (the “Assignment”) is made as of _________________, 2016, by RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company (“Seller”), in favor of ___________________, a ________________ (“Buyer”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ________________, 2016 (the “Agreement of Sale”), Seller has agreed to sell to Buyer, upon the terms, provisions and conditions set forth therein, certain property commonly known as the Cape Cod Apartments located at 13030 Blanco Road, San Antonio, TX 78216, all as more particularly described in the Agreement of Sale (the “Property”).

B.    In connection with the sale and purchase of the Property, Seller desires to sell, assign and transfer to Buyer all of Seller’s right, title and interest in and to the Personal Property identified and as defined in the Agreement of Sale, all upon the terms, covenants and conditions set forth in this instrument.

NOW THEREFORE, for an in consideration of Ten Dollars ($10.00), the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Seller hereby agrees as follows:

1.    Definitions. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given such terms in the Agreement of Sale.

2.Transfer and Assignment. Seller hereby sells, transfers, assigns, delivers and conveys to Buyer, its successors and assigns, all of Seller's right, title and interest in, to and under the Personal Property.

3.Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows:

(i)    Seller is the sole owner and holder of the Personal Property; and

(ii)    Seller has the power, authority and right to execute and deliver this Assignment and to sell, transfer, assign, deliver and convey the Personal Property.

4.AS IS, WHERE IS. THE PERSONAL PROPERTY IS BEING CONVEYED “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS” AS OF THE DATE OF THIS ASSIGNMENT, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER AS TO ITS CONDITON, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, THERETO. BUYER IS HEREBY THUS ACQUIRING THE PERSONAL PROPERTY BASED SOLEY UPON BUYER’S OWN INDEPENDENT INVESTIGATIONS AND INSPECTION OF THAT PROPERTY AND NOT IN RELIANCE UPON ANY INFORMATION PROVIDED BY SELLER OR SELLER’S AGENTS OR CONTRACTORS.

5.Absolute Transfer. It is the intention of Seller to transfer absolute title of the Personal Property to Buyer, its successors and assigns, free of any equity of redemption by Seller or its successors and assigns

6.Binding Effect. This Assignment shall be binding upon and inure to the benefit of Seller and Buyer and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Seller has caused this Bill of Sale and Assignment to be executed by its duly authorized officer on the day and year first above written.

SELLER:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By:_________________________

Name:

Title:

EXHIBIT D

[RENT ROLL]

SEE ATTACHED

EXHIBIT E

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made and entered into as of __________, 2016, by and between RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company (“Assignor”), and _________________, a __________________ (“Assignee”).

RECITALS

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of ____________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as the Cape Cod Apartments located at 13030 Blanco Road, San Antonio, TX 78216, all as more particularly described in the Agreement of Sale (the “Property”)

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all tenant leases encumbering the Property and Assignee desires to accept said assignment and assume the obligations of Assignor under said leases, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignee to Assignor for the Property, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over unto Assignee all of Assignor’s right, title and interest in and to (collectively, the “Assigned Interests”) (a) the leases set forth on the rent roll attached hereto as Exhibit A and made a part of this Assignment and any other lease, license or right of occupancy affecting the Property, together with all amendments, extensions, and other modifications thereto (the “Leases”), (b) any and all rights of Assignor and the lessor under the Leases to collect rents, additional rents, escrow or security deposits, fees, income, charges, and profits now or hereafter arising thereunder, and (c) any guarantees of any Leases, to have and to hold the same unto Assignee, its successors and assigns.

    2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor on the part of the lessor/landlord under the Leases first arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorney’s fees and legal costs) (a) arising out of the Assigned Interests in connection with events occurring at any time during Assignor’s ownership of the Property, or (b) arising out of any claim by any tenant arising prior to the date of this Assignment with respect to any security deposit but only to the extent of the amount of such security deposit and interest thereon not transferred by Assignor to Assignee.

4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Assigned Interests in connection with events occurring on or after the date of this Assignment or arising out of any claim by any tenant arising on or after the date of this Assignment with respect to its security deposit but only to the extent of the amount of such security deposit and interest thereon transferred by Assignor to Assignee and not returned to such tenant by Assignee.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Assignment and Assumption of Leases to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By:_________________________

Name:

Title:

ASSIGNEE:

[_______________________]

By: ________________________

Name:

Title:

Exhibit A – rent roll

EXHIBIT F

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is made and entered into as of __________ 2016, by and between RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company (“Assignor”) and _________________, a __________________ (“Assignee”).

R E C I T A L S:

A.    Pursuant to a certain Agreement of Purchase and Sale, dated as of _________, 2016 (the “Agreement of Sale”), Assignor has agreed to sell to Assignee, upon the terms, provisions and conditions set forth therein, certain property commonly known as the Cape Cod Apartments located at 13030 Blanco Road, San Antonio, TX 78216, all as more particularly described in the Agreement of Sale (hereinafter “Property”).

B.    In connection with the sale and purchase of the Property, Assignor desires to assign to Assignee all of Assignor’s right, title and interest in and to those agreements set forth on Exhibit A attached to and made a part of this Assignment (collectively, the “Contracts”) and Assignee desires to accept said assignment and assume the obligations of Assignor under the Contracts, all upon the terms, covenants and conditions set forth in this instrument.

NOW, THEREFORE, in consideration of the purchase price paid by Assignor to Assignee for the Property and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee covenant and agree as follows:

1.    Assignment. Assignor hereby assigns, transfers and sets over to Assignee all of Assignor’s right, title and interest in and to the Contracts. Assignor agrees to pay and perform all terms, covenants, conditions, agreements and obligations to be kept and performed under the Contracts to the date of this Assignment, together with such other obligations of Assignor concerning the Contracts set forth in the Agreement of Sale.

2.    Assumption. Assignee accepts said assignment and assumes all obligations of Assignor under the Contracts arising or accruing on or after the date of this Assignment.

3.    Indemnification by Assignor. Assignor agrees to indemnify, defend and hold Assignee harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring prior to the date of this Assignment.

4.    Indemnification by Assignee. Assignee agrees to indemnify, defend and hold Assignor harmless from and against any claim, demand, cause of action, charge, judgment, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the Contracts in connection with events occurring on or after the date of this Assignment.

5.     Counterparts. This Assignment may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. For purposes of this Assignment, any signature transmitted by e-mail (in pdf format) shall be considered to have the same legal and binding effect as any original signature.

6.    Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, intending to be legally bound, Assignor and Assignee have caused this Assignment and Assumption of Contracts to be executed by their duly authorized officers on the day and year first above written.

ASSIGNOR:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By:_________________________

Name:

Title:

ASSIGNEE:

[________________]

By: _____________________

Name:

Title:

Exhibit A – list of contracts

EXHIBIT G

FIRPTA

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the undersigned “Transferor” which is the owner, directly or indirectly of all of the membership interests of RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company, which has legal title to a U.S. real property interest under local law, will be the actual transferor of the property for U.S. tax purposes and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by Transferor, the undersigned hereby certifies as follows:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity, as defined in Treas. Reg. § 1.1445-2(b)(2)(iii);

3. Transferor’s U.S. taxpayer identification number is _____________________; and

4. Transferor’s office address is 1845 Walnut Street, 18^th Floor, Philadelphia, PA 19103.

Transferor understands that the above information may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, the undersigned, in the capacity set forth below, hereby declares that he has examined this instrument and to the best of his knowledge and belief it is true, correct, and complete, and the undersigned further declares that he has the authority to sign this document in such capacity.

TRANSFEROR:

[MEMBER]

Dated: _________________, 2016

EXHIBIT H

NOTICE TO TENANTS

_________, 2016

PERSONAL DELIVERY
Residents of Cape Cod Apartments

13030 Blanco Road,

San Antonio, TX 78216

Dear Resident:

Notice is hereby given to the tenants of the Cape Cod Apartments (the “Property”) that the current owner of the Property (the “Seller”), has sold the Property to ____________(“Buyer”), effective as of this date. Buyer has assumed all of the obligations of Seller, as landlord under your lease, including any obligations with respect to your security deposit. Buyer acknowledges that it has received and is responsible for your security deposit in the amount listed on the Addendum hereto, which security deposit has been transferred to Buyer, less any amounts applied by Seller listed on the Addendum attached hereto. Any pending claims by Seller against your security deposit are also described on the Addendum attached hereto. Buyer is now your landlord and all future rent payments under your lease shall be made to Buyer.

In the event that your rent payments are made to Seller via an ACH, other automatic debit system, or the WIPS program, such payments shall be rejected as of the date hereof and you should make alternative arrangements with Buyer for the payment of your rent.

Buyer’s address for purposes of your lease is as follows:

___________________

___________________

Attn: _______________

All future rental payments should be hand delivered to the on-site rental office.

Sincerely,

SELLER:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, its manager

By:____________________________

Name:

Title:

BUYER:

[_________________]

By:______________________________

Name:

Title:

ADDENDUM

Tenant: ____________________

Unit No.: ___________________

Original Security Deposit Amount: $___________

Amount of Security Deposit Previously Applied: $____________

Existing Security Deposit Amount Being Transferred: $__________

SCHEDULE 5(b)

[DOCUMENTS]

To the extent in Seller’s possession or control:

Base Building Information

Seller’s Phase I Report for the Property

Radon Testing Reports (included in Phase I)

Moisture Management Plan

List of Hazardous Substances stored on the Property (included in personal property list)

Pool Permits

Licenses

Survey (Most Recent)

Marketing Brochure

Floor Plans

Site Plan

Property Maintenance Work Order History (Prior 24 months)

CC&Rs, Owner’s Association or condo documents, if any (included in title link)

Financial Information

Current Building/Capital Improvement Projects -- please include pending proposals or executed contracts, including description of what is planned

Capital Improvements (historical/projected) past three years for historical

Budget (Current year)

Security Deposit Listing

Utility Security Deposits (via Conservice login)

Utility invoices by month for the past 6 months (via Conservice Login)

List of Utility Accounts (via Conservice Login)

General Ledger report of revenues and expenses for the prior 2 years and to current date for the current year

Detailed Income Statements, YTD, prior 3 years

All Leases, Amendments, Lease correspondence for current tenants (available on-site)

Rent Roll, Current (Needs to include tenant name, unit number, rent rates, concessions, term, other income,

and security deposits)

RUBS/electric billings (via Conservice login)

Aging Reports (Current and past 6 months, by month)

All Service Contracts (including utility agreements)

Utility Agreements (included in Service Contracts)

Property Tax and Personal Property Tax statements for current year and prior 2 years

Property Tax Appeal information

Occupancy/Vacancy History, past 3 years, and current year

Bank Statements for 24 months

Other Information

Seller Certificate of Insurance

Insurance Loss History, prior 3 years

List of Pending Litigation

Current Title Policy

Personal Property Inventory

LW:1035494.5

EX-10.7

REINSTATEMENT OF AND

AMENDMENT TO

AGREEMENT OF PURCHASE AND SALE

THIS REINSTATEMENT OF AND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (this “Amendment”) is made effective as of October 7, 2016, by and between RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company (“Seller”), and WESTMOUNT REALTY CAPITAL, LLC, a Texas limited liability company (“Buyer”).

RECITALS

WHEREAS, Seller and Buyer entered into that certain Agreement of Purchase and Sale dated August 22, 2016 (the “Agreement”) for the purchase and sale of Cape Cod Apartments located in San Antonio, Texas, which property is further described in the Agreement; and

WHEREAS, the Agreement was terminated by Buyer on September 16, 2016 in accordance with the terms of the Agreement; and

WHEREAS, the parties desire to reinstate and amend the Agreement pursuant to the terms hereof.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree to amend the Agreement as follows:

AGREEMENT

1.The Agreement is hereby reinstated as modified hereby. Buyer and Seller hereby agree that, notwithstanding anything contained in the Agreement to the contrary, Buyer shall wire directly to Seller the additional deposit in the amount of $325,000 in immediately available funds (as contemplated by Section 2(b) of the Agreement, though modified hereby insofar as such additional deposit being paid directly to Seller) no later than 5:00 p.m. (Eastern) on Monday, October 10, 2016, pursuant to the wiring instructions for Seller’s account attached hereto as Exhibit “A” (and, to the extent Closing is completed under the Agreement, as amended hereby, such additional deposit shall be credited against the Purchase Price (as amended hereby)).

2.Buyer and Seller hereby agree that, notwithstanding anything contained in the Agreement to the contrary, the Initial Deposit of $175,000.00, which has remained held by Escrow Holder following Buyer’s termination of the Agreement, shall be immediately paid by Escrow Holder to Seller upon the execution of this Amendment by Buyer and Seller, pursuant to the wiring instructions for Seller’s account attached hereto as Exhibit “A” (and, to the extent Closing is completed under the Agreement, as amended hereby, the Initial Deposit shall be credited against the Purchase Price (as amended hereby)).

3.Buyer and Seller hereby agree that the “Purchase Price” for the Property as defined in Section 2 of the Agreement is amended to be in the amount of FIFTEEN MILLION SEVEN HUNDRED THOUSAND AND 00/100 DOLLARS ($15,700,000.00).

4.Buyer and Seller hereby agree that Section 4 of the Agreement [Closing] is deleted in its entirety and replaced with the following language:

“Closing. The consummation of the purchase and sale of the Property (the “Closing”) shall take place on or before November 21, 2016 or at such earlier date as mutually agreed to in writing by the parties (the “Closing Date”). The Closing shall be conducted through an escrow with the Escrow Holder, with escrow fees to be paid equally by Seller and Buyer. IT IS AGREED THAT TIME IS OF THE ESSENCE OF THIS AGREEMENT.”

5.Buyer hereby (i) waives and removes any and all Buyer contingencies contained in the Agreement; (ii) acknowledges and agrees that the Title, Survey, ESA Period and Buyer’s right to terminate the Agreement under Section 3(e) has expired; (iii) acknowledges and agrees that the Inspection Period and Buyer’s rights to terminate the Agreement under Sections 5(d) and 6(b) have expired; and (iv) shall conclusively be deemed to have (A) completed all Buyer investigations and review of reports and other applicable information and disclosures and (B) elected to proceed with the transaction.

6.This Amendment shall be binding on and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

7.The parties hereby ratify and affirm all other provisions of the Agreement and agree that the Agreement, as amended by this Amendment, remains in full force and effect. This Amendment and the Agreement constitute the entire agreement between the parties hereto and supersedes all discussions, understanding, agreement and negotiations between the parties hereto.

8.In the event of any conflict between the provisions of this Amendment and the provisions of the Agreement, the provisions of this Amendment shall prevail.

9.This Amendment may be executed in two or more counterpart copies, all of which shall have the same force and effect as if all parties hereto had executed a single copy of this Amendment. Facsimile or other electronic transmission (e.g., in PDF format) of any executed original of this Amendment shall be the same as the delivery of an original.

10.This Amendment shall be governed by and construed under the laws of the State of Texas.

11.Capitalized terms in this Amendment shall have the same meaning as set forth in the Agreement, unless otherwise modified hereby. All references in the Agreement to the Agreement shall be references to such document as modified hereby.

[signatures appear on the following page]

IN WITNESS WHEREOF, the parties hereto have executed this Reinstatement and Amendment to Agreement of Purchase and Sale as of the date first above mentioned.

SELLER:

RRE CAPE COD HOLDINGS, LLC, a Delaware limited liability company

By: RCP Cape Cod Manager, LLC, a Delaware limited liability company, its manager

By: _______________________________

Name:

Title:

BUYER:

WESTMOUNT REALTY CAPITAL, LLC, a Texas limited liability company

By: _______________________________

Name: Stephen H. Kanoff

Title: Manager

EXHIBIT “A”

SELLER’S WIRING INSTRUCTIONS

BANK NAME:        TD Bank, N.A.

Philadelphia, PA

ACCOUNT NAME:        RESOURCE REAL ESTATE INVESTORS 7, L.P.

ABA NUMBER:        036 001 808    

ACCOUNT #:            36 650020 5

LW:1049316.2

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Kevin M. Finkel, certify that:

1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2016 of Resource Real Estate Investors 7, L.P.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
March 28, 2017	By:        /s/ Kevin M. Finkel
	Kevin M. Finkel
	President
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Steven R. Saltzman, certify that:

1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2016 of Resource Real Estate Investors 7, L.P.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
March 28, 2017	By:          /s/ Steven R. Saltzman
	Steven R. Saltzman
	Vice President - Finance
	(Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARANES-OXLEY ACT OF 2002

In connection with the Annual Report of Resource Real Estate Investors 7, L.P. (“the Company”) on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin M. Finkel, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
March 28, 2017	By:      /s/ Kevin M. Finkel
	Kevin M. Finkel
	President
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARANES-OXLEY ACT OF 2002

In connection with the Annual Report of Resource Real Estate Investors 7, L.P. (“the Company”) on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven R. Saltzman, Vice President - Finance of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By:  Resource Capital Partners, Inc., its general partner
March 28, 2017	By:      /s/ Steven R. Saltzman
	Steven R. Saltzman
	Vice President - Finance
	(Principal Accounting Officer)

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2016 USD ($) shares
Document and Entity Information [Abstract]
Entity Registrant Name	Resource Real Estate Investors 7, L.P.
Entity Central Index Key	0001486279
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding | shares	0
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float | $	$ 0

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Rental properties, at cost:
Land	$ 0	$ 4,201
Buildings and improvements	0	31,920
Personal property	0	1,551
Identifiable intangible assets	0	1,497
Total rental properties, at cost	0	39,169
Accumulated depreciation and amortization	0	(9,634)
Total rental properties, net	0	29,535
Cash	1,570	6,702
Restricted cash	0	1,600
Accounts receivable	59	70
Accounts receivable due from related parties	121	171
Prepaid expenses and other assets	0	71
Total assets	1,750	38,149
Liabilities:
Mortgage notes payable	0	25,630
Accounts payable and accrued expenses	46	574
Real estate taxes payable	0	1,132
Accrued interest	0	116
Payables to related parties	5	138
Prepaid rents	0	114
Security deposits	0	170
Total liabilities	51	27,874
Partners’ capital	1,699	10,275
Total liabilities and partners’ capital	$ 1,750	$ 38,149

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Rental income	$ 6,359	$ 10,341
Expenses:
Rental operating	3,788	5,385
Management fees – related parties	450	768
General and administrative	463	503
Depreciation and amortization	856	1,872
Total expenses	5,557	8,528
Income before other income (expenses)	802	1,813
Other income (expenses):
Interest expense, net	(1,223)	(1,957)
Loss on extinguishment of debt	(2,379)	0
Gain on sale of rental properties	33,965	17,645
Loss on disposal of fixed assets	(2)	(16)
Total other income (expenses)	30,361	15,672
Net income	$ 31,163	$ 17,485
Weighted average number of limited partner units outstanding	3,270	3,270
Net income (loss) per weighted average limited partner unit, basic and diluted (in dollars per unit)	$ 9.53	$ 5.35

XML

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL - USD ($) $ in Thousands	Total	General Partner	Limited Partners
Balance at Dec. 31, 2014	$ 9,921	$ 1	$ 9,920
Balance (in units) at Dec. 31, 2014			3,269,655
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	(17,131)		$ (17,131)
Net income	17,485		17,485
Balance at Dec. 31, 2015	10,275	1	$ 10,274
Balance (in units) at Dec. 31, 2015			3,269,655
Increase (Decrease) in Partners' Capital [Roll Forward]
Distributions	(39,739)	(2,773)	$ (36,966)
Net income	31,163	3,112	28,051
Balance at Dec. 31, 2016	$ 1,699	$ 340	$ 1,359
Balance (in units) at Dec. 31, 2016			3,269,655

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities:
Net income	$ 31,163	$ 17,485
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales of rental properties	(33,965)	(17,645)
Loss on extinguishment of debt	2,379	0
Depreciation and amortization	856	1,872
Amortization of deferred financing costs	261	126
Losses on disposal of fixed assets	2	16
Changes in operating assets and liabilities:
Restricted cash	119	36
Accounts receivable	95	11
Prepaid expense and other assets	(29)	26
Accounts receivable due from related parties	50	(72)
Accounts payable and accrued expenses	(451)	244
Real estate taxes payable	(206)	144
Accrued interest	(34)	(25)
Payables to related parties	(133)	(1,872)
Prepaid rents	(76)	25
Security deposits	(4)	(3)
Net cash provided by operating activities	27	368
Cash flows from investing activities:
Capital expenditures	(303)	(663)
Restricted cash	(126)	288
Proceeds from sale of rental properties, net	37,739	19,885
Net cash provided by investing activities	37,310	19,510
Cash flows from financing activities:
Distributions to limited partners	(39,739)	(17,131)
Principal payments on mortgage notes payable	(351)	(528)
Payment of defeasance costs on extinguishment of debt	(2,379)	0
Net cash used in financing activities	(42,469)	(17,659)
Net (decrease) increase in cash	(5,132)	2,219
Cash at beginning of period	6,702	4,483
Cash at end of period	1,570	6,702
Non-cash Investing and Financing Activities
Settlement of mortgage notes payable with proceeds from sale of rental properties	$ 25,540	$ 22,272

XML

NATURE OF BUSINESS AND OPERATIONS

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND OPERATIONS

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Investors 7, L.P. (“R-7” or the “Partnership”) is a Delaware limited partnership which, until November 21, 2016, owned and operated multifamily residential rental properties. The Partnership was formed on March 28, 2008 and commenced operations on June 16, 2008.  The Partnership's general partner, Resource Capital Partners, Inc. (“RCP”, the “General Partner”, or “GP”), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs.  RCP contributed $1,000 in cash as its minimum capital contribution to the Partnership.  In addition, during the year ended December 31, 2016 and 2015, RCP held a 5.62% limited partnership interest in the Partnership. RCP is an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a company operating in the real estate, financial fund management and commercial finance sectors.

On September 8, 2016, RAI was acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities. C-III indirectly controls RCP and all of the general and limited units of the Partnership currently owned by RCP.

The General Partner, in its discretion, may extend the Partnership's term for up to an aggregate of two years. The General Partner has complete and exclusive discretion in the management of the Partnership's business. Pursuant to the Partnership's limited partnership agreement, the Partnership's term was set to expire on March 28, 2016. On February 12, 2016, by written notice to the partners, the General Partner elected to extend the term for one year to March 28, 2017.

The First Amended and Restated Agreement of Limited Partnership (the "Agreement") provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LP’s have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

As of December 31, 2016 the Partnership had disposed of all real estate assets and is in the process of liquidating its operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, as follows:

Subsidiaries	Purchase Date	Disposition Date
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”)(1)	07/31/2008	12/01/2015
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)(2)	12/10/2008	09/12/2016
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)(3)	12/10/2008	11/21/2016
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)(4)	12/12/2008	09/12/2016
RRE Woodland Hills Holdings, LLC, or Woodland Hills Apartments (“The Hills”)(5)	12/19/2008	03/19/2015
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)(6)	03/07/2012	09/30/2016

(1) Tamarlane was a 115 unit multifamily apartment complex in Maine.

(2) Bent Oaks was a 146 unit multifamily apartment complex in Texas.

(3) Cape Cod was a 212 unit multifamily apartment complex in Texas.

(4) Woodhollow was a 108 unit multifamily apartment complex in Texas.

(5) The Hills was a 228 unit multifamily apartment complex in Georgia.

(6) Woodland Village was a 308 unit multifamily apartment complex in South Carolina.

All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and adjusts the balance quarterly.  Actual results could differ from those estimates.

Supplemental Disclosure of Cash Flow Information

During the years endedDecember 31, 2016 and 2015, the Partnership paid $1.1 million and $1.9 million, respectively, in cash for interest.

Advertising

The Partnership expenses advertising costs as they are incurred.  Advertising costs, which are included in rental operating expenses, totaled $105,000 and $124,000 for the years endedDecember 31, 2016 and 2015, respectively.

Deferred Financing Costs

Costs incurred to obtain financing were capitalized and were being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership recorded deferred financing costs as a direct reduction of the related mortgage notes payable.

Concentration of Credit Risk

Financial instruments, which potentially subject the Partnership to concentration of credit risk, consist of periodic temporary deposits of cash. At December 31, 2016, the Partnership had $1.9 million of deposits at various banks, of which $1.3 million was over the insurance limit of the Federal Deposit Insurance Corporation. No losses have been experienced on such deposits.

Income Taxes

The Partnership evaluated the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership did not have any unrecognized tax benefits, nor interest and penalties, recorded in the consolidated balance sheets or consolidated statements of operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership was subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership had significant business operations.  The Partnership was not currently undergoing any examinations by taxing authorities. The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2016.

Revenue Recognition

Revenue was primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognized revenue in the period that rent was earned, which was on a monthly basis.  The Partnership recognized rent as income on a straight-line basis over the term of the related lease. Additionally, any incentives included in the lease were amortized on a straight-line basis over the term of the related lease.

Included within rental income were other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which were recognized when earned or received.

Long-Lived Assets

The Partnership reviewed long-lived assets for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable.  If it was determined that an asset’s estimated future cash flows would not be sufficient to recover its carrying amount, an impairment charge would be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership had estimated that the future cash flows from its Properties would be sufficient to recover their carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for either of the years ended December 31, 2016 or 2015.

Tenant Receivables

Tenant receivables were stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determined its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the industry as a whole.  The Partnership wrote off receivables when they became uncollectible.  At December 31, 2016 and 2015, there were no balances in allowances for uncollectible receivables.

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Adoption of New Accounting Standards

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for

the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption had no impact on the Partnership's consolidated financial statements.

In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU 2015-01"). The amendments in ASU 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. On January 1, 2016, the Partnership adopted ASU 2015-01; the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02; the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued No. ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable.

In September 2015, FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). which is intended to improve financial

reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which provides guidance on the classification of restricted cash in the statement of cash flows. ASU 2016-18 is effective for us for our fiscal year beginning November 1, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 850): Clarifying the Definition of

Business" ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. ASU 2017-01 is effective for us beginning January 1, 2018 but early adoption is allowed. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

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RESTRICTED CASH

12 Months Ended

Dec. 31, 2016

Restricted Cash and Investments [Abstract]

RESTRICTED CASH

NOTE 3 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements.  A summary of the components of restricted cash follows (in thousands):

	Years Ended
	December 31,
	2016		2015
Real estate taxes	$	—	$	1,034
Insurance	—		180
Capital improvements	—		386
Total	$	—	$	1,600

XML

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     In the ordinary course of its business operations, the Partnership had ongoing relationships with several related entities.

Substantially all of the receivables from related parties represent insurance deposits held in escrow by Resource Real Estate, Inc ("RRE") for self insurance which, if unused, will be returned to the Partnership. The Partnership's properties participate in insurance pools with other properties directly and indirectly managed by RAI for both the property insurance and general liability. RRE holds the deposits in escrow to fund future insurance claims. The pool for property insurance covers losses up to $2.5 million and the pool for the general liability covers losses up to the first $50,000 of each general liability incident. Catastrophic insurance would cover losses in excess of the insurance pools up to $140 million. Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership's financial condition and operating results. In the year ended December 31, 2016, the Partnership paid approximately $137,000 into the insurance pools.

     RCP was entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds, net of any amounts otherwise attributable to LP interests owned by RCP.  During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.  As of December 31, 2016 and 2015, the amount of unpaid subordinated investment management fees totaled $0 and $15,000, respectively. During the year ended December 31, 2016, the Partnership paid investment management fees totaling $157,000 due to the LP's Preferred Return threshold having been satisfied during the year ended December 31, 2016.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”), was entitled to receive property and debt management fees. RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties. As of December 31, 2016 and 2015, property management fees due totaled $0 and $62,000, respectively. Because the Partnership had not acquired any real estate debt investments, there were no debt management fees as of December 31, 2016 and 2015.

During the ordinary course of business, RCP and RREMI advanced funds for ordinary operating expenses on behalf of the Properties, which were substantially repaid within a few days. As of December 31, 2016 and 2015, advances for ordinary operating expenses due totaled $7,000 and $61,000, respectively. Total reimbursable operating expenses incurred during the years ended December 31, 2016 and 2015 were $1.2 million and $1.7 million, respectively. Reimbursable expenses include payroll and miscellaneous operating expenses. Reimbursable operating expenses are included in property operating expenses in the consolidated statements of operations.

During the year ended December 31, 2016 and 2015, total LP distributions paid to RCP, excluding investment management fees and Promote, were $1.9 million and $940,000, respectively.

During 2016, the General Partner received $2.9 million, $157,000 relates to investment management fees and $2.7 million represented the promote due to the sales of the four remaining Properties.

    The Partnership pays investment management fees and property management fees to related parties. These expenses

are summarized as follows (in thousands):

	Years Ended   December 31,
	2016		2015
RCP:
Investment management fees 1	$	142	$	251
RREML:
Property management fees - 5% of gross cash receipts 2	308		517
	$	450	$	768

(1) RCP was entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML was entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

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MORTGAGE NOTES PAYABLE

12 Months Ended

Dec. 31, 2016

Notes Payable [Abstract]

MORTGAGE NOTES PAYABLE

NOTE 4 - MORTGAGE NOTES PAYABLE

The following is a summary of mortgage notes payable (in thousands, except percentages):

	December 31, 2016						December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net		Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—	$	—	$	5,731	$	(50	)	$	5,681
Cape Cod	—		—		—		5,951		(51		)	5,900
Woodhollow	—		—		—		4,916		(43		)	4,873
Village	—		—		—		9,293		(117		)	9,176
Total	$	—	$	—	$	—	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt.

Bent Oaks and Woodhollow were sold on September 12, 2016. Woodland Village was sold on September 30, 2016. Cape Cod was sold on November 21, 2016. Proceeds from these sales were used to repay the outstanding borrowings. During the year ended December 31, 2016, the Partnership incurred losses of $2.4 million on extinguishment of debt due to defeasance prepayment costs.

Deferred financing costs included unamortized costs incurred to obtain financing which were amortized over the term

of the related debt. Accumulated amortization as of December 31, 2016 and December 31, 2015 was $0 and $486,000, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In analyzing the fair value of its financial instruments disclosed or accounted for on a fair value basis, the Partnership followed the fair value hierarchy, which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The Partnership determined fair value based on quoted prices when available or, if quoted prices were not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the financial instruments.  The fair value of cash, tenant receivables and accounts payable approximate their carrying values due to their short term nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date. 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or can be corroborated with observable market data for substantially the entire contractual term of the asset.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset and are consequently not based on market activity, but rather through particular valuation techniques.

The following methods and assumptions were used to estimate the fair value of the Partnership’s financial instruments:

Ÿ Mortgage notes payable.  Rates currently available to the Partnership for debt with similar terms and remaining maturities, which are Level 2 inputs, are used to estimate the fair value of existing debt.

The carrying amounts and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	December 31, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable:
Bent Oaks	—		—		$	5,731	$	6,121
Cape Cod	—		—		5,951		6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	—	$	—	$	25,891	$	27,003

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DISPOSITION OF PROPERTIES

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

DISPOSITION OF PROPERTIES

NOTE 7 - DISPOSITION OF PROPERTIES

The following table presents details of the Partnership's disposition activities during the years ended December 31, 2016 and 2015 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		9,122
Cape Cod	San Antonio, TX	11/21/2016	15,700		9,040
Tamarlane - additional gain recognized					10
			$	64,535	$	33,965
2015 Dispositions:
Hills	Decatur, GA	3/19/2015	$	25,200	$	9,603
Tamarlane	Portland, ME	12/1/2015	18,300		8,042
			$	43,500	$	17,645

The table below presents the revenues and net income attributable to properties sold for the year ended December 31, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold		Net Income Attributable to Properties Sold
Multifamily Community	For the year ended December 31, 2016		For the year ended December 31, 2016
2016 Dispositions:
Bent Oaks	$	1,240	$	8,367
Woodhollow	1,031		6,002
Cape Cod	1,819		8,509
Woodland Village	2,266		8,637
	$	6,356	$	31,515
	For the year ended December 31, 2015		For the year ended December 31, 2015
2015 Dispositions:
Hills	$	602	$	9,740
Tamarlane	1,808		8,374
	$	2,410	$	18,114

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 8 - SUBSEQUENT EVENTS

On January 30, 2017, the Partnership distributed $874,000 to the Partners.

The Partnership has evaluated subsequent events through the date these consolidated financial statements were issued and determined that no events have occurred, other than those disclosed above, which would require an adjustment to or disclosure in the consolidated financial statements.

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SCHEDULE III Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2016

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III Real Estate and Accumulated Depreciation

SCHEDULE III

Real Estate and Accumulated Depreciation

December 31, 2016

(dollars in thousands)

Column A

Column B

Column C

Column D

Column E

Column F

Column G

Column H

Column I

Description

Encumbrances

Initial cost to Company

Cost capitalized subsequent to acquisition

Gross amount at which carried at close of period

Accumulated depreciation

Date of construction

Date acquired

Life on which depreciation in latest income is computed

Buildings and land improvements

Improvements carrying costs

Buildings and land improvements total

Real estate owned:

$

—

$

—

$

—

$

—

$

—

	2016			2015
Investments in Rental Properties:
Balance at the beginning of the period	$	39,169		$	71,844
Additions during period:
Improvements	305			663
Deductions during period:
Disposals	(39,474		)	(33,338		)
Balance at the end of the period	$	—		$	39,169
Accumulated Depreciation
Balance at the beginning of the period	$	(9,634	)	$	(16,255	)
Sales	10,482			8,453
Disposals	8			40
Depreciation	(856		)	(1,872		)
Balance at the close of period	$	—		$	(9,634	)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Incentive Distribution Policy

The First Amended and Restated Agreement of Limited Partnership (the "Agreement") provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs.  All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LP’s have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP, as a Promote.

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, as follows:

Subsidiaries	Purchase Date	Disposition Date
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”)(1)	07/31/2008	12/01/2015
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)(2)	12/10/2008	09/12/2016
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)(3)	12/10/2008	11/21/2016
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)(4)	12/12/2008	09/12/2016
RRE Woodland Hills Holdings, LLC, or Woodland Hills Apartments (“The Hills”)(5)	12/19/2008	03/19/2015
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)(6)	03/07/2012	09/30/2016

(1) Tamarlane was a 115 unit multifamily apartment complex in Maine.

(2) Bent Oaks was a 146 unit multifamily apartment complex in Texas.

(3) Cape Cod was a 212 unit multifamily apartment complex in Texas.

(4) Woodhollow was a 108 unit multifamily apartment complex in Texas.

(5) The Hills was a 228 unit multifamily apartment complex in Georgia.

(6) Woodland Village was a 308 unit multifamily apartment complex in South Carolina.

All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  The Partnership estimates the allowance for uncollectible receivables and adjusts the balance quarterly.  Actual results could differ from those estimates.

Advertising

Advertising

The Partnership expenses advertising costs as they are incurred.

Deferred Financing Costs

Deferred Financing Costs

Costs incurred to obtain financing were capitalized and were being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership recorded deferred financing costs as a direct reduction of the related mortgage notes payable.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments, which potentially subject the Partnership to concentration of credit risk, consist of periodic temporary deposits of cash.

Income Taxes

Income Taxes

The Partnership evaluated the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process.  Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership.  The Partnership did not have any unrecognized tax benefits, nor interest and penalties, recorded in the consolidated balance sheets or consolidated statements of operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership was subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership had significant business operations.  The Partnership was not currently undergoing any examinations by taxing authorities. The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2013 through 2016.

Revenue Recognition

Revenue Recognition

Revenue was primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less.  The Partnership recognized revenue in the period that rent was earned, which was on a monthly basis.  The Partnership recognized rent as income on a straight-line basis over the term of the related lease. Additionally, any incentives included in the lease were amortized on a straight-line basis over the term of the related lease.

Included within rental income were other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which were recognized when earned or received.

Long-Lived Assets

Long-Lived Assets

The Partnership reviewed long-lived assets for impairment whenever events or changes in circumstances indicated that the carrying amount of an asset may not be recoverable.  If it was determined that an asset’s estimated future cash flows would not be sufficient to recover its carrying amount, an impairment charge would be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership had estimated that the future cash flows from its Properties would be sufficient to recover their carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for either of the years ended December 31, 2016 or 2015.

Tenant Receivables

Tenant Receivables

Tenant receivables were stated at amounts due from tenants net of an allowance for uncollectible receivables.  Payment terms vary and receivables outstanding longer than the payment terms are considered past due.  The Partnership determined its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the industry as a whole.  The Partnership wrote off receivables when they became uncollectible.

Redemptions

Redemptions

The LPs may request redemption of their units at any time.  The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion.  If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

Recent Accounting Standards

Adoption of New Accounting Standards

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for

the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The adoption had no impact on the Partnership's consolidated financial statements.

In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" ("ASU 2015-01"). The amendments in ASU 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. On January 1, 2016, the Partnership adopted ASU 2015-01; the adoption had no impact on the Partnership's consolidated financial statements.

In February 2015, FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. On January 1, 2016, the Partnership adopted ASU 2015-02; the adoption had no impact on the Partnership's consolidated financial statements.

In April 2015, FASB issued No. ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable.

In September 2015, FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

In August 2016, FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-13"), which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-13 has been early adopted by the Partnership. As result of adoption, the Partnership has classified cash paid on early extinguishment of debt as cash used in financing activities.

Accounting Standards Issued But Not Yet Effective.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). which is intended to improve financial

reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In June 2016, FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses” ("ASU 2016-13") which requires measurement and recognition of expected credit losses for financial assets held. The standard update is effective for the Partnership beginning January 1, 2019. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”), which provides guidance on the classification of restricted cash in the statement of cash flows. ASU 2016-18 is effective for us for our fiscal year beginning November 1, 2018. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 850): Clarifying the Definition of

Business" ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. ASU 2017-01 is effective for us beginning January 1, 2018 but early adoption is allowed. The Partnership does not believe that this guidance will have any impact on consolidated financial position, results of operations and cash flows, as the Partnership expects to terminate in 2017.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Schedule of Consolidated Subsidiaries

The accompanying consolidated financial statements have been prepared in conformity with accounting principles accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries, as follows:

Subsidiaries	Purchase Date	Disposition Date
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”)(1)	07/31/2008	12/01/2015
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)(2)	12/10/2008	09/12/2016
RRE Cape Cod Holdings,  LLC, or Cape Cod Apartments (“Cape Cod”)(3)	12/10/2008	11/21/2016
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)(4)	12/12/2008	09/12/2016
RRE Woodland Hills Holdings, LLC, or Woodland Hills Apartments (“The Hills”)(5)	12/19/2008	03/19/2015
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)(6)	03/07/2012	09/30/2016

(1) Tamarlane was a 115 unit multifamily apartment complex in Maine.

(2) Bent Oaks was a 146 unit multifamily apartment complex in Texas.

(3) Cape Cod was a 212 unit multifamily apartment complex in Texas.

(4) Woodhollow was a 108 unit multifamily apartment complex in Texas.

(5) The Hills was a 228 unit multifamily apartment complex in Georgia.

(6) Woodland Village was a 308 unit multifamily apartment complex in South Carolina.

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RESTRICTED CASH (Tables)

12 Months Ended

Dec. 31, 2016

Restricted Cash and Investments [Abstract]

Summary of Components of Restricted Cash

A summary of the components of restricted cash follows (in thousands):

	Years Ended
	December 31,
	2016		2015
Real estate taxes	$	—	$	1,034
Insurance	—		180
Capital improvements	—		386
Total	$	—	$	1,600

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Summary of Fees

The Partnership pays investment management fees and property management fees to related parties. These expenses

are summarized as follows (in thousands):

	Years Ended   December 31,
	2016		2015
RCP:
Investment management fees 1	$	142	$	251
RREML:
Property management fees - 5% of gross cash receipts 2	308		517
	$	450	$	768

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MORTGAGE NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2016

Notes Payable [Abstract]

Summary of Mortgage Notes Payable

The following is a summary of mortgage notes payable (in thousands, except percentages):

	December 31, 2016						December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net		Carrying Value		Mortgage balance		Deferred Finance Costs, Net(1)			Carrying Value
Bent Oaks	$	—	$	—	$	—	$	5,731	$	(50	)	$	5,681
Cape Cod	—		—		—		5,951		(51		)	5,900
Woodhollow	—		—		—		4,916		(43		)	4,873
Village	—		—		—		9,293		(117		)	9,176
Total	$	—	$	—	$	—	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Schedule of Carrying and Fair Values of Financial Instruments

The carrying amounts and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	December 31, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable:
Bent Oaks	—		—		$	5,731	$	6,121
Cape Cod	—		—		5,951		6,343
Woodhollow	—		—		4,916		5,234
Village	—		—		9,293		9,305
Total mortgage notes payable	$	—	$	—	$	25,891	$	27,003

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DISPOSITION OF PROPERTIES (Tables)

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Partnership's Disposition Activity

The following table presents details of the Partnership's disposition activities during the years ended December 31, 2016 and 2015 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Gain on Sale
2016 Dispositions:
Bent Oaks	Austin, TX	9/12/2016	$	15,765	$	9,108
Woodhollow	Austin, TX	9/12/2016	12,420		6,685
Woodland Village	Columbia, SC	9/30/2016	20,650		9,122
Cape Cod	San Antonio, TX	11/21/2016	15,700		9,040
Tamarlane - additional gain recognized					10
			$	64,535	$	33,965
2015 Dispositions:
Hills	Decatur, GA	3/19/2015	$	25,200	$	9,603
Tamarlane	Portland, ME	12/1/2015	18,300		8,042
			$	43,500	$	17,645

The table below presents the revenues and net income attributable to properties sold for the year ended December 31, 2016 and 2015 (in thousands):

	Revenue Attributable to Properties Sold		Net Income Attributable to Properties Sold
Multifamily Community	For the year ended December 31, 2016		For the year ended December 31, 2016
2016 Dispositions:
Bent Oaks	$	1,240	$	8,367
Woodhollow	1,031		6,002
Cape Cod	1,819		8,509
Woodland Village	2,266		8,637
	$	6,356	$	31,515
	For the year ended December 31, 2015		For the year ended December 31, 2015
2015 Dispositions:
Hills	$	602	$	9,740
Tamarlane	1,808		8,374
	$	2,410	$	18,114

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NATURE OF BUSINESS AND OPERATIONS (Details) - USD ($)		12 Months Ended
	Feb. 12, 2016	Dec. 31, 2016	Dec. 31, 2015
Capital Unit [Line Items]
Partnership term extension maximum		2 years
Partnership term extended until March 28, 2017	1 year
General Partner
Capital Unit [Line Items]
Minimum capital contribution		$ 1,000
Limited partnership interest		5.62%	5.62%
Distributable cash from operations allocated, excess		20.00%
Distributable cash from capital transactions allocated, excess		20.00%
Limited Partners
Capital Unit [Line Items]
Income allocation to Limited Partners		100.00%
Losses allocated to Limited Partners until their aggregate capital account balances		100.00%
Losses allocated to Limited Partners, excess		100.00%
Distributable cash from operations allocated to Limited Partners		100.00%
Distributable cash from operations allocated, excess		80.00%
Distributable cash from capital transactions allocated to Limited Partners after receiving Preferred Return		100.00%
Distributable cash from capital transactions allocated to Limited Partners after receiving Adjusted Capital Contributions		100.00%
Distributable cash from capital transactions allocated, excess		80.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) Unit	Dec. 31, 2015 USD ($)
Supplemental Disclosure of Cash Flow Information [Abstract]
Cash paid for interest	$ 1,100,000	$ 1,900,000
Advertising [Abstract]
Advertising expense	105,000	124,000
Concentration of Credit Risk [Abstract]
Amount of deposits at various banks	1,900,000
Amount of deposits over the FDIC insurance limit	$ 1,300,000
Revenue Recognition [Abstract]
Approximate lease agreement term	1 year
Tenant Receivables [Abstract]
Allowance for uncollectible receivables	$ 0	0
Accounting Standards Update 2015-03 | Other Assets
New Accounting Pronouncements [Abstract]
Debt issuance costs		261,000
Accounting Standards Update 2015-03 | Notes Payable
New Accounting Pronouncements [Abstract]
Debt issuance costs		$ 261,000
Tamarlane
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	115
Bent Oaks
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	146
Cape Cod
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	212
Woodhollow
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	108
Hills
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	228
Village
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]
Number of units in real estate property | Unit	308

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RESTRICTED CASH (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 0	$ 1,600,000
Real Estate Taxes
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	0	1,034,000
Insurance
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	0	180,000
Capital Improvements
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 0	$ 386,000

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
Maximum insurance coverage for property losses	$ 2,500,000.0
Maximum insurance coverage for general liability losses	50,000
Maximum catastrophic insurance coverage for property losses	140,000,000
Insurance pool funded by partnership	137,000
Total fees	$ 450,000	$ 768,000
Property management fee	5.00%
RCP
Related Party Transaction [Line Items]
Annual investment management fee as a percentage of gross proceeds	1.00%
Percentage of annual investment management fee subordinated to the receipt by the Limited Partners	100.00%
Investment management fees due	$ 0	0
Related party transactions	$ 142,000	251,000
Investment management fee entitled to receive	1.00%
Investment management fee subordinated to its preferred returns	100.00%
RCP | Investment Management Fees
Related Party Transaction [Line Items]
Related party transactions	$ 156,972.07
RCP and RREMI
Related Party Transaction [Line Items]
Fees and advances due	7,000	61,000
RCP and RREMI | Reimbursed Expenses Including Payroll and Miscellaneous Operating Expenses
Related Party Transaction [Line Items]
Related party transactions	1,200,000	1,700,000
RCP and RREMI | Distributions Net of Investment Management Fees and Promote
Related Party Transaction [Line Items]
Related party transactions	1,900,000	940,000
RREML
Related Party Transaction [Line Items]
Related party transactions	308,000	517,000
Fees and advances due	$ 0	$ 62,000
Investment management fee entitled to receive	5.00%
Investment management fee subordinated to its preferred returns	100.00%

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MORTGAGE NOTES PAYABLE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Loss on extinguishment of debt	$ 2,379	$ 0
Accumulated amortization, deferred finance costs	0	486
Mortgage Notes Payable
Debt Instrument [Line Items]
Mortgage balance	0	25,891
Deferred Finance Costs, Net	0	(261)
Carrying Value	0	25,630
Mortgage Notes Payable | Bent Oaks
Debt Instrument [Line Items]
Mortgage balance	0	5,731
Deferred Finance Costs, Net	0	(50)
Carrying Value	0	5,681
Mortgage Notes Payable | Cape Cod
Debt Instrument [Line Items]
Mortgage balance	0	5,951
Deferred Finance Costs, Net	0	(51)
Carrying Value	0	5,900
Mortgage Notes Payable | Woodhollow
Debt Instrument [Line Items]
Mortgage balance	0	4,916
Deferred Finance Costs, Net	0	(43)
Carrying Value	0	4,873
Mortgage Notes Payable | Village
Debt Instrument [Line Items]
Mortgage balance	0	9,293
Deferred Finance Costs, Net	0	(117)
Carrying Value	$ 0	$ 9,176

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	$ 0	$ 25,891
Carrying Value | Bent Oaks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	5,731
Carrying Value | Cape Cod
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	5,951
Carrying Value | Woodhollow
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	4,916
Carrying Value | Village
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	9,293
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	27,003
Fair Value | Bent Oaks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	6,121
Fair Value | Cape Cod
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	6,343
Fair Value | Woodhollow
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	0	5,234
Fair Value | Village
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	$ 0	$ 9,305

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DISPOSITION OF PROPERTIES (Details) - USD ($) $ in Thousands						1 Months Ended	12 Months Ended
	Nov. 21, 2016	Sep. 30, 2016	Sep. 12, 2016	Dec. 01, 2015	Mar. 19, 2015	Dec. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price						$ 64,535	$ 64,535	$ 43,500
Gain on sale of rental properties							33,965	17,645
Revenue Attributable to Properties Sold							6,356	2,410
Net Income Attributable to Properties Sold							31,515	18,114
Bent Oaks
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price			$ 15,765
Gain on sale of rental properties			9,108
Revenue Attributable to Properties Sold							1,240
Net Income Attributable to Properties Sold							8,367
Woodhollow
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price			12,420
Gain on sale of rental properties			$ 6,685
Revenue Attributable to Properties Sold							1,031
Net Income Attributable to Properties Sold							6,002
Cape Cod
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price	$ 15,700
Gain on sale of rental properties	$ 9,040					$ 10
Revenue Attributable to Properties Sold							1,819
Net Income Attributable to Properties Sold							8,509
Village
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price		$ 20,650
Gain on sale of rental properties		$ 9,122
Revenue Attributable to Properties Sold							2,266
Net Income Attributable to Properties Sold							$ 8,637
Hills
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price					$ 25,200
Gain on sale of rental properties					$ 9,603
Revenue Attributable to Properties Sold								602
Net Income Attributable to Properties Sold								9,740
Tamarlane
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract Sales Price				$ 18,300
Gain on sale of rental properties				$ 8,042
Revenue Attributable to Properties Sold								1,808
Net Income Attributable to Properties Sold								$ 8,374

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SUBSEQUENT EVENTS - Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Subsequent Event [Line Items]
Distributions to partners		$ 39,739	$ 17,131
Subsequent Event | Cash Distribution
Subsequent Event [Line Items]
Distributions to partners	$ 874

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SCHEDULE III Real Estate and Accumulated Depreciation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]
Encumbrances	$ 0
Initial cost to Company, Buildings and land improvements	0
Cost capitalized subsequent to acquisition, Improvements carrying costs	0
Gross amount at which carried at close of period, Buildings and land improvements total	0
Accumulated depreciation	0
Reconciliation of Carrying Amount of Real Estate Investments [Roll Forward]
Balance at the beginning of the period	39,169	$ 71,844
Additions during period:
Improvements	305	663
Deductions during period:
Disposals	(39,474)	(33,338)
Balance at the end of the period	$ 0	$ 39,169