10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2016

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 001-35624

INVESTORS REAL ESTATE TRUST

(Exact name of registrant as specified in its charter)

North Dakota	45-0311232
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1400 31st Avenue SW, Suite 60
Post Office Box 1988
Minot, ND 58702-1988
(Address of principal executive offices) (Zip code)

(701) 837-4738

(Registrant’s telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report.)

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 the filing requirements for at least the past 90 days.

Yes ☑ No ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or 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 ☑	Accelerated filer ☐
Non-accelerated filer ☐	Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of common shares of beneficial interest outstanding as of December 5, 2016, was 121,748,585.

TABLE OF CONTENTS

	Page
Part I. Financial Information
	3
Condensed Consolidated Balance Sheets (unaudited) October 31, 2016 and April 30, 2016	3
Condensed Consolidated Statements of Operations (unaudited) For the Three and Six Months ended October 31, 2016 and 2015	4
Condensed Consolidated Statements of Equity (unaudited) For the Six Months ended October 31, 2016 and 2015	5
Condensed Consolidated Statements of Cash Flows (unaudited) For the Six Months ended October 31, 2016 and 2015	6
Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	48
Item 4. Controls and Procedures	49
Part II. Other Information
Item 1. Legal Proceedings	50
Item 1A. Risk Factors	50
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3. Defaults Upon Senior Securities	50
Item 4. Mine Safety Disclosures	50
Item 5. Other Information	50
Item 6. Exhibits	50
Signatures	52

2

PART I

ITEM 1. FINANCIAL STATEMENTS - SECOND QUARTER - FISCAL 2017

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	(in thousands, except share data)
	October 31, 2016		April 30, 2016
ASSETS
Real estate investments
Property owned	$	1,665,354	$	1,681,471
Less accumulated depreciation		(321,790)		(312,889)
		1,343,564		1,368,582
Development in progress		20,921		51,681
Unimproved land		19,069		20,939
Total real estate investments		1,383,554		1,441,202
Assets held for sale and assets of discontinued operations		191,233		220,537
Cash and cash equivalents		68,729		66,698
Other investments		—		50
Receivable arising from straight-lining of rents, net of allowance of $299 and $333, respectively		7,660		7,179
Accounts receivable, net of allowance of $192 and $97, respectively		9,815		1,524
Real estate deposits		1,370		—
Prepaid and other assets		3,496		2,937
Intangible assets, net of accumulated amortization of $5,261 and $6,230, respectively		842		1,858
Tax, insurance, and other escrow		4,786		5,450
Property and equipment, net of accumulated depreciation of $1,051 and $1,058, respectively		928		1,011
Goodwill		1,645		1,680
Deferred charges and leasing costs, net of accumulated amortization of $3,603 and $3,719, respectively		5,261		4,896
TOTAL ASSETS	$	1,679,319	$	1,755,022
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	$	69,326	$	77,488
Accounts payable and accrued expenses		40,382		39,727
Revolving line of credit		47,500		17,500
Mortgages payable, net of unamortized loan costs of $4,222 and $4,931, respectively		779,568		812,393
Construction debt and other		82,742		82,130
TOTAL LIABILITIES		1,019,518		1,029,238
COMMITMENTS AND CONTINGENCIES (NOTE 6)
REDEEMABLE NONCONTROLLING INTERESTS – CONSOLIDATED REAL ESTATE ENTITIES		8,585		7,522
EQUITY
Investors Real Estate Trust shareholders’ equity
Series A Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 1,150,000 shares issued and outstanding at October 31, 2016 and April 30, 2016, aggregate liquidation preference of $28,750,000)		27,317		27,317
Series B Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, 4,600,000 shares issued and outstanding at October 31, 2016 and April 30, 2016, aggregate liquidation preference of $115,000,000)		111,357		111,357
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,701,433 shares issued and outstanding at October 31, 2016, and 121,091,249 shares issued and outstanding at April 30, 2016)		920,759		922,084
Accumulated distributions in excess of net income		(489,356)		(442,000)
Total Investors Real Estate Trust shareholders’ equity		570,077		618,758
Noncontrolling interests – Operating Partnership (16,228,507 units at October 31, 2016 and 16,285,239 units at April 30, 2016)		71,994		78,484
Noncontrolling interests – consolidated real estate entities		9,145		21,020
Total equity		651,216		718,262
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	1,679,319	$	1,755,022

See accompanying Notes to Condensed Consolidated Financial Statements.

3

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)

for the three and six months ended October 31, 2016 and 2015

	(in thousands, except per share data)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
REVENUE
Real estate rentals	$	45,859	$	41,868	$	90,844	$	82,618
Tenant reimbursement		4,750		4,478		9,376		8,773
TOTAL REVENUE		50,609		46,346		100,220		91,391
EXPENSES
Property operating expenses, excluding real estate taxes		15,814		15,052		31,871		28,540
Real estate taxes		5,759		4,899		11,336		9,715
Depreciation and amortization		13,531		12,405		27,798		23,622
Impairment of real estate investments		—		1,873		54,153		3,158
General and administrative expenses		2,702		2,933		5,308		5,387
Acquisition and investment related costs		4		391		47		398
Other expenses		816		813		1,668		1,230
TOTAL EXPENSES		38,626		38,366		132,181		72,050
Operating (loss) income		11,983		7,980		(31,961)		19,341
Interest expense		(10,626)		(8,741)		(20,990)		(16,555)
Loss on extinguishment of debt		—		(106)		—		(106)
Interest income		600		565		1,172		1,121
Other income		37		100		510		151
Income (loss) before (loss) gain on sale of real estate and other investments, and income from discontinued operations		1,994		(202)		(51,269)		3,952
(Loss) gain on sale of real estate and other investments		(103)		—		8,855		(175)
Income (loss) from continuing operations		1,891		(202)		(42,414)		3,777
Income from discontinued operations		10,399		16,879		14,110		17,627
NET INCOME (LOSS)		12,290		16,677		(28,304)		21,404
Net (income) loss attributable to noncontrolling interests – Operating Partnership		(1,174)		(1,527)		2,122		(1,713)
Net loss attributable to noncontrolling interests – consolidated real estate entities		484		1,516		16,139		1,515
Net income (loss) attributable to Investors Real Estate Trust		11,600		16,666		(10,043)		21,206
Dividends to preferred shareholders		(2,878)		(2,878)		(5,757)		(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	8,722	$	13,788	$	(15,800)	$	15,449
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	—	$	(0.01)	$	(0.23)	$	—
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		0.07		0.12		0.10		0.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	0.07	$	0.11	$	(0.13)	$	0.12
DIVIDENDS PER COMMON SHARE	$	0.13	$	0.13	$	0.26	$	0.26

See accompanying Notes to Condensed Consolidated Financial Statements.

4

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY(unaudited)

for the six months ended October 31, 2016 and 2015

	(in thousands)
				NUMBER			ACCUMULATED
	NUMBER OF			OF			DISTRIBUTIONS		NONREDEEMABLE
	PREFERRED	PREFERRED		COMMON	COMMON		IN EXCESS OF		NONCONTROLLING		TOTAL
	SHARES	SHARES		SHARES	SHARES		NET INCOME		INTERESTS		EQUITY
Balance April 30, 2015	5,750	$	138,674	124,455	$	951,868	$	(438,432)	$	88,844	$	740,954
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests								21,206		287		21,493
Distributions - common shares and units								(32,525)		(3,626)		(36,151)
Distributions – Series A preferred shares								(1,186)				(1,186)
Distributions – Series B preferred shares								(4,571)				(4,571)
Distribution reinvestment and share purchase plan				821		5,619						5,619
Shares issued and share-based compensation				220		482						482
Partnership units issued										400		400
Redemption of units for common shares				154		855				(855)		—
Shares repurchased				(2,852)		(21,931)						(21,931)
Other										(6,236)		(6,236)
Balance October 31, 2015	5,750	$	138,674	122,798	$	936,893	$	(455,508)	$	78,814	$	698,873
Balance April 30, 2016	5,750	$	138,674	121,091	$	922,084	$	(442,000)	$	99,504	$	718,262
Net income attributable to Investors Real Estate Trust and nonredeemable noncontrolling interests								(10,043)		(18,116)		(28,159)
Distributions - common shares and units								(31,556)		(4,234)		(35,790)
Distributions – Series A preferred shares								(1,186)				(1,186)
Distributions – Series B preferred shares								(4,571)				(4,571)
Shares issued and share-based compensation				553		1,218						1,218
Redemption of units for common shares				57		134				(134)		—
Contributions from nonredeemable noncontrolling interests – consolidated real estate entities										7,150		7,150
Distributions to nonredeemable noncontrolling interests – consolidated real estate entities										(155)		(155)
Acquisition of nonredeemable noncontrolling interests – consolidated real estate entities						(2,677)				(2,261)		(4,938)
Other										(615)		(615)
Balance October 31, 2016	5,750	$	138,674	121,701	$	920,759	$	(489,356)	$	81,139	$	651,216

See accompanying Notes to Condensed Consolidated Financial Statements.

5

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)

for the six months ended October 31, 2016 and 2015

	(in thousands)
	Six Months Ended
	October 31,
	2016		2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(28,304)	$	21,404
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		28,548		28,594
Depreciation and amortization from discontinued operations		64		5,300
Gain on sale of real estate, land, other investments and discontinued operations		(15,358)		(23,733)
Gain on extinguishment of debt and discontinued operations		72		904
Share-based compensation expense		865		605
Impairment of real estate investments		54,153		3,598
Bad debt expense		371		162
Changes in other assets and liabilities:
Receivable arising from straight-lining of rents		(487)		512
Accounts receivable		(588)		1,230
Prepaid and other assets		(541)		379
Tax, insurance and other escrow		(200)		565
Deferred charges and leasing costs		(851)		(576)
Accounts payable, accrued expenses and other liabilities		(2,357)		(4,626)
Net cash provided by operating activities		35,388		34,318
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to notes receivable		(8,196)		—
Proceeds from real estate deposits		—		2,837
Payments for real estate deposits		(1,370)		(792)
Decrease in other investments		50		—
Decrease in lender holdbacks for improvements		1,925		3,258
Increase in lender holdbacks for improvements		(614)		(578)
Proceeds from sale of discontinued operations		43,896		364,559
Proceeds from sale of real estate and other investments		13,875		6,783
Insurance proceeds received		481		432
Payments for acquisitions of real estate assets		—		(71,381)
Payments for development and re-development of real estate assets		(10,897)		(79,298)
Payments for improvements of real estate assets		(23,641)		(13,510)
Payments for improvements of real estate assets from discontinued operations		—		(4,993)
Net cash provided by investing activities		15,509		207,317
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable		1,113		51,070
Principal payments on mortgages payable		(53,208)		(205,833)
Proceeds from revolving lines of credit		30,000		43,000
Principal payments on revolving lines of credit		—		(106,855)
Proceeds from construction debt		11,174		46,775
Proceeds from sale of common shares under distribution reinvestment and share purchase program		—		1,493
Proceeds from noncontrolling partner – consolidated real estate entities		8,696		826
Payments for acquisition of noncontrolling interests – consolidated real estate entities		(4,938)		—
Repurchase of common shares		—		(21,931)
Distributions paid to common shareholders		(31,556)		(28,528)
Distributions paid to preferred shareholders		(5,757)		(5,757)
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership		(4,234)		(3,496)
Distributions paid to noncontrolling interests – consolidated real estate entities		(155)		(6,236)
Net cash used by financing activities		(48,866)		(235,472)
NET INCREASE IN CASH AND CASH EQUIVALENTS		2,031		6,163
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		66,698		48,970
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	68,729	$	55,133

See accompanying Notes to Condensed Consolidated Financial Statements.

6

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, continued)

for the six months ended October 31, 2016 and 2015

	(in thousands)
	Six Months Ended
	October 31,
	2016		2015
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distribution reinvestment plan – shares issued	$	—	$	3,997
Operating partnership distribution reinvestment plan – shares issued		—		130
Operating partnership units converted to shares		134		855
Real estate assets acquired through the issuance of operating partnership units		—		400
Increase  to accounts payable included within real estate investments		3,188		1,241
Construction debt reclassified to mortgages payable		10,549		41,649
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized of $298 and $3,367, respectively	$	17,457	$	16,846

See accompanying Notes to Condensed Consolidated Financial Statements.

7

INVESTORS REAL ESTATE TRUST AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)

for the six months ended October 31, 2016 and 2015

NOTE 1 • ORGANIZATION

Investors Real Estate Trust (“IRET”, “we” or “us”) is a self-advised real estate investment trust engaged in acquiring, owning and leasing real estate. We have elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute 90% of ordinary taxable income to shareholders, and, generally, are not subject to federal income tax on net income, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary (“TRS”). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the six months ended October 31, 2016 and 2015. Our properties are located mainly in the states of North Dakota and Minnesota, but also in the states of Idaho, Iowa, Kansas, Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of October 31, 2016, we held for investment 86 multifamily properties with 12,751 apartment units and 2.7 million net rentable square feet in 30 healthcare and 14 other properties. We held for sale 14 multifamily property, 27 healthcare properties, 2 retail properties and 1 parcel of land as of October 31, 2016. We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities.

All references to IRET, we or us refer to Investors Real Estate Trust and its consolidated subsidiaries.

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. Our fiscal year ends April 30th.

Our interest in the Operating Partnership was 88.2% of the limited partnership units of the Operating Partnership (“Units”) as of October 31, 2016 and 88.1% as of April 30, 2016. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their Units for cash any time following the first anniversary of the date they acquired such Units (“Exchange Right”). When a limited partner exercises the Exchange Right, we have the right, in our sole discretion, to acquire such Units by either making a cash payment or exchanging the Units for our common shares of beneficial interest (“Common Shares”), on a one-for-one basis. The Exchange Right is subject to certain conditions and limitations, including the limited partner may not exercise the Exchange Right more than two times during a calendar year and the limited partner may not exercise for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for less than all of the Units held by such limited partner. The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year, a greater number of redemptions during a calendar year or other limitations to their Exchange Right.

The condensed consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our other operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership and income and expenses.

UNAUDITED INTERIM FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The year-end balance

8

sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, as filed with the SEC on June 29, 2016.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 does not apply to lease contracts accounted for under ASC 840, Leases.The ASU is effective for fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with variable interest entities, and (iv) provide a scope exception for certain entities. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-02 as of May 1, 2016, as more fully described in the Variable Interest Entity section below.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-03 as of May 1, 2016.

In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Under ASU 2015-05, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The ASU is effective for fiscal years beginning after December 15, 2015. Our adoption of the guidance in ASU 2015-05 did not have a material impact on our operating results or financial position.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax

9

consequences, accrual of compensation cost, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS

We periodically evaluate our long-lived assets, including investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the six months ended October 31, 2016, we recognized impairments of $40.9 million, $5.8 million, $4.7 million, and $2.8 million, respectively, on three multifamily properties and one parcel of unimproved land in Williston, North Dakota, due to deterioration of this energy-impacted market, which resulted in poor leasing activity and declining rental rates during the three months ended July 31, 2016, which should generally be a strong leasing period. These properties were written-down to estimated fair value based on an independent appraisal in the case of one property and management cash flow estimates and market data in the case of the remaining assets. The properties impaired for $40.9 million, $4.7 million, and $2.8 million are owned by joint venture entities in which we currently have an approximately 71.5%, 60% and 70% interest, respectively, but which are consolidated in our financial statements.

During the six months ended October 31, 2015, we incurred a loss of approximately $3.6 million due to impairment of one office property and one parcel of land and eight multifamily properties. We recognized impairment of approximately $440,000 on an office property in Eden Prairie, Minnesota, which was written-down to estimated fair value during the first quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. We recognized impairment of $1.3 million on a parcel of land in Grand Chute, Wisconsin based on its sale listing price and our intent to dispose of the property. We recognized impairment of $1.9 million on eight multifamily properties in St. Cloud, Minnesota which were written-down to estimated fair value during the second quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. The impairment loss of the Eden Prairie, Minnesota property for the first quarter of fiscal year 2016 is reported in discontinued operations. See Note 7 for additional information.

HELD FOR SALE

We classify properties as held for sale when they meet the U.S. GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset (disposal group), (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets (disposal groups), and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale. Liabilities classified as held for sale consist of

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liabilities to be included in the transaction and liabilities directly associated with assets that will be transferred in the transaction. Twenty-seven healthcare properties, fourteen multifamily properties, two commercial properties, and one parcel of land were classified as held for sale at October 31, 2016. Thirty-five healthcare properties, one multifamily property, one industrial property and three parcels of unimproved land were classified as held for sale at April 30, 2016.

COMPENSATING BALANCES AND OTHER INVESTMENTS; HOLDBACKS

We maintain compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability. At October 31, 2016, our compensating balances totaled $14.8 million and consisted of the following:

Financial Institution
First International Bank, Watford City, ND	$	7,758,000
Associated Bank, Green Bay, WI		3,000,000
The PrivateBank, Minneapolis, MN		2,000,000
Bremer Bank, Saint Paul, MN		1,285,000
Dacotah Bank, Minot, ND		250,000
Peoples State Bank, Velva, ND		225,000
American National Bank, Omaha, NE		200,000
Commerce Bank a Minnesota Banking Corporation		100,000
Total	$	14,818,000

We have a number of mortgage loans under which the lender retains a portion of the loan proceeds or requires a deposit for the payment of construction costs or tenant improvements. The decrease of $1.9 million in lender holdbacks for improvements reflected in the Condensed Consolidated Statements of Cash Flows for the six months ended October 31, 2016 is due primarily to the release of loan proceeds to us upon completion of construction and tenant improvement projects, while the increase of approximately $614,000 represents additional amounts retained by lenders for new projects.

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

Upon acquisition of real estate, we record the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill. We amortize identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease). In the six months ended October 31, 2016 and 2015, respectively, we added $0 and $1.3 million in new intangible assets and $0 and approximately $101,000 of new intangible liabilities. The weighted average lives of the intangible assets acquired in the six months ended October 31, 2016 and 2015 are 0 and .08 years, respectively. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Condensed Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Condensed Consolidated Statements of Operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value.

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Our identified intangible assets and intangible liabilities atOctober 31, 2016 and April 30, 2016 were as follows:

	(in thousands)
	October 31, 2016		April 30, 2016
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	6,103	$	8,088
Accumulated amortization		(5,261)		(6,230)
Net carrying amount	$	842	$	1,858
Identified intangible liabilities (included in other liabilities):
Gross carrying amount	$	157	$	159
Accumulated amortization		(65)		(55)
Net carrying amount	$	92	$	104

The amortization of acquired below-market leases and acquired above-market leases reduced rental income by approximately $4,000 for the three months ended October 31, 2016 and 2015, and approximately $9,000 and $11,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	(11)
2019		(20)
2020		(16)
2021		(13)
2022		(6)

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was approximately $321,000 and $331,000 for the three months ended October 31, 2016 and 2015, respectively, and approximately $995,000 and $523,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	269
2019		170
2020		104
2021		78
2022		25

The excess of the cost of an acquired property over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Our goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The book value of goodwill as of October 31, 2016 and April 30, 2016 was $1.6 million and $1.7 million, respectively. The annual review at April 30, 2016 indicated no impairment to goodwill and there was no indication of impairment at October 31, 2016.  During the six months ended October 31, 2016, we classified as held for sale of one commercial property to which goodwill had been assigned, and as a result, approximately $17,000 of goodwill was derecognized. Approximately $35,000 and $17,000 of goodwill is included in assets held for sale at October 31, 2016 and April 30, 2016, respectively. During the six months ended October 31, 2015, we disposed of seven commercial properties to which goodwill had been assigned, and as a result, approximately $193,000 of goodwill was derecognized.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. 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

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the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.  On the Condensed Consolidated Statements of Operations, we combined utilities, maintenance, insurance, property management expenses and other property expenses onto a single line called property operating expenses, excluding real estate taxes. We also combined depreciation/amortization related to real estate investments and amortization related to non-real estate investments onto a single line called depreciation and amortization. Additionally on the Condensed Consolidated Statements of Operations, we reclassed acquisition and project costs from other expenses to acquisition and investment related costs.

We report, in discontinued operations, the results of operations and the related gains or losses of properties that have either been disposed of or classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. As the result of discontinued operations, retroactive reclassifications that change prior period numbers have been made. See Note 7 for additional information. During the fourth quarter of fiscal year 2016, we classified as discontinued operations 34 senior housing properties, of which 8 were sold during the second quarter of fiscal year 2017 and 26 remained held for sale at October 31, 2016.

PROCEEDS FROM FINANCING LIABILITY

During fiscal year 2014, we sold a non-core assisted living property in exchange for $7.9 million in cash and a $29.0 million contract for deed. The buyer leased the property back to us, and also granted us an option to repurchase the property at a specified price at or prior to July 31, 2018. We accounted for the transaction as a financing liability due to our continuing involvement with the property and recorded the $7.9 million in sales proceeds within other liabilities on the Condensed Consolidated Balance Sheets.  The balance of the liability as of October 31, 2016 was $7.9 million.

VARIABLE INTEREST ENTITY

As discussed in the Recent Accounting Pronouncements section, effective May 1, 2016, we adopted the guidance in ASU 2015-02.  As a result, the Operating Partnership and each of our less than wholly-owned real estate partnerships have been deemed to have the characteristics of a variable interest entity (“VIE”).  However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the recognized amounts in our condensed consolidated balance sheets and statements of operations or amounts reported in our condensed consolidated statements of cash flows. We determined that an additional six consolidated partnerships, including the Operating Partnership, are VIEs under the new standard because the limited partners are not able to exercise substantive kick-out or participating rights. We are the VIEs primary beneficiary and the partnerships are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs, and have both the power to direct the activities of the VIEs that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

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NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of Common Shares outstanding during the period. We have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Upon the exercise of Exchange Rights, and in our sole discretion, we may issue shares in exchange for Units on a one-for-one basis after a minimum holding period of one year. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and six months ended October 31, 2016 and 2015:

	(in thousands, except per share data)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
NUMERATOR
Income (loss) from continuing operations – Investors Real Estate Trust	$	2,426	$	1,474	$	(22,488)	$	5,341
Income from discontinued operations – Investors Real Estate Trust		9,174		15,192		12,445		15,865
Net income (loss) attributable to Investors Real Estate Trust		11,600		16,666		(10,043)		21,206
Dividends to preferred shareholders		(2,878)		(2,878)		(5,757)		(5,757)
Numerator for basic earnings per share – net income (loss) available to common shareholders		8,722		13,788		(15,800)		15,449
Noncontrolling interests – Operating Partnership		1,174		1,527		(2,122)		1,713
Numerator for diluted earnings (loss) per share	$	9,896	$	15,315	$	(17,922)	$	17,162
DENOMINATOR
Denominator for basic earnings per share weighted average shares		121,154		124,665		121,135		124,757
Effect of convertible operating partnership units		16,264		13,900		16,276		13,929
Denominator for diluted earnings per share		137,418		138,565		137,411		138,686
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	—	$	(.01)	$	(.23)	$	—
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.07		.12		.10		.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	.07	$	.11	$	(.13)	$	.12

NOTE 4 • EQUITY

Equity Awards. During the second quarter of fiscal year 2017, we issued approximately 120,792 Common Shares, with a total grant-date value of approximately $502,000, under our 2015 Incentive Award Plan, for executive officer share based compensation for future performance. During the first quarter of fiscal year 2017, we issued approximately 378,000 Common Shares, with a total grant-date value of approximately $1.4 million, under our 2015 Incentive Award Plan, for executive officer and trustee share based compensation for future performance. We also issued approximately 59,000 Common Shares, with a total grant-date value of approximately $352,000, under our 2008 Incentive Award Plan, for trustee share based compensation for fiscal year 2016 performance. During the first quarter of fiscal year 2016, we issued approximately 220,000 Common Shares, net of withholding, with a total grant-date value of approximately $1.6 million, under our 2008 Incentive Award Plan, for executive officer and trustee share based compensation for fiscal year 2015 performance. No shares were issued under an incentive award plan during the second quarter of fiscal year 2016.

DRIP. We have implemented a Distribution Reinvestment and Share Purchase Plan (“DRIP”), which provides our common shareholders and the unitholders of the Operating Partnership an opportunity to invest their cash distributions in Common Shares and to purchase additional Common Shares through voluntary cash contributions. A DRIP participant cannot purchase additional Common Shares in excess of $10,000 per month, unless waived by us. We did not issue any waivers during the three months ended October 31, 2016 and 2015.

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As permitted under the DRIP, starting on October 1, 2015, we changed the source from which Common Shares will be purchased under the DRIP to open market transactions, which are not eligible for purchase price discounts. During the three months ended October 31, 2016, no shares were issued under the DRIP. During the three months ended October 31, 2015, approximately 55,000 Common Shares with a total value included in equity of $377,000, and an average price per share after applicable discounts of $6.87, were issued under the DRIP.  During the six months ended October 31, 2016, no shares were issued under the DRIP.  During the six months ended October 31, 2015, approximately 821,000 Common Shares with a total value included in equity of $5.6 million, and an average price per share after applicable discounts of $6.85 were issued under the DRIP.

Exchange Rights. Pursuant to the exercise of Exchange Rights, during the three months ended October 31, 2016 and 2015, respectively, approximately 56,700 and 75,500 Common Shares were issued in exchange for Units, with a total value of approximately $134,000 and $279,000 included in equity.  During the six months ended October 31, 2016 and 2015, approximately 56,700 and 154,000 Common Shares were issued in exchange for Units, with a total value of approximately $134,000 and $855,000 included in equity.

NOTE 5 • SEGMENT REPORTING

We report our results in two reportable segments, which are aggregations of similar properties: multifamily and healthcare, excluding our senior housing properties, which are classified as held for sale and discontinued operations at October 31, 2016.   

We measure the performance of our segments based on net operating income (“NOI”), which we define as total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). During the first quarter of fiscal year 2017, we removed offsite costs associated with property management and casualty-related amounts from our assessment of segment performance as a result of our announced strategic shift to focus solely on our multifamily segment. These expenses were removed from the operating results reviewed by our chief operating decision maker to allow for the assessment of direct property costs in NOI, excluding allocated costs. We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with US GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.

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The revenues and NOI for these reportable segments are summarized as follows for the three and six month periods ended October 31, 2016 and 2015, along with reconciliations to the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.

	(in thousands)
Three Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	36,250	$	11,661	$	2,698	$	—	$	50,609
Real estate expenses		15,566		4,151		730		1,126		21,573
Net operating income (loss)	$	20,684	$	7,510	$	1,968	$	(1,126)	$	29,036
Depreciation and amortization										(13,531)
General and administrative expenses										(2,702)
Acquisition and investment related costs										(4)
Other expenses										(816)
Interest expense										(10,626)
Interest and other income										637
Income before loss on sale of real estate and other investments and income from discontinued operations										1,994
Loss on sale of real estate and other investments										(103)
Income from continuing operations										1,891
Income from discontinued operations										10,399
Net income									$	12,290

	(in thousands)
Six Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	71,290	$	23,202	$	5,728		—	$	100,220
Real estate expenses		30,445		8,343		1,456		2,963		43,207
Net operating income (loss)	$	40,845	$	14,859	$	4,272		(2,963)		57,013
Depreciation and amortization										(27,798)
Impairment of real estate investments										(54,153)
General and administrative expenses										(5,308)
Acquisition and investment related costs										(47)
Other expenses										(1,668)
Interest expense										(20,990)
Interest and other income										1,682
Loss before gain on sale of real estate and other investments and income from discontinued operations										(51,269)
Gain on sale of real estate and other investments										8,855
Loss from continuing operations										(42,414)
Income from discontinued operations										14,110
Net loss									$	(28,304)

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

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	(in thousands)
Three Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	32,176	$	11,351	$	2,819	$	—	$	46,346
Real estate expenses		14,191		3,834		620		1,306		19,951
Net operating income (loss)	$	17,985	$	7,517	$	2,199	$	(1,306)		26,395
Depreciation and amortization										(12,405)
Impairment of real estate investments										(1,873)
General and administrative expenses										(2,933)
Acquisition and investment related costs										(391)
Other expenses										(813)
Interest expense										(8,741)
Loss on debt extinguishment										(106)
Interest and other income										665
Loss from continuing operations										(202)
Income from discontinued operations										16,879
Net income									$	16,677

	(in thousands)
Six Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	63,609	$	22,130	$	5,652	$	—	$	91,391
Real estate expenses		27,631		7,316		1,228		2,080		38,255
Net operating income (loss)	$	35,978	$	14,814	$	4,424	$	(2,080)		53,136
Depreciation and amortization										(23,622)
Impairment of real estate investments										(3,158)
General and administrative expenses										(5,387)
Acquisition and investment related costs										(398)
Other expenses										(1,230)
Interest expense										(16,555)
Loss on debt extinguishment										(106)
Interest and other income										1,272
Income before gain on sale of real estate and other investments										3,952
Loss on sale of real estate and other investments										(175)
Income from continuing operations										3,777
Income from discontinued operations										17,627
Net income									$	21,404

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

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Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of October 31, 2016, and April 30, 2016, along with reconciliations to the condensed consolidated financial statements:

	(in thousands)
As of October 31, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,226,198	$	342,242	$	96,914	$	1,665,354
Less accumulated depreciation		(212,922)		(88,669)		(20,199)		(321,790)
Total property owned	$	1,013,276	$	253,573	$	76,715	$	1,343,564
Assets held for sale and assets from discontinued operations								191,233
Cash and cash equivalents								68,729
Receivables and other assets								35,803
Development in progress								20,921
Unimproved land								19,069
Total Assets							$	1,679,319

	(in thousands)
As of April 30, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,243,909	$	337,920	$	99,642	$	1,681,471
Less accumulated depreciation		(209,156)		(83,558)		(20,175)		(312,889)
Total property owned	$	1,034,753	$	254,362	$	79,467	$	1,368,582
Assets held for sale and assets from discontinued operations								220,537
Cash and cash equivalents								66,698
Other investments								50
Receivables and other assets								26,535
Development in progress								51,681
Unimproved land								20,939
Total Assets							$	1,755,022

NOTE 6 • COMMITMENTS AND CONTINGENCIES

Litigation.  We are not a party to any legal proceedings which are expected to have a material effect on our liquidity, financial position, cash flows or results of operations. We are subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of our business, most of which are covered by liability insurance. Various claims of resident discrimination are also periodically brought, most of which also are covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material effect on our liquidity, financial position, cash flows or results of operations.

Insurance.  We carry insurance coverage on our properties in amounts and types that we believe are customarily obtained by owners of similar properties and are sufficient to achieve our risk management objectives.

Purchase Options.  We have granted options to purchase certain of our properties to tenants under lease agreements. In general, the options grant the tenant the right to purchase the property at the greater of such property’s appraised value or an annual compounded increase of a specified percentage of our initial cost for the property. As of October 31, 2016, the total investment cost, plus improvements, for the seven properties subject to purchase options was $77.4 million, and the total gross rental revenue from these properties was $3.7 million for the six months ended October 31, 2016.

Environmental Matters.  Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around or under the property. While we currently have no knowledge of any material violation of

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environmental laws, ordinances or regulations at any of our properties, there can be no assurance that areas of contamination will not be identified at any of our properties, or that changes in environmental laws, regulations or cleanup requirements would not result in material costs to us.

Restrictions on Taxable Dispositions.  Approximately 49 of our properties, consisting of approximately 762,000 square feet of our combined commercial properties and 4,603 apartment units, are subject to restrictions on our ability to resell in taxable transactions. These restrictions are contained in agreements we entered into with some of the sellers or contributors of the properties, and are effective for varying periods. The real estate investment amount of these properties (net of accumulated depreciation) was $435.9 million at October 31, 2016. We do not believe that these restrictions materially affect the conduct of our business or decisions whether to dispose of these properties during the restriction periods because we generally hold properties for investment purposes, rather than for sale.  Historically, where we have deemed it to be in the Company’s and the shareholders’ best interests to dispose of restricted properties, we have done so through tax-deferred transactions under Section 1031 of the Internal Revenue Code.

Exchange Value of Units.  Whenever limited partners of the Operating Partnership exercise their Exchange Rights, we have the right, but not the obligation, to acquire such Units in exchange for either cash or our Common Shares on a one-for-one basis. If Units are exchanged for cash, the amount of cash per Unit is equal to the average of the daily market price of a Common Share for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of October 31, 2016 and 2015, the aggregate exchange value of the then-outstanding Units of the Operating Partnership owned by limited partners was approximately $99.1 million and $112.6 million, respectively. All Units receive the same cash distributions as those paid on our Common Shares. 

Joint Venture Buy/Sell Options.  Several of our joint venture agreements contain buy/sell options in which each party under certain circumstances has the option to acquire the interest of the other party, but do not generally require that we buy our partners’ interests. However, from time to time, we have entered into joint venture agreements which contain options compelling us to acquire the interest of the other parties. We currently have one such joint venture, IRET-Minot Apartments, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire the partner’s interest for a price to be determined in accordance with the provisions of the joint venture agreement.  The joint venture partner’s interest is reflected as a redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets. See Note 11 for additional information.

Tenant Improvements. In entering into leases with commercial tenants, we may commit to fund improvements or build-outs of the rented space to suit tenant requirements. These tenant improvements are typically funded at the beginning of the lease term, and we are accordingly exposed to some risk of loss if a tenant defaults prior to the expiration of the lease term and the rental income that was expected to cover the cost of the tenant improvements is not received. As of October 31, 2016, we are committed to fund $6.0 million in tenant improvements within approximately the next 12 months.

Development Project.  As of October 31, 2016, we had a development project underway during the quarter, the costs for which have been capitalized, as follows:

			(in thousands)				(in fiscal years)
		Rentable					Anticipated
		Square Feet	Anticipated		Costs as of		Construction
Project Name and Location	PlannedSegment	or Number of Units	Total Cost		October 31, 2016(1)		Completion
Monticello Crossings - Monticello, MN	Multifamily	202 units		31,784		28,068	4Q 2017
Other	n/a	n/a		n/a		3,283	n/a
			$	31,784	$	31,351

(1) Amount for Monticello Crossings includes costs for to a portion of the development project that was placed into service during the quarter ended October 31, 2016.

This development project is subject to various contingencies, and no assurances can be given that it will be completed within the time frames or on the terms currently expected.

Construction interest capitalized for the three month periods ended October 31, 2016 and 2015, respectively, was approximately $145,000 and $1.1 million for development projects completed and in progress. Construction interest

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capitalized for the six month periods ended October 31, 2016 and 2015, respectively, was approximately $298,000 and $3.4 million for development projects completed and in progress.

Pending Disposition. We currently have signed sales agreements for the disposition of the following properties. These pending dispositions are subject to various closing conditions and contingencies, and no assurances can be given that the transactions will be completed on the terms currently proposed, or at all:

· 26 senior housing properties, 1 multifamily property and 1 parcel of unimproved land in various states for a total sale price of $236.0 million; and

· a retail property in Grand Forks, North Dakota, for a sale price of $4.0 million.

NOTE 7 • DISCONTINUED OPERATIONS

We report in discontinued operations the results of operations and any gain or loss on sale of a property or group of properties that has either been disposed of or is classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. During fiscal year 2016, we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations. Accordingly, 48 office properties, 17 retail properties and 1 healthcare property were classified as held for sale and subsequently sold during fiscal year 2016. Additionally, we determined that our strategic decision to exit senior housing, which was a subset of our healthcare segment, met the criteria for discontinued operations and we consequently classified 34 senior housing properties as held for sale and discontinued operations at April 30, 2016. Eight of those senior housing properties were sold during the second quarter of fiscal year 2017 and the remaining 26 senior housing properties continued to be classified as held for sale and discontinued operations at October 31, 2016.

The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and six months ended October 31, 2016 and 2015:

	(in thousands)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
REVENUE
Real estate rentals	$	4,992	$	9,703	$	10,002	$	28,143
Tenant reimbursement		112		1,486		226		7,751
TRS senior housing revenue		916		965		1,789		2,003
TOTAL REVENUE		6,020		12,154		12,017		37,897
EXPENSES
Property operating expenses, excluding real estate taxes		—		2,668		—		8,768
Real estate taxes		(112)		1,269		—		4,789
Depreciation and amortization		—		2,498		16		9,587
Impairment of real estate investments		—		—		—		440
TRS senior housing expenses		769		812		1,553		1,581
TOTAL EXPENSES		657		7,247		1,569		25,165
Operating income		5,363		4,907		10,448		12,732
Interest expense(1)		(1,395)		(5,021)		(2,769)		(12,168)
Gain/Loss on extinguishment of debt(1)		(72)		(7,120)		(72)		(7,120)
Other income		—		203		—		273
Income from discontinued operations before gain on sale		3,896		(7,031)		7,607		(6,283)
Gain on sale of discontinued operations		6,503		23,910		6,503		23,910
INCOME FROM DISCONTINUED OPERATIONS	$	10,399	$	16,879	$	14,110	$	17,627

(1) Interest expense for the three and six months ended October 31, 2015 includes $1.6 million and $3.1 million, respectively of default interest related to a $122.6 million non-recourse loan by one of our subsidiaries. In the third quarter of fiscal year 2016, ownership of the nine properties serving as collateral on the loan was transferred to the mortgage lender and the debt obligation and accrued interest was removed from our balance sheet.

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The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations to assets and liabilities held for sale that are presented separately on the Condensed Consolidated Balance Sheets:

	(in thousands)
	October 31, 2016		April 30, 2016
Carrying amounts of major classes of assets included as part of discontinued operations
Property owned and intangible assets, net of accumulated depreciation and amortization	$	157,050	$	189,900
Receivable arising from straight-lining of rents		8,800		9,805
Accounts receivable		912		1,707
Prepaid and other assets		34		43
Tax, insurance and other escrow		781		670
Property and equipment		471		479
Goodwill		18		18
Total major classes of assets of the discontinued operations		168,066		202,622
Other assets included in the disposal group classified as held for sale		23,167		17,915
Total assets of the disposal group classified as held for sale on the balance sheet	$	191,233	$	220,537
Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable and accrued expenses	$	352	$	810
Mortgages payable		53,829		67,940
Other		7,900		7,900
Total major classes of liabilities of the discontinued operations		62,081		76,650
Other liabilities included in the disposal group classified as held for sale		7,245		838
Total liabilities of the disposal group classified as held for sale on the balance sheet	$	69,326	$	77,488

NOTE 8 • ACQUISITIONS, DEVELOPMENTS PLACED IN SERVICE AND DISPOSITIONS

PROPERTY ACQUISITIONS

We added no new real estate properties to our portfolio through property acquisitions during the six months ended October 31, 2016 compared to $71.8 million in the six months ended October 31, 2015. However, during the second quarter of fiscal year 2017, we purchased the remaining 41.41% minority interest in the joint venture entity that owns the Red 20 multifamily property for a purchase price totaling $4.9 million. We expensed approximately $153,000 of transaction costs related to the acquisitions in the six months ended October 31, 2015. Our acquisitions during the six months ended October 31, 2015 are detailed below.

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Six Months Ended October 31, 2015

		(in thousands)
		Total		Form of Consideration				Investment Allocation
	Date	Acquisition										Intangible
Acquisitions	Acquired	Cost		Cash		Units(1)		Land		Building		Assets
Multifamily
74 unit - Gardens - Grand Forks, ND	2015-09-10	$	9,250	$	8,850	$	400	$	518	$	8,672	$	60
276 unit - GrandeVille at Cascade Lake - Rochester, MN	2015-10-29		56,000		56,000		—		5,003		50,363		634
			65,250		64,850		400		5,521		59,035		694
Healthcare
27,819 sq ft Lakeside Medical Plaza - Omaha, NE	2015-08-20		6,500		6,500		—		903		5,109		488
Total Property Acquisitions		$	71,750	$	71,350	$	400	$	6,424	$	64,144	$	1,182

(1) Value of Units of the Operating Partnership at the acquisition date.

Acquisitions in the six months ended October 31, 2016 and 2015 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Condensed Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our acquisitions in the six months ended October 31, 2016 and 2015, respectively, (excluding development projects placed in service) are detailed below.

	(in thousands)
Six Months Ended October 31,	2016		2015
Total revenue	$	—	$	268
Net loss	$	—	$	(219)

DEVELOPMENT PROJECTS PLACED IN SERVICE

The Operating Partnership placed $72.3 million and $137.0 million of development projects in service during the six months ended October 31, 2016 and 2015, respectively, as detailed below.

Six Months Ended October 31, 2016

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service(1)	in Service	Land		Building		Cost
Multifamily
241 unit - 71 France - Edina, MN(2)	2016-05-01	$	4,721	$	67,555	$	72,276
Total Development Projects Placed in Service		$	4,721	$	67,555	$	72,276

(1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 6 for additional information on the Monticello Crossings project, which was partially placed in service during the three months ended October 31, 2016.

(2) Costs paid in prior fiscal years totaled $70.9 million. Additional costs incurred in fiscal year 2017 totaled $1.4 million, for a total project cost at October 31, 2016 of $72.3 million. The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements.

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Six Months Ended October 31, 2015

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service	in Service	Land		Building		Cost
Multifamily
72 unit - Chateau II - Minot, ND (1)	2015-06-01	$	240	$	14,401	$	14,641
288 unit - Renaissance Heights - Williston, ND(2)	2015-07-27		3,080		59,440		62,520
			3,320		73,841		77,161
Healthcare
57,624 sq ft Edina 6565 France SMC III - Edina, MN(3)	2015-06-01		—		32,495		32,495
70,756 sq ft PrairieCare Medical - Brooklyn Park, MN(4)	2015-09-08		2,610		22,099		24,709
			2,610		54,594		57,204
Other
7,963 sq ft Minot Southgate Retail - Minot, ND(5)	2015-10-01		889		1,733		2,622
Total Development Projects Placed in Service		$	6,819	$	130,168	$	136,987

(1) Costs paid in prior fiscal years totaled $12.3 million. Additional costs paid in fiscal year 2016 totaled $2.3 million, for a total project cost at October 31, 2015 of $14.6 million.

(2) Costs paid in prior fiscal years totaled $57.7 million. Additional costs paid in fiscal year 2016 totaled $4.8 million, for a total project cost at October 31, 2015 of $62.5 million. The project is owned by a joint venture entity in which we currently have an approximately 71.5% interest. The joint venture is consolidated in our financial statements. An impairment charge of $36.7 million was recorded for this property in the first quarter of fiscal year 2017. See Note 2 for additional information.

(3) Costs paid in prior fiscal years totaled $20.8 million. Additional costs paid in fiscal year 2016 totaled $11.7 million, for a total project cost at October 31, 2015 of $32.5 million.

(4) Costs paid in prior fiscal years totaled $17.3 million. Additional costs paid in fiscal year 2016 totaled $7.4 million, for a total project cost at October 31, 2015 of $24.7 million.

(5) Costs paid in prior fiscal years totaled $2.1 million. Additional costs paid in fiscal year 2016 totaled approximately $500,000, for a total project cost at October 31, 2015 of $2.6 million.

PROPERTY DISPOSITIONS

During the second quarter of fiscal year 2017, we sold eight healthcare properties along with the adjacent unimproved land for a total sales price of $43.9 million. During the second quarter of fiscal year 2016, we sold 39 office properties, 1 healthcare property and 15 retail properties for a total sales price of $371.9 million. The following table details our dispositions during the six months ended October 31, 2016 and 2015:

Six Months Ended October 31, 2016

		(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Healthcare
189,244 sq ft Idaho Spring Creek Senior Housing Portfolio(1)	2016-10-31	$	43,900	$	37,397	$	6,503
Other
195,075 sq ft Stone Container - Fargo, ND	2016-07-25		13,400		4,418		8,982
Unimproved Land
Georgetown Square Unimproved Land - Grand Chute, WI	2016-05-06		250		274		(24)
Total Property Dispositions		$	57,550	$	42,089	$	15,461

(1) The properties included in this portfolio disposition are: Spring Creek American Falls, Spring Creek Boise, Spring Creek Eagle, Spring Creek Fruitland, Spring Creek Fruitland Unimproved, Spring Creek Meridian, Spring Creek Overland, Spring Creek Soda Springs and Spring Creek Ustick.

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Six Months Ended October 31, 2015 

			(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Other
117,144 sq ft Thresher Square – Minneapolis, MN	2015-05-18	$	7,000	$	7,175	$	(175)
2,549,222 sq ft Office Sale Portfolio(1)	2015-08-03		250,000		231,537		18,463
420,216 sq ft Mendota Office Center Portfolio – Mendota Heights, MN(2)	2015-08-12		40,000		41,574		(1,574)
1,027,208 sq ft Retail Sale Portfolio(3)	2015-09-30		78,960		71,913		7,047
48,700 sq ft Eden Prairie 6101 Blue Circle Drive – Eden Prairie, MN	2015-10-19		2,900		2,928		(28)
Total Property Dispositions		$	378,860	$	355,127	$	23,733

(1) The properties included in this portfolio disposition are: 610 Business Center, 7800 West Brown Deer Road, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Crosstown Centre, Golden Hills Office Center, Granite Corporate Center, Great Plains, Highlands Ranch I, Highlands Ranch II, Interlachen Corporate Center, Intertech Building, Minnesota National Bank, Northpark Corporate Center, Omaha 10802 Farnam Dr, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900Concourse Drive, Spring Valley IV, Spring Valley V, Spring Valley X, Spring Valley XI, Superior Office Building, TCA Building, Three Paramount Plaza, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park and Westgate.

(2) The properties included in this portfolio disposition are: Mendota Office Center I, Mendota Office Center II, Mendota Office Center III,

Mendota Office Center IV and American Corporate Center.

(3) The properties included in this portfolio disposition are: Champlin South Pond, Chan West Village, Duluth 4615 Grand, Duluth Denfeld

Retail, Forest Lake Auto, Forest Lake Westlake Center, Grand Forks Medpark Mall, Jamestown Buffalo Mall, Jamestown Business Center,

Lakeville Strip Center, Monticello C Store & vacant land, Omaha Barnes & Noble, Pine City Evergreen Square, Rochester Maplewood

Square and St. Cloud Westgate.

NOTE 9 • MORTGAGES PAYABLE AND LINE OF CREDIT

Most of the properties we own serve as collateral for separate mortgage loans on single properties or groups of properties. The majority of these mortgages payable are non-recourse to us, other than for standard carve-out obligations such as fraud, waste, failure to insure, environmental conditions and failure to pay real estate taxes.Interest rates on mortgages payable range from 2.49% to 7.94%, and the mortgages have varying maturity dates from the current fiscal year through July 1, 2036. As of October 31, 2016, our management believes there are no material defaults or material compliance issues in regard to any mortgages payable.

Of the mortgages payable, including mortgages on properties held for sale, the balances of fixed rate mortgages totalled $617.7 million at October 31, 2016 and $689.3 million at April 30, 2016. The balances of variable rate mortgages totalled $226.9 million and $196.8 million as of October 31, 2016 and April 30, 2016, respectively. We do not utilize derivative financial instruments to mitigate our exposure to changes in market interest rates. Most of the fixed rate mortgages have substantial pre-payment penalties. As of October 31, 2016, the weighted average rate of interest on our mortgage debt was 4.55%, compared to 4.54% on April 30, 2016. The aggregate amount of required future principal payments on mortgages payable as of October 31, 2016, is as follows:

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		(in thousands)
		Mortgages		Mortgages
		on Properties		on Properties
		Held for		Held for
Year Ended April 30,		Investment		Sale
2017 (remainder)	$	73,122	$	45,684
2018		64,747		819
2019		141,952		2,326
2020		94,259		668
2021		154,262		710
Thereafter		255,448		10,588
Total payments	$	783,790	$	60,795

In addition to the individual mortgage loans comprising our $844.6 million of mortgage indebtedness, we also have a revolving, multi-bank line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank, which had, as of October 31, 2016, lending commitments of $100.0 million. This line of credit is not included in our mortgage indebtedness total. As of October 31, 2016, the line of credit was secured by mortgages on 17 properties. Under the terms of the line of credit, properties may be added and removed from the collateral pool with the agreement of the lenders. Participants in this credit facility as of October 31, 2016 included, in addition to First International Bank, the following financial institutions: The Bank of North Dakota, First Western Bank and Trust, Dacotah Bank, Highland Bank, American State Bank & Trust Company, Town & Country Credit Union, WoodTrust Bank, United Community Bank and United Bankers’ Bank. As of October 31, 2016, the line of credit had an interest rate of 4.75% and a minimum outstanding principal balance requirement of $17.5 million. As of October 31, 2016 and April 30, 2016, we had borrowed $47.5 million and $17.5 million, respectively. The line of credit includes covenants and restrictions requiring us to achieve on a fiscal and calendar quarter basis a debt service coverage ratio on borrowing base collateral of 1.25x in the aggregate and 1.00x on individual assets in the collateral pool. We are also required to maintain minimum depository account(s) totaling $6.0 million with First International Bank, of which $1.5 million is to be held in a non-interest bearing account. As of October 31, 2016, we believe we were in compliance with the line of credit’s covenants.

NOTE 10 • FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement and Disclosures defines and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels, as follows: 

Level 1:  Quoted prices in active markets for identical assets

Level 2:  Significant other observable inputs

Level 3:  Significant unobservable inputs

Fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

We had no assets or liabilities recorded at fair value on a recurring basis at October 31, 2016 and April 30, 2016.

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets and liabilities measured at fair value on a nonrecurring basis at October 31, 2016. Non-financial assets measured at fair value on a nonrecurring basis at April 30, 2016 consisted of real estate held for sale

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that was written-down to estimated fair value during fiscal year 2016. See Note 2 for additional information on impairment losses recognized during fiscal years 2017 and 2016. The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:

	(in thousands)
	Total		Level 1		Level 2		Level 3
April 30, 2016
Real estate held for sale	$	6,650	$	—	$	—	$	6,650

As of April 30, 2016, we estimated fair value on two properties held for sale based upon receipt of individual market offers and our intent to dispose of the properties. 

Financial Assets and Liabilities Not Measured at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities. The fair values of our financial instruments approximate their carrying amount in the consolidated financial statements except for debt.

Cash and Cash Equivalents. The carrying amount approximates fair value because of the short maturity.

Other Investments. The carrying amount, or cost plus accrued interest, of the certificates of deposit approximates fair value.

Other Debt. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

Line of Credit.  The carrying amount approximates fair value because the variable rate debt re-prices frequently.

Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

The estimated fair values of our financial instruments as of October 31, 2016 and April 30, 2016, are as follows:

	(in thousands)
	October 31, 2016				April 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	68,729	$	68,729	$	66,698	$	66,698
FINANCIAL LIABILITIES
Other debt		82,650		82,650		82,026		82,026
Lines of credit		47,500		47,500		17,500		17,500
Mortgages payable		783,790		827,127		817,324		866,649
Mortgages payable related to assets held for sale		68,695		70,286		68,824		78,690

NOTE 11 • REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests on the Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures in which our unaffiliated partner, at its election, could require us to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. Redeemable noncontrolling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to Common Shares on the Condensed Consolidated Balance Sheets. We currently have one joint venture, IRET-Minot Apartments, LLC, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire the

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partner’s interest for a price to be determined in accordance with the provisions of the joint venture agreement. IRET-Minot Apartments, LLC owns the Commons and Landing at Southgate properties in Minot, ND.

As of October 31, 2016, the estimated redemption value of the redeemable noncontrolling interests was $8.6 million. Below is a table reflecting the activity of the redeemable noncontrolling interests.

	(in thousands)
Balance at April 30, 2016	$	7,522
Contributions		1,209
Net income		(146)
Balance at October 31, 2016	$	8,585

NOTE 12 • SHARE BASED COMPENSATION

Share based awards are provided to officers, non-officer employees and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, which allows for awards in the form of cash and unrestricted and restricted Common Shares, up to an aggregate of 4,250,000 shares, over the ten year period in which the plan will be in effect. Through October 31, 2016, awards under the 2015 Incentive Plan consisted of restricted and unrestricted Common Shares.

Prior to the approval of our 2015 Incentive Plan, share based awards were provided to officers, non-officer employees and trustees under the our 2008 Incentive Award Plan, which was approved by shareholders on September 16, 2008, which allowed for awards in the form of cash and unrestricted and restricted Common Shares, up to an aggregate of 2,000,000 shares, over the period in which the plan will be in effect. Through October 31, 2016, awards under the 2008 Incentive Award Plan consisted of cash and restricted and unrestricted Common Shares.

Long-Term Incentive Plan

Under the 2008 Incentive Award Plan, our officers and non-officer employees could earn share awards under the Long-Term Incentive Program (“LTIP”) adopted pursuant to the plan, which was a backward-looking program that measured performance over a one-year performance period beginning on the first day of each fiscal year. Such awards were payable to the extent deemed earned in shares, 50% of which vested on the last day of the performance period and 50% of which vested on the first anniversary of the end of the performance period. Such awards utilized the sole performance metric of the three-year average of the annual absolute total shareholder return (“TSR”).

Under the 2015 Incentive Plan, our officers and non-officer employees may earn share awards under a revised long-term incentive program, a forward-looking program that measures long-term performance over the stated performance period. Such awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

Fiscal Year 2017 LTIP Awards

Awards granted on June 22, 2016 consist of time-based restricted share awards and performance restricted share awards for 45,651 and 273,901 shares, respectively, that are classified as equity awards. The time-based restricted share awards vest as to one-third of the shares on each June 22, 2017, May 1, 2018 and May 1, 2019.  We recognize compensation expense associated with the time-based restricted share awards ratably over the requisite service periods.

The performance restricted share awards are earned based on our TSR as compared to the MSCI US REIT Index over a forward looking three-year period. The maximum number of shares that are eligible to be earned are the shares that were granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. We recognize compensation expense ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, and regardless of whether the market conditions are achieved and the performance restricted share awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. We based the expected volatility on the historical volatility of our daily closing share price. We based the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award.

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We based the expected term on the performance period of the performance restricted share award. The assumptions used to value the performance restricted share awards were an expected volatility of 23.8%, a risk-free interest rate of 0.86% and an expected life of 2.85 years. The share price at the grant date, June 22, 2016, was $6.24. 

Awards granted on August 8, 2016 consist of time-based restricted share awards and performance restricted share awards for 43,549 and 77,243 shares, respectively, that ware classified as equity awards. Of the time-based awards, 12,874 vest as to one-third of the shares on each August 8, 2017, May 1, 2018 and May 1, 2019.  The remaining 30,675 time-based awards vest as to one-third of the shares on each August 8, 2017, August 8, 2018 and August 8, 2019.

The assumptions used to value the performance restricted awards granted on August 8, 2016 were an expected volatility of 24.0%, a risk-free interest rate of 0.83% and an expected life of 2.72 years. We based the expected volatility on the historical volatility of our daily closing price. The share price at the grant date, August 8, 2016, was $6.57.

Trustee Awards

We award share-based compensation to our non-management trustees on an annual basis. Awards for 59,000 shares granted on June 22, 2016 consisted of time-based restricted share awards that vest on May 1, 2017. We recognize compensation expense associated with the time-based restricted share awards ratably over the requisite service periods.

Total Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share based awards was approximately $603,000 and $539,000 for the three months ended October 31, 2016 and 2015, respectively, and approximately $865,000 and $605,000 for the six months ended October 31, 2016 and 2015, respectively.

NOTE 13 • RELATED PARTY TRANSACTIONS

Investment Banking Services

We have an investment banking relationship with BMO Capital Markets Corp. (“BMO”). Mark O. Decker, Jr., our President and Chief Investment Officer since August 5, 2016, has been deemed a related party due to family members serving in various roles with BMO.

On March 28, 2016, we engaged BMO to act as our exclusive financial advisor regarding the sale of our senior housing portfolio. Under the terms of this engagement, BMO will be entitled to compensation based on a percentage of the aggregate value of the transaction(s). As previously announced, on August 26, 2016, IRET Properties and its various subsidiaries entered into six sales agreements regarding 26 senior housing properties and one multifamily property for approximately $236.0 million in cash. It is anticipated that such sales will close in calendar year 2017.

Also, on July 28, 2015, we engaged BMO to provide general financial and investment banking services, which included a right of first refusal to serve as lead financial advisor for large acquisition or disposition transactions for which we engage a financial advisor. The agreement may be terminated by either party for any reason, and remains currently in effect. 

NOTE 14 • SUBSEQUENT EVENTS

Common and Preferred Share Distributions. On December 7, 2016, our Board of Trustees declared the following distributions:

	Quarterly Amount
Class of shares/units	per Share or Unit		Record Date	Payment Date
Common shares and limited partnership units	$	0.1300	January 3, 2017	January 17, 2017
Preferred shares:
Series B	$	0.4968	December 23, 2016	January 2, 2017

Redemption of Preferred A.  On September 1, 2016, our Board of Trustees authorized the redemption of some or all of the 8.25% Series A Cumulative Redeemable Preferred Shares (“Preferred A Shares”) from time to time, but no later than

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by December 31, 2016. On November 1, 2016, we delivered notice to holders of the Preferred A Shares that we intend to redeem all 1,150,000 Preferred A Shares at a redemption price equal to $25.00 per share plus any accrued but unpaid distributions per share up to and including the redemption date of December 2, 2016. On December 2, 2016, we completed the redemption of the Preferred A Shares for an aggregate redemption price of $29.164 million, and such shares are no longer deemed outstanding as of such date.

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ITEM 2. MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements included in this report, as well as our audited financial statements for the fiscal year ended April 30, 2016, which are included in our Form 10-K filed with the SEC on June 29, 2016.

Forward Looking Statements. Certain matters included in this discussion are forward looking statements within the meaning of the federal securities laws. Although we believe that the expectations reflected in the following statements are based on reasonable assumptions, we can give no assurance that the expectations expressed will actually be achieved. Many factors may cause actual results to differ materially from our current expectations, including general economic conditions, local real estate conditions, the general level of interest rates and the availability of financing and various other economic risks inherent in the business of owning and operating investment real estate.

Overview

We are a self-advised equity REIT engaged in owning and operating income-producing real estate properties. Our investments include multifamily, healthcare and other properties located primarily in the upper Midwest states of Minnesota and North Dakota. As of October 31, 2016, we held for investment 86 multifamily properties containing 12,751 apartment units and having a total real estate investment amount net of accumulated depreciation of $1.0 billion, 30 healthcare properties and 14 other properties, containing approximately 2.7 million square feet of leasable space and having a total real estate investment amount net of accumulated depreciation of $330.3 million.We held for sale 14 multifamily property, 27 healthcare properties, 2 retail properties and 1 parcel of land as of October 31, 2016.

Our primary source of income and cash is rents associated with multifamily and commercial leases. Our business objective is to increase shareholder value by employing a disciplined investment strategy. This strategy is implemented by growing income-producing assets in desired geographical markets in real estate classes we believe will provide a consistent return on investment for our shareholders. We have paid quarterly distributions continuously since our first distribution in 1971.

Critical Accounting Policies

In preparing the condensed consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting policies is included in our Form 10-K for the fiscal year ended April 30, 2016, filed with the SEC on June 29, 2016, under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no significant changes to those policies during the three months ended October 31, 2016.

Second Quarter Activities

Summarized below are transactions that occurred during the second quarter of our fiscal year 2017:

· As part of our strategic plan to sell our senior housing portfolios, we disposed of eight senior housing properties and one parcel of unimproved land for a sale price totaling $43.9 million.

· We purchased the remaining 41.41% minority interest in the joint venture entity that owns the Red 20 multifamily property for a purchase price totaling $4.9 million.

Same-store and Non-same-store Properties

Throughout this Quarterly Report on Form 10-Q, we have provided certain information on a same-store and non-same-store properties basis. Information provided on a same-store properties basis includes the results of properties that we have owned and operated for the entirety of both periods being compared except for properties for which significant redevelopment or expansion occurred during either of the periods being compared and properties sold or classified as

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held for sale, and which, in the case of development or re-development properties, have achieved a target level of occupancy of 90% for multifamily properties and 85% for healthcare and other properties.

For the comparison of the three and six months ended October 31, 2016 and 2015, all or a portion of 50 properties were non-same-store, of which 12 were redevelopment or in-service development properties.

While there are judgments to be made regarding changes in designation, we typically remove properties from same-store to non-same-store when redevelopment has or is expected to have a significant impact on property net operating income within the fiscal year. Acquisitions are moved to same-store once we have owned the property for the entirety of comparable periods and the property is not under significant redevelopment or expansion. Our development projects in progress are not included in our non-same-store properties category until they are placed in-service, which occurs upon the substantial completion for a commercial development property and upon receipt of a certificate of occupancy for a multifamily development project. They are then subsequently moved from non-same-store to same-store when the property has been in-service for the entirety of both periods being compared and has reached the target level of occupancy specified above.

Market Conditions and Outlook

The demand for investment and institutional quality real estate in our markets is strong. Investors have abundant equity and access to debt to facilitate acquisitions and developments. Prices and sales volumes are strong. Fundamentals are favorable across property types. The exception for us is in various North Dakota markets where energy and commodity market weakness coupled with increased supply caused us to experience elevated vacancies and offer lower rents to attract residents.

We experienced generally stable trends across most of our apartment investments during the quarter ended October 31, 2016, except in certain commodity and supply impacted markets. Our ability to maintain occupancy levels and raise rents remains dependent on continued healthy employment and wage growth. We continue to observe considerable multifamily development activity in our markets, and as this new construction is completed, we will experience increased competition for residents. However, developers of new apartment projects are trying to push up market rents to support the increasing costs of new developments. Many existing apartment owners of modestly older properties are making significant upgrades to their units and raising rents. The calendar 2016 economic outlook of the Ninth Federal Reserve District, which overlays most of our geographic footprint, is positive according to the Federal Reserve Bank of Minneapolis.  Increases in employment and personal income growth are projected. The biggest challenge facing employers is hiring qualified workers. The unemployment rate is generally below the national average in most of the district’s states.

Our healthcare segment consists of medical office properties. The same-store healthcare segment remains stable with occupancy at 92.8%. A significant portion of our medical office portfolio is on campus and located in the Minneapolis Metropolitan Statistical Area (“MSA”) which has a 9.5% on campus vacancy rate as of Q2 2016 according to Colliers International.

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RESULTS OF OPERATIONS

Consolidated Results of Operations for the Three and Six Months Ended October 31, 2016 and 2015

The discussion that follows is based on our consolidated results of operations for the three and six months ended October 31, 2016 and 2015.

	(in thousands, except percentages)
	Three Months Ended								Six Months Ended
	October 31,				2016 vs. 2015				October 31,				2016 vs. 2015
	2016		2015		$ Change		% Change		2016		2015		$ Change		% Change
Real estate rentals	$	45,859	$	41,868	$	3,991	9.5	%	$	90,844	$	82,618	$	8,226	10.0	%
Tenant reimbursement		4,750		4,478		272	6.1	%		9,376		8,773		603	6.9	%
TOTAL REVENUE		50,609		46,346		4,263	9.2	%		100,220		91,391		8,829	9.7	%
Property operating expenses, excluding real estate taxes		15,814		15,052		762	5.1	%		31,871		28,540		3,331	11.7	%
Real estate taxes		5,759		4,899		860	17.6	%		11,336		9,715		1,621	16.7	%
Depreciation and amortization		13,531		12,405		1,126	9.1	%		27,798		23,622		4,176	17.7	%
Impairment of real estate investments		—		1,873		(1,873)	(100.0)	%		54,153		3,158		50,995	1,614.8	%
General and administrative expenses		2,702		2,933		(231)	(7.9)	%		5,308		5,387		(79)	(1.5)	%
Acquisition and investment related costs		4		391		(387)	(99.0)	%		47		398		(351)	(88.2)	%
Other expenses		816		813		3	0.4	%		1,668		1,230		438	35.6	%
TOTAL EXPENSES		38,626		38,366		260	0.7	%		132,181		72,050		60,131	83.5	%
Operating (loss) income		11,983		7,980		4,003	50.2	%		(31,961)		19,341		(51,302)	(265.2)	%
Interest expense		(10,626)		(8,741)		(1,885)	21.6	%		(20,990)		(16,555)		(4,435)	26.8	%
Loss on extinguishment of debt		—		(106)		106	(100.0)	%		—		(106)		106	(100.0)	%
Interest income		600		565		35	6.2	%		1,172		1,121		51	4.5	%
Other income		37		100		(63)	(63.0)	%		510		151		359	237.7	%
Income (loss) before (loss) gain on sale of real estate and other investments and income from discontinued operations		1,994		(202)		2,196	(1,087.1)	%		(51,269)		3,952		(55,221)	(1,397.3)	%
(Loss) gain on sale of real estate and other investments		(103)		—		(103)	n/a			8,855		(175)		9,030	(5,160.0)	%
Income (loss) from continuing operations		1,891		(202)		2,093	(1,036.1)	%		(42,414)		3,777		(46,191)	(1,223.0)	%
Income from discontinued operations		10,399		16,879		(6,480)	(38.4)	%		14,110		17,627		(3,517)	(20.0)	%
NET INCOME (LOSS)		12,290		16,677		(4,387)	(26.3)	%		(28,304)		21,404		(49,708)	(232.2)	%
Net (income) loss attributable to noncontrolling interests – Operating Partnership		(1,174)		(1,527)		353	(23.1)	%		2,122		(1,713)		3,835	(223.9)	%
Net loss attributable to noncontrolling interests – consolidated real estate entities		484		1,516		(1,032)	(68.1)	%		16,139		1,515		14,624	965.3	%
Net income (loss) attributable to Investors Real Estate Trust		11,600		16,666		(5,066)	(30.4)	%		(10,043)		21,206		(31,249)	(147.4)	%
Dividends to preferred shareholders		(2,878)		(2,878)		—	—	%		(5,757)		(5,757)		—	—	%
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$	8,722	$	13,788		(5,066)	(36.7)	%	$	(15,800)	$	15,449	$	(31,249)	(202.3)	%

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Revenues.  Revenues for the three months ended October 31, 2016 were $50.6 million compared to $46.3 million in the three months ended October 31, 2015, an increase of $4.3 million or 9.2%. The increase in revenue for the three months ended October 31, 2016 resulted primarily from properties acquired and development projects placed in service in fiscal year 2016, as shown in the table below.

	(in thousands)
	Increase in Total Revenue Three Months Ended October 31, 2016
Increase in revenue primarily from development project placed in service in fiscal year 2017	$	167
Increase in revenue primarily from properties acquired and development projects placed in service in fiscal year 2016		6,148
Decrease in revenue from same-store properties(1)		(631)
Decrease in revenue from properties sold or classified as held for sale in fiscal years 2017 and 2016		(1,421)
Net increase in total revenue	$	4,263

(1) See analysis of NOI by segment below for additional information.

Revenues for the six months ended October 31, 2016 were $100.2 million compared to $91.4 million in the six months ended October 31, 2015, an increase of $8.8 million or 9.7%. The increase in revenue for the six months ended October 31, 2016 resulted primarily from properties acquired and development projects placed in service in fiscal year 2016, as shown in the table below.

	(in thousands)
	Increase in Total Revenue Six Months Ended October 31, 2016
Increase in revenue primarily from development project placed in service in fiscal year 2017	$	167
Increase in revenue primarily from properties acquired and development projects placed in service in fiscal year 2016		12,566
Decrease in revenue from same-store properties(1)		(1,483)
Decrease in revenue from properties sold or classified as held for sale in fiscal years 2017 and 2016		(2,421)
Net increase in total revenue	$	8,829

(1) See analysis of NOI by segment below for additional information.

Property operating expenses, excluding real estate taxes. Property operating expenses, excluding real estate taxes, increased by 5.1% to $15.8 million in the second quarter of fiscal year 2017 compared to $15.1 in the same period of the prior fiscal year. Non-same-store properties realized an increase of $1.1 million while expenses at same-store properties decreased by $376,000. The decrease at same-store properties was attributable to a decrease in casualty related costs.

Property operating expenses, excluding real estate taxes, increased by 11.7% to $31.9 million for the six months ended October 31, 2016 compared to $28.5 million in the same period of the prior fiscal year.  Of this $3.3 million increase, $2.2 million was attributable to non-same-store properties, and $1.1 million was attributable to same-store properties, primarily due to an increase in general maintenance expenses and an increase in the bad debt provision expense.

Real Estate Taxes.  Real estate taxes increased by 17.6% to $5.8 million in the second quarter of fiscal year 2017 compared to $4.9 million in the same period of the prior fiscal year. An increase of $627,000 was attributable to non-same-store properties while same-store properties realized an increase of $233,000.

Real estate taxes increased 16.7% to $11.3 million for the six months ended October 31, 2016 compared to $9.7 million in the same period of the prior fiscal year. An increase of $1.4 million was attributable to non-same-store properties while same-store properties realized an increase of $213,000. 

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Depreciation and Amortization. Depreciation and amortization increased by 9.1% to $13.5 million in the second quarter of fiscal year 2017, compared to $12.4 million in the same period of the prior fiscal year. This increase was primarily due to depreciation on new developments placed in service and acquisitions.

Depreciation and amortization related to real estate investments increased by 17.7% to $27.8 million in the six months ended October 31, 2016, compared to $23.6 million in the same period of the prior fiscal year. This increase was primarily due to depreciation on new developments placed in service and acquisitions.

Impairment of Real Estate Investments.  We recognized $0 and $1.9 million of impairment in continuing operations during the three months ended October 31, 2016 and 2015, respectively. We recognized $54.2 million and $3.2 million of impairment in continuing operations during the six months ended October 31, 2016 and 2015, respectively. See Note 2 of the Notes to the Condensed Consolidated Financial Statements in this report for additional information.

General and Administrative Expenses.  General and administrative expenses decreased by 7.9% to $2.7 million in the three months ended October 31, 2016, compared to $2.9 million in the same period of the prior fiscal year, primarily due to a decrease in short term incentive plan expense. The decrease in general and administrative expense in the six months ended October 31, 2016, compared to the same period of the prior fiscal year was immaterial.

Acquisition and Investment Related Costs.  Acquisition and investment related costs decreased to approximately $4,000 in the three months ended October 31, 2016, compared to approximately $391,000 in the same period of the prior fiscal year, primarily due to decreased acquisition costs and decreased costs related to development projects we are no longer pursuing.

Acquisition and investment related costs decrease to approximately $47,000 in the six months ended October 31, 2016, compared to approximately $398,000 in the same period of the prior fiscal year, primarily due to decreased acquisition costs and decreased costs related to development projects we are no longer pursuing.

Other Expenses.  The increase in other expenses in the second quarter of fiscal year 2017 compared to the same period of the prior fiscal year was immaterial. Other expenses increased approximately $438,000 to $1.7 million in the six months ended October 31, 2016, compared to the same period of the prior fiscal year, primarily due to third-party consulting costs.

Interest Expense.  Components of interest expense in the three and six months ended October 31, 2016 and 2015 were as follows.

	(in thousands, except percentages)
	Three Months Ended								Six Months Ended
	October 31,				2016 vs. 2015				October 31,				2016 vs. 2015
	2016		2015		$ Change		% Change		2016		2015		$ Change		% Change
Mortgage debt	$	9,477	$	8,479	$	998	11.8	%	$	18,800	$	16,132	$	2,668	16.5	%
Line of credit		281		241		40	16.6	%		494		1,155		(661)	(57.2)	%
Other		868		21		847	4,033.3	%		1,696		(732)		2,428	(331.7)	%
Total interest expense	$	10,626	$	8,741	$	1,885	21.6	%	$	20,990	$	16,555	$	4,435	26.8	%

Mortgage interest increased by 11.8% to $9.5 million in the second quarter of fiscal year 2017, compared to $8.5 million in the same period of the prior fiscal year. Mortgages on non-same-store properties added approximately $938,000 and $2.7 million to our mortgage interest expense in the three and six months ended October 31, 2016, respectively, while mortgage interest on same-store properties decreased approximately $24,000 and $97,000, respectively, compared to the three and six months ended October 31, 2015, primarily due to loan payoffs and refinancings.

Interest expense on our line of credit increased to approximately $281,000 in the three months ended October 31, 2016, compared to approximately $241,000 in the same period of the prior fiscal year, primarily due to a higher average outstanding balance during the second quarter of fiscal year 2017. Interest expense on our line of credit decreased to approximately $494,000 in the six months ended October 31, 2016, compared to approximately $1.2 million in the same period of the prior fiscal year, primarily due to a lower average outstanding balance during fiscal year 2017.

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Other interest consists of interest on construction loans, security deposits and special assessments, as well as amortization of loan costs, offset by capitalized construction interest. Other interest increased by approximately $847,000 to approximately $868,000 in the second quarter of fiscal year 2017, compared to the same period of the prior fiscal year, primarily due to a decrease in capitalized construction interest. Other interest increased to approximately $1.7 million in the six months ended October 31, 2016, compared to approximately $(732,000) in the same period of the prior fiscal year, primarily due to a decrease in capitalized construction interest.

Interest and Other Income. We recorded interest income in the second quarter of fiscal years 2017 and 2016 of approximately $600,000 and $565,000, respectively, and during the six months ended October 31, 2016 and 2015 of $1.2 million and $1.1 million, respectively. The change between periods was immaterial.

Other income decreased 63.0% to approximately $37,000 in the second quarter of fiscal year 2017 compared to the same period of the prior fiscal year and increase 237.7% to approximately $510,000 in the six months ended October 31, 2016 compared to the same period of the prior fiscal year. The changes between periods was primarily due to changes in real estate tax appeal refunds.

Gain (Loss) on Sale of Real Estate and Other Investments. We recorded in continuing operations a net loss of approximately $103,000 in the second quarter of fiscal year 2017 and no gain or loss in the same period of the prior fiscal year.  We recorded in continuing operations a net gain of $8.9 million and a net loss of approximately $175,000 in the six months ended October 31, 2016 and 2015, respectively. Properties sold in the six months ended October 31, 2016 and 2015 are detailed below in the section captioned “Property Acquisitions and Dispositions.”  

Income from Discontinued Operations.  We recorded income from discontinued operations of $10.4 million and $16.9 million, respectively, in the three months ended October 31, 2016 and 2015, and $14.1 million and $17.6 million in the six months ended October 31, 2016 and 2015, respectively. See Note 7 of the Notes to the Condensed Consolidated Financial Statements in this report for further information on discontinued operations.

Occupancy

Occupancy as of October 31, 2016 compared to October 31, 2015 decreased in our multifamily and healthcare segments on a same-store basis. Occupancy represents the actual number of units or square footage leased divided by the total number of units or square footage at the end of the period.

Occupancy Levels on a Same-Store Property and All Property Basis:

	Same-Store Properties				All Properties
	As of October 31,				As of October 31,
Segments	2016		2015		2016		2015
Multifamily	92.9	%	95.2	%	91.2	%	91.9	%
Healthcare	92.8	%	95.8	%	88.9	%	90.0	%

Net Operating Income

Net Operating Income (“NOI”) is a non-US GAAP measure which we define as total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense.  NOI does not represent cash generated by operating activities in accordance with US GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.

The following tables show real estate revenues, real estate operating expenses and NOI by reportable operating segment for the three and six months ended October 31, 2016 and 2015.  For a reconciliation of NOI of reportable segments to net income as reported, see Note 5 of the Notes to the Condensed Consolidated Financial Statements in this report.

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The tables also show NOI by reportable operating segment on a same-store property and non-same-store property basis. This comparison allows us to evaluate the performance of existing properties and their contribution to net income. Management believes that measuring performance on a same-store property basis is useful to investors because it enables evaluation of how our properties are performing year over year. Management uses this measure to assess whether or not it has been successful in increasing NOI, renewing the leases of existing tenants, controlling operating costs and appropriately handling capital improvements. The discussion below focuses on the main factors affecting real estate revenue and real estate expenses from same-store properties. Since changes from one fiscal year to another in real estate revenue and expenses from non-same-store properties are due to the addition of those properties to our real estate portfolio, such information is less useful for evaluating the ongoing operational performance of our real estate portfolio.

All Segments

The following table of selected operating data reconciles NOI to net income and provides the basis for our discussion of NOI by segment in the three and six months ended October 31, 2016 and 2015. 

	(in thousands, except percentages)
	Three Months Ended October 31,								Six Months Ended October 31,
	2016		2015		$ Change		% Change		2016		2015		$ Change		% Change
All Segments
Real estate revenue
Same-store	$	40,078	$	40,709	$	(631)	(1.6)	%	$	79,892	$	81,375	$	(1,483)	(1.8)	%
Non-same-store(1)		10,531		5,637		4,894	86.8	%		20,328		10,016		10,312	103.0	%
Total	$	50,609	$	46,346	$	4,263	9.2	%	$	100,220	$	91,391	$	8,829	9.7	%
Real estate expenses
Same-store	$	17,270	$	17,415	$	(145)	(0.8)	%	$	35,034	$	33,741	$	1,293	3.8	%
Non-same-store(1)		4,303		2,536		1,767	69.7	%		8,173		4,514		3,659	81.1	%
Total	$	21,573	$	19,951	$	1,622	8.1	%	$	43,207	$	38,255	$	4,952	12.9	%
Net operating income
Same-store	$	22,808	$	23,294	$	(486)	(2.1)	%	$	44,858	$	47,634	$	(2,776)	(5.8)	%
Non-same-store(1)		6,228		3,101		3,127	100.8	%		12,155		5,502		6,653	120.9	%
Total	$	29,036	$	26,395	$	2,641	10.0	%	$	57,013	$	53,136	$	3,877	7.3	%
Depreciation/amortization		(13,531)		(12,405)						(27,798)		(23,622)
Impairment of real estate investments		—		(1,873)						(54,153)		(3,158)
General and administrative expenses		(2,702)		(2,933)						(5,308)		(5,387)
Acquisition and investment related costs		(4)		(391)						(47)		(398)
Other expenses		(816)		(813)						(1,668)		(1,230)
Interest expense		(10,626)		(8,741)						(20,990)		(16,555)
Loss on debt extinguishment		—		(106)						—		(106)
Interest and other income		637		665						1,682		1,272
Income (loss) before gain (loss) on sale of real estate and other investments and income from discontinued operations		1,994		(202)						(51,269)		3,952
(Loss) gain on sale of real estate and other investments		(103)		—						8,855		(175)
Income (loss) from continuing operations		1,891		(202)						(42,414)		3,777
Income from discontinued operations(2)		10,399		16,879						14,110		17,627
Net income (loss)	$	12,290	$	16,677					$	(28,304)	$	21,404

(1)	Non-same-store properties consist of the following properties (re-development and in-service development properties are listed in bold type):
Held for Investment -	Multifamily  -	71 France, Edina, MN; Arcata, Golden Valley, MN; Avalon Cove, Rochester, MN; Cardinal Point, Grand Forks, ND; Cascade Shores, Rochester, MN; Chateau II, Minot, ND; Crystal Bay, Rochester, MN; Deer Ridge, Jamestown, ND; French Creek, Rochester, MN; Gardens, Grand Forks, ND; GrandeVille at Cascade Lake, Rochester, MN; Legacy Heights, Bismarck, ND; Monticello Crossings, Monticello, MN;  Red 20, Minneapolis, MN and Renaissance Heights, Williston, ND. Total number of units, 2,238.
	Healthcare  -	Edina 6525 Drew Ave, Edina, MN; Edina 6565 France SMC III, Edina, MN; Lakeside Medical Plaza, Omaha, NE and PrairieCare Medical, Brooklyn Park, MN. Total rentable square footage, 156,199.
	Other -	Minot Southgate Retail, Minot, ND and Roseville 3075 Long Lake Road, Roseville, MN. Total rentable square footage, 228,406.

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Held for Sale -	Multifamily  -	11th Street 3 Plex, Minot, ND; 4th Street 4 Plex, Minot, ND; Apartments on Main, Minot, ND; Brooklyn Heights, Minot, ND; Colton Heights, Minot, ND; Fairmont, Minot, ND; First Avenue, Minot, ND; Pinecone Villas, Sartell, MN; Pines, Minot, ND; Southview, Minot, ND; Summit Park, Minot, ND; Temple, Minot, ND; Terrace Heights, Minot, ND; and Westridge, Minot, ND. Total number of units, 351.
	Healthcare  -	Sartell 2000 23rd St, Sartell, MN. Total rentable square footage, 59,760.
	Other -	17 South Main, Minot, ND; 1st Avenue Building, Minot, ND; and Grand Forks Carmike, Grand Forks, ND. Total rentable square footage, 35,409.
	Total NOI for held for sale properties for the three months ended October 31, 2016 and 2015, respectively, $361 and $479. Total NOI for held for sale properties for the six months ended October 31, 2016 and 2015, respectively, $758 and $990.
Sold -	Multifamily -	Campus Center, St. Cloud, MN; Campus Heights, St. Cloud, MN; Campus Knoll, St. Cloud, MN; Campus Plaza, St. Cloud, MN; Campus Side, St. Cloud, MN; Campus View, St. Cloud, MN; Cornerstone, St. Cloud, MN; and University Park Place, St. Cloud, MN.
	Healthcare  -	Nebraska Orthopaedic Hospital, Omaha, NE
	Other -	Minot Arrowhead First International, Minot, ND; Minot Plaza, Minot, ND; Stone Container, Fargo, ND and Thresher Square, Minneapolis, MN.
	Total NOI for sold properties for the three months ended October 31, 2016 and 2015, respectively, $0 and $988. Total NOI for sold properties for the six months ended October 31, 2016 and 2015, respectively, $280 and $1,801.

(2)	Discontinued operations include gain on disposals and income from operations for:
	Held for Sale:  Casper 1930 E 12th St, Casper 3955 E 12th St, Cheyenne 4010 N College Dr, Cheyenne 4606 N College Dr, Edgewood Vista (“EV”) Belgrade, EV Billings, EV Bismarck, EV Brainerd, EV Columbus, EV East Grand Forks, EV Fargo, EV Fremont, EV Grand Island, EV Hastings, EV Hermantown I and II, EV Kalispell, EV Minot, EV Missoula, EV Norfolk, EV Omaha, EV Sioux Falls, EV Spearfish, EV Virginia, Laramie 1072 N 22nd St and Legends at Heritage Place.
	2017 Dispositions:  Spring Creek (“SC”) American Falls, SC Boise, SC Eagle, SC Fruitland, SC Meridian, SC Overland, SC Soda Springs and SC Ustick.
	2016 Dispositions:  610 Business Center, 7800 West Brown Deer Road, American Corporate Center, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Burnsville Strip Center, Champlin South Pond, Chan West Village, Corporate Center West, Crosstown Centre, Duluth 4615 Grand, Duluth Denfeld Retail, Eden Prairie 6101 Blue Circle Drive, Farnam Executive Center, Flagship Corporate Center, Forest Lake Auto, Forest Lake Westlake Center, Gateway Corporate Center, Golden Hills Office Center, Grand Forks Medpark Mall, Granite Corporate Center, Great Plains, Highlands Ranch I and II, Interlachen Corporate Center, Intertech Building, Jamestown Buffalo Mall, Jamestown Business Center, Lakeville Strip Center, Mendota Office Center I-IV, Minnesota National Bank, Miracle Hills One,  Monticello C-Store, Northpark Corporate Center, Omaha 10802 Farnam Dr, Omaha Barnes & Noble, Pacific Hills, Pine City C-Store, Pine City Evergreen Square, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900 Concourse Drive, Riverport, Rochester Maplewood Square, Spring Valley IV, V, X and XI, St. Cloud Westgate, Superior Office Building, TCA Building, Three Paramount Plaza, Timberlands, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park, Westgate and Woodlands Plaza IV.

An analysis of NOI by segment follows.

Multifamily

Real estate revenue from same-store properties in our multifamily segment decreased by 1.7% or $486,000 in the three months ended October 31, 2016 compared to the same period in the prior fiscal year. The decrease was attributable to a decrease in scheduled rent of $244,000 and an increase in vacancy of $467,000.  These decreases were offset by an increase in the resident utility billings system “RUBS” revenue of $288,000 while all other fee items combined decreased by $63,000.  The overall decrease of 1.7% was attributable to the operating results in our Minot and Williston, North Dakota markets.  The balance of our portfolio in our ten other markets realized an increase in revenue of $278,000 or 1.1%.

Real estate expenses at same-store properties in our multifamily segment decreased by 0.9% or $115,000 in the three months ended October 31, 2016 compared to the same period in the prior fiscal year. The decrease was attributable to a decrease in insurance costs of $290,000 primarily due to a decrease in under deductible insurance claims. All other real estate expenses combined increased by $175,000.

Real estate revenue from same-store properties in our multifamily segment decreased by 2.3% or $1.3 million in the six months ended October 31, 2016 compared to the same period in the prior fiscal year. The decrease was attributable to a decrease in scheduled rent of $742,000 and an increase in vacancy of $761,000.  These decreases were offset by an increase in the “RUBS” revenue of $514,000 while all other fee items combined decreased by $281,000. The overall decrease of 1.7% was attributable to the operating results in our Minot and Williston, North Dakota markets. The balance of our portfolio in our ten other markets realized an increase in revenue of $547,000 or 1.1%.

Real estate expenses at same-store properties in our multifamily segment decreased by 0.8% or $189,000 in the six months ended October 31, 2016 compared to the same period in the prior fiscal year. The decrease was attributable to a

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decrease in insurance costs of $381,000 primarily due to a decrease in insurance premiums. All other real estate expenses combined increased by $192,000.

	(in thousands, except percentages)
	Three Months Ended October 31,										Six Months Ended October 31,
	2016			2015			$ Change		% Change		2016		2015		$ Change		% Change
Multifamily
Real estate revenue
Same-store	$	27,613		$	28,099		$	(486)	(1.7)	%	$	54,999	$	56,269	$	(1,270)	(2.3)	%
Non-same-store		8,637			4,077			4,560	111.8	%		16,291		7,340		8,951	121.9	%
Total	$	36,250		$	32,176		$	4,074	12.7	%	$	71,290	$	63,609	$	7,681	12.1	%
Real estate expenses(1)
Same-store	$	12,033		$	12,148		$	(115)	(0.9)	%	$	23,813	$	24,002	$	(189)	(0.8)	%
Non-same-store		3,533			2,043			1,490	72.9	%		6,632		3,629		3,003	82.8	%
Total	$	15,566		$	14,191		$	1,375	9.7	%	$	30,445	$	27,631	$	2,814	10.2	%
Net operating income
Same-store	$	15,580		$	15,951		$	(371)	(2.3)	%	$	31,186	$	32,267	$	(1,081)	(3.4)	%
Non-same-store		5,104			2,034			3,070	150.9	%		9,659		3,711		5,948	160.3	%
Total	$	20,684		$	17,985		$	2,699	15.0	%	$	40,845	$	35,978	$	4,867	13.5	%
Occupancy		2016			2015
Same-store		92.9	%		95.2	%
Non-same-store		84.4	%		75.5	%
Total		91.2	%		91.9	%
Number of Units		2016			2015
Same-store		10,513			10,511
Non-same-store		2,589			2,149
Total		13,102			12,660

(1) Excludes offsite costs associated with property management and casualty-related amounts. Property management costs increased by approximately $306,000 and $935,000 respectively, for the three and six months ended October 31, 2016 as compared to the same period of the prior year. Casualty-related costs decreased by approximately $405,000 and increased by approximately $100,000, respectively, for the three and six months ended October 31, 2016 as compared to the same period of the prior year.

Healthcare

Real estate revenue from same-store properties in our healthcare segment decreased by 0.7% or $75,000 in the three months ended October 31, 2016 compared to the same period in the prior fiscal year. This decrease was attributable to an increase in vacancy of $186,000 while all other revenue items combined increased by $111,000.

Real estate expenses from same-store healthcare properties increased by 8.7% or $298,000 in the three months ended October 31, 2016 compared to the same period in the prior fiscal year. The primary factors were increases in general maintenance expenses of $149,000 and real estate taxes of $145,000. All other real estate expense combined increased by $4,000.

Real estate revenue from same-store properties in our healthcare segment decreased by 0.6% or $126,000 in the six months ended October 31, 2016 compared to the same period in the prior fiscal year. This decrease was attributable to an increase in vacancy of $370,000 while all other revenue items combined increased by $244,000.

Real estate expenses from same-store healthcare properties increased by 12.5% or $832,000 in the six months ended October 31, 2016 compared to the same period in the prior fiscal year. The primary factors were increases in general maintenance expenses of $259,000, the bad debt provision expense of $241,000 and real estate taxes of $202,000. All other real estate expense combined increased by $130,000.

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	(in thousands, except percentages)
	Three Months Ended October 31,										Six Months Ended October 31,
	2016			2015			$ Change		% Change		2016		2015		$ Change		% Change
Healthcare
Real estate revenue
Same-store	$	10,205		$	10,280		$	(75)	(0.7)	%	$	20,322	$	20,448	$	(126)	(0.6)	%
Non-same-store		1,456			1,071			385	35.9	%		2,880		1,682		1,198	71.2	%
Total	$	11,661		$	11,351		$	310	2.7	%	$	23,202	$	22,130	$	1,072	4.8	%
Real estate expenses(1)
Same-store	$	3,730		$	3,432		$	298	8.7	%	$	7,502	$	6,670	$	832	12.5	%
Non-same-store		421			402			19	4.7	%		841		646		195	30.2	%
Total	$	4,151		$	3,834		$	317	8.3	%	$	8,343	$	7,316	$	1,027	14.0	%
Net operating income
Same-store	$	6,475		$	6,848		$	(373)	(5.4)	%	$	12,820	$	13,778	$	(958)	(7.0)	%
Non-same-store		1,035			669			366	54.7	%		2,039		1,036		1,003	96.8	%
Total	$	7,510		$	7,517		$	(7)	(0.1)	%	$	14,859	$	14,814	$	45	0.3	%
Occupancy		2016			2015
Same-store		92.8	%		95.8	%
Non-same-store		66.2	%		63.1	%
Total		88.9	%		90.0	%
Rentable Square Footage		2016			2015
Same-store		1,285,749			1,285,778
Non-same-store		215,959			281,148
Total		1,501,708			1,566,926

(1) Excludes offsite costs associated with property management, which decreased by approximately $66,000 and $123,000, respectively, for the three and six months ended October 31, 2016 as compared to the same period of the prior year.

Analysis of Commercial Credit Risk and Leases

Credit Risk

The following table lists our top ten commercial tenants on October 31, 2016, for all commercial properties owned by us, including healthcare, other commercial properties and those held for sale, measured by percentage of total commercial minimum rents as of October 1, 2016.  Our results of operations are dependent on, among other factors, the economic health of our tenants. We attempt to mitigate tenant credit risk by working to secure creditworthy tenants that meet our underwriting criteria and monitoring our portfolio to identify potential problem tenants. We believe that our credit risk is also mitigated by the fact that no individual tenant accounts for more than 10% of our total real estate rentals, although affiliated entities of Edgewood Vista together accounted for approximately 30.1% of our total commercial minimum rents as of October 1, 2016. 

As of October 31, 2016, 15 of our 40 commercial properties held for investment, along with our held for sale properties including all 20 of our Edgewood Vista properties and all 5 of our Wyoming senior housing properties, were leased under triple net leases under which the tenant pays a monthly lump sum base rent as well as all costs associated with the property, including property taxes, insurance, replacement, repair or restoration, in addition to maintenance. The failure by any of our triple net tenants to effectively conduct their operations or to maintain and improve our properties in accordance with the terms of their respective triple net leases could adversely affect their business reputations and ability to attract and retain residents and customers to our properties, which could have an indirect adverse effect on us.

We regularly monitor the relative credit risk of our significant tenants, including our triple net tenants. The metrics we use to evaluate a significant tenant’s liquidity and creditworthiness depend on facts and circumstances specific to that tenant and to the industry in which it operates, and include the tenant’s credit history and economic conditions related to the tenant, its operations and the markets in which it operates. These factors may change over time. Prior to signing a lease with a tenant, we generally assesses the prospective tenant’s credit quality through review of its financial statements and tax returns, and the result of that review is a factor in establishing the rent to be charged (e.g., higher risk

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tenants will be charged higher rent). Over the course of a lease, our property management and asset management personnel have regular contact with tenants and tenant employees, and, where the terms of the lease permit, receive tenant financial information for periodic review or review publicly-available financial statements in the case of public company tenants or non-profit entities, such as hospital systems, whose financial statements are required to be filed with state agencies. Through these means we monitor tenant credit quality.

	% of Total Commercial
	Minimum Rents
Lessee	as of October 1, 2016
Affiliates of Edgewood Vista(1)	30.1	%
Fairview Health Services	8.7	%
St. Luke's Hospital of Duluth, Inc.	6.1	%
PrairieCare Medical LLC	5.2	%
HealthEast Care System	3.9	%
Quality Manufacturing Corp	2.3	%
Allina Health	1.9	%
Children's Hospitals & Clinics	1.8	%
Noran Neurological Clinic	1.7	%
Amerada Hess	1.6	%
All Others	36.7	%
Total Monthly Commercial Rent as of October 1, 2016	100.0	%

(1) Affiliates of Edgewood Vista are tenants in our senior housing properties which are classified as held for sale and discontinued operations at October 31, 2016.

Healthcare Leasing Activity

During fiscal year 2017, we have executed new and renewal healthcare leases for our same-store properties on 21,843 square feet for the three months ended October 31, 2016 and 54,067 square feet for the six months ended October 31, 2016. Due to our leasing efforts, occupancy in our same-store healthcare portfolio remained strong at 92.8% as of October 31, 2016.

The total leasing activity for our same-store healthcare properties, expressed in square feet of leases signed during the period, and the resulting occupancy levels, are as follows:

Three Months Ended October 31, 2016 and 2015

					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
Segment	2016	2015	2016	2015	2016	2015	2016		2015
Healthcare	4,891	2,831	16,952	60,121	21,843	62,952	92.8	%	96.0	%

Six Months Ended October 31, 2016 and 2015

					Total
	Square Feet of		Square Feet of		Square Feet of
	New Leases(1)		Leases Renewed(1)		Leases Executed(1)		Occupancy
Segment	2016	2015	2016	2015	2016	2015	2016		2015
Healthcare	17,031	4,455	37,036	106,543	54,067	110,998	92.8	%	96.0	%

(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period.

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Healthcare New Leases

The following table sets forth the average effective rents and the estimated costs of tenant improvements and leasing commissions, on a per square foot basis, that we are obligated to fulfill under the new leases signed for our same-store healthcare properties:

Three Months Ended October 31, 2016 and 2015

							Estimated Tenant		Leasing
	Square Feet of		Average Term		Average		Improvement Cost		Commissions per
	New Leases(1)		in Years		Effective Rent(2)		per Square Foot(1)		Square Foot(1)
Segment	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Healthcare	4,891	2,831	2.0	2.5	22.66	19.52	—	24.15	—	2.01

Six Months Ended October 31, 2016 and 2015

							Estimated Tenant		Leasing
	Square Feet of		Average Term		Average		Improvement Cost		Commissions per
	New Leases(1)		in Years		Effective Rent(2)		per Square Foot(1)		Square Foot(1)
Segment	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Healthcare	17,031	4,455	8.5	7.2	20.98	21.02	39.31	28.11	6.24	4.92

(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions presented are based on square feet leased during the period. 

(2) Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.

Healthcare Lease Renewals

The following table summarizes our lease renewal activity within our same-store healthcare segment (square feet data in thousands):

Three Months Ended October 31, 2016 and 2015

													Estimated
									Weighted Average				Tenant Improvement		Leasing
	Square Feet of		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square		Commissions per
	Leases Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)		Square Foot(1)
Segment	2016	2015	2016		2015		2016	2015	2016		2015		2016	2015	2016	2015
Healthcare	16,952	60,121	69.9	%	86.3	%	2.4	3.7	5.9	%	(2.1)	%	—	7.05	0.54	0.95

Six Months Ended October 31, 2016 and 2015

													Estimated
									Weighted Average				Tenant Improvement		Leasing
	Square Feet of		Percent of Expiring				Average Term		Growth (Decline)				Cost per Square		Commissions per
	Leases Renewed(1)		Leases Renewed(2)				in Years		in Effective Rents(3)				Foot(1)		Square Foot(1)
Segment	2016	2015	2016		2015		2016	2015	2016		2015		2016	2015	2016	2015
Healthcare	37,036	106,543	94.5	%	86.4	%	3.0	5.4	5.2	%	6.0	%	2.23	10.62	1.61	3.28

(1) The leasing activity presented is based on leases signed or executed for our same-store rental properties during the period and is not intended to coincide with the commencement of rental revenue in accordance with US GAAP.  Prior periods reflect amounts previously reported and exclude retroactive adjustments for properties reclassified to discontinued operations or non-same-store in the current period. Tenant improvements and leasing commissions are based on square feet leased during the period.

(2) Renewal percentage of expiring leases is based on square footage of renewed leases and not the number of leases renewed. The category of renewed leases does not include leases that have become month-to-month leases, as the month-to-month leases are considered lease amendments.

(3) Represents the percentage change in effective rent between the original leases and the renewal leases. Effective rents represent average annual base rental payments, on a straight-line basis for the term of each lease, excluding operating expense reimbursements. The underlying leases contain various expense structures including gross, modified gross, net and triple net.

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Healthcare Lease Expirations

Our ability to maintain and improve occupancy rates and base rents primarily depends upon our continuing ability to re-lease expiring space. The following table reflects the in-service portfolio lease expiration schedule of our consolidated healthcare properties, including square footage and annualized base rent for expiring leases, as of October 31, 2016. 

							Percentage of Total
			Percentage of Total		Annualized Base		Healthcare
Fiscal Year of Lease		Square Footage of	Healthcare Segment		Rent of Expiring		Segment
Expiration	# of Leases	Expiring Leases(3)	Leased Square Footage		Leases at Expiration(2)		Annualized Base Rent
2017⁽¹⁾	28	92,158	6.9	%	$	1,769,381	6.1	%
2018	18	101,971	7.7	%		2,071,054	7.2	%
2019	16	183,880	13.8	%		3,795,918	13.2	%
2020	15	83,762	6.3	%		1,733,420	6.0	%
2021	20	95,575	7.2	%		2,029,038	7.0	%
2022	14	71,610	5.4	%		1,314,549	4.5	%
2023	11	52,511	3.9	%		988,425	3.4	%
2024	26	165,687	12.4	%		3,883,048	13.5	%
2025	5	76,691	5.7	%		1,663,237	5.8	%
2026	9	103,178	7.7	%		1,780,197	6.2	%
Thereafter	20	307,142	23.0	%		7,827,010	27.1	%
Totals	182	1,334,165	100.0	%	$	28,855,277	100.0	%

(1) Includes month-to-month leases. As of October 31, 2016, month-to-month leases accounted for 50,078 square feet.

(2) Assuming that none of the tenants exercise renewal or termination options, and including leases renewed prior to expiration. Also excludes 1,361 square feet of space occupied by us.

(3) Annualized Base Rent is monthly scheduled rent as of October 1, 2016, multiplied by 12.

Because of the dispersed locations of a substantial portion of the portfolio’s properties in secondary and tertiary markets, information on current market rents is difficult to obtain, is highly subjective and is often not directly comparable between properties. As a result, we believe that the increase or decrease in effective rent on our recent leases is the most objective and meaningful information available regarding rent trends and the relationship between rents on leases expiring in the near term and current market rents across our markets. We believe that rents on our new and renewed leases generally approximate market rents.

PROPERTY ACQUISITIONS AND DISPOSITIONS

During the second quarter of fiscal year 2017, we had no acquisitions of property, however, we purchased the remaining 41.41% minority interest in the joint venture entity that owns the Red 20 multifamily property for a purchase price totaling $4.9 million. During the second quarter of fiscal year 2017, we sold eight healthcare properties along with the adjacent parcel of unimproved land for a total sales price of $43.9 million. See Note 8 of the Notes to Condensed Consolidated Financial Statements in this report for a table detailing our acquisitions and dispositions during the six month periods ended October 31, 2016 and 2015.

Development Projects

The following tables provide additional detail, as of October 31, 2016, on our in-service (completed) development project and development project in progress. These projects are excluded from the same-store pool. We measure initial yield on our development projects upon completion and achievement of target lease-up levels by measuring net operating income from the development against the cost of the project. Estimated initial yield on the project in progress listed below is approximately 6.0%.

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Project Placed in Service in the Three Months Ended October 31, 2016

(in thousands)

Percentage

Date

Anticipated

Number

Leased or

Anticipated

Costs as of

Cost per

Placed in

Same-Store

Project Name and Location

Segment

of Units

Committed

Total Cost

Oct 31, 2016

Unit

Service

Date

71 France I - Edina, MN (1)

Multifamily

241 units

89.2

%

$

73,290

$

72,276

$

304,108

Q1 2017

Q1 2019

(1) We are currently a 52.6% partner in the joint venture entity constructing this project. Anticipated total cost is the total cost to the joint venture entity.

Project in Progress at October 31, 2016

					(in thousands)
Project Name and Location	Planned Segment	Number of Units	Percentage Leased or Committed		Anticipated Total Cost		Costs as of October 31, 2016		Anticipated Construction Completion
Monticello Crossing - Monticello, MN	Multifamily	202 units	65.9	%		31,784		28,068	4Q 2017
Other	n/a	n/a	n/a			n/a		3,283	n/a
					$	31,784	$	31,351

FUNDS FROM OPERATIONS

We consider Funds from Operations (“FFO”) a useful measure of performance for an equity REIT. We use the definition of FFO adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO to mean “net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.” In addition, in October 2011, NAREIT clarified its computation of FFO to exclude impairment charges for all periods presented. Because of limitations of the FFO definition adopted by NAREIT, we have made certain interpretations in applying the definition. We believe all such interpretations not specifically provided for in the NAREIT definition are consistent with the definition.

Management considers that FFO, by excluding depreciation costs, impairment write-downs, the gains or losses from the sale of operating real estate properties and extraordinary items as defined by US GAAP, is useful to investors in providing an additional perspective on our operating results. Historical cost accounting for real estate assets in accordance with US GAAP assumes, through depreciation, that the value of real estate assets decreases predictably over time. However, real estate asset values have historically risen or fallen with market conditions. NAREIT’s definition of FFO, by excluding depreciation costs, reflects the fact that real estate, as an asset class, generally appreciates over time and that depreciation charges required by US GAAP may not reflect underlying economic realities. Additionally, the exclusion in NAREIT’s definition of FFO of impairment write-downs and gains and losses from the sales of previously depreciated operating real estate assets, assists our management and investors in identifying the operating results of the long-term assets that form the core of our investments, and assists in comparing those operating results between periods. FFO is used by our management and investors to identify trends in occupancy rates, rental rates and operating costs.

While FFO is widely used by us as a primary performance metric, not all real estate companies use the same definition of FFO or calculate FFO in the same way. Accordingly, FFO presented here is not necessarily comparable to FFO presented by other real estate companies. FFO should not be considered as an alternative to net income as determined in accordance with US GAAP as a measure of our performance, but rather should be considered as an additional, supplemental measure, and should be viewed in conjunction with net income as presented in the consolidated financial statements included in this report. FFO does not represent cash generated from operating activities in accordance with US GAAP, and is not necessarily indicative of sufficient cash flow to fund all of our needs or our ability to service indebtedness or make distributions.

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FFO applicable to Common Shares and Units for the three months ended October 31, 2016 increased to $16.5 million compared to $8.1 million for the comparable period ended October 31, 2015, an increase of 103.7%. FFO applicable to Common Shares and Units for the six months ended October 31, 2016 increased to $32.3 million compared to $30.1 million for the comparable period ended October 31, 2015, an increase of 7.3%.

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO

INVESTORS REAL ESTATE TRUST TO FUNDS FROM OPERATIONS

	(in thousands, except per share and unit amounts)
Three Months Ended October 31,	2016					2015
				Per					Per
			Weighted Avg	Share				Weighted Avg	Share
			Shares and	and				Shares and	and
	Amount		Units(1)	Unit(2)		Amount		Units(1)	Unit(2)
Net income attributable to Investors Real Estate Trust	$	11,600		$		$	16,666		$
Less dividends to preferred shareholders		(2,878)					(2,878)
Net income available to common shareholders		8,722	121,154		0.07		13,788	124,665		0.11
Adjustments:
Noncontrolling interests – Operating Partnership		1,174	16,264				1,527	13,900
Depreciation and amortization		12,971					14,860
Impairment of real estate attributable to Investors Real Estate Trust		—					1,873
Gains on depreciable property sales attributable to Investors Real Estate Trust		(6,400)					(23,909)
Funds from operations applicable to common shares and Units	$	16,467	137,418	$	0.12	$	8,139	138,565	$	0.06

	(in thousands, except per share and unit amounts)
Six Months Ended October 31,	2016					2015
				Per					Per
			Weighted Avg	Share				Weighted Avg	Share
			Shares and	and				Shares and	and
	Amount		Units(1)	Unit(2)		Amount		Units(1)	Unit(2)
Net (loss) income attributable to Investors Real Estate Trust	$	(10,043)		$		$	21,206		$
Less dividends to preferred shareholders		(5,757)					(5,757)
Net (loss) income available to common shareholders		(15,800)	121,135		(0.13)		15,449	124,757		0.12
Adjustments:
Noncontrolling interests – Operating Partnership		(2,122)	16,276				1,713	13,929
Depreciation and amortization		26,408					33,119
Impairment of real estate attributable to Investors Real Estate Trust		39,190					3,598
Gains on depreciable property sales attributable to Investors Real Estate Trust		(15,358)					(23,733)
Funds from operations applicable to common shares and Units	$	32,318	137,411	$	0.24	$	30,146	138,686	$	0.22

(1)    Upon the exercise of Exchange Rights, Units of the Operating Partnership are exchangeable for cash or, at our discretion, for Common Shares on a one-for-one basis.

(2)Net income attributable to Investors Real Estate Trust is calculated on a per Common Share basis. FFO is calculated on a per Common Share and Unit basis.

DISTRIBUTIONS

The following distributions per Common Share and Unit were paid during the six months ended October 31 of fiscal years 2017 and 2016:

Month	Fiscal Year 2017		Fiscal Year 2016
July	$	0.13	$	0.13
October		0.13		0.13

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

Our principal liquidity demands are maintaining distributions to the holders of Common Shares, preferred shares and Units; capital improvements and repairs and maintenance to properties; acquisition of additional properties; property development; tenant improvements; and debt service and repayments.

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We have historically met our short-term liquidity requirements through net cash flows provided by our operating activities, and, from time to time, through draws on secured and unsecured lines of credit. As of October 31, 2016, we had one multi-bank line of credit with a total commitment capacity of $100.0 million, secured by mortgages on 17 properties. Management considers our ability to generate cash from property operating activities, cash-out refinancing of existing properties and, from time to time, draws on our line of credit to be adequate to meet all operating requirements and to make distributions to our shareholders in accordance with the REIT provisions of the Internal Revenue Code. Budgeted expenditures for ongoing maintenance and capital improvements and renovations to our real estate portfolio are also generally expected to be funded from existing cash on hand, cash flow generated from property operations, cash-out refinancing of existing properties, and/or new borrowings. However, the real estate market continues to be subject to various market factors that can result in reduced tenant demand, occupancies and rental rates. In the event of deterioration in property operating results, or absent our ability to successfully continue cash-out refinancing of existing properties and/or new borrowings, we may need to consider additional cash preservation alternatives, including scaling back development activities, capital improvements and renovations and reducing the level of distributions to shareholders.

To the extent we do not satisfy our long-term liquidity requirements, which consist primarily of maturities under long-term debt, construction and development activities and potential acquisition opportunities, through net cash flows provided by operating activities and our credit facilities, we intend to satisfy such requirements through a combination of funding sources which we believe will be available to us, including the issuance of Units, additional common or preferred equity, proceeds from the sale of properties, and additional long-term secured or short-term unsecured indebtedness.

SOURCES AND USES OF CASH

Credit markets continue to be stable, with credit availability relatively unconstrained and benchmark interest rates remaining at or near historic lows.  While to date there has been no material negative impact on our ability to borrow in our multifamily segment, we continue to monitor the roles of the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) in financing multifamily properties and their general capacity to lend given allocations set by the Federal Housing Finance Agency. We consider that one of the consequences of a modification in the agencies’ roles in recent years could potentially lead to a narrowing of their lending focus away from the smaller secondary or tertiary markets which we generally target, to multifamily properties in major metropolitan markets. We have historically obtained a significant portion of our multifamily debt from Freddie Mac, and we continue to plan to refinance portions of our maturing multifamily debt with these two entities, so any change in their ability or willingness to lend going forward could result in higher loan costs and/or more constricted availability of financing for us. Underwriting on commercial real estate continues to be more conservative compared to the underwriting standards employed prior to the recessionary period and we continue to find recourse security more frequently required, lower amounts of proceeds available and lenders limiting the amount of financing available in an effort to manage capital allocations and credit risk.  While we continue to expect to be able to refinance our debt maturing in the next twelve months without significant issues, we also expect lenders to continue to employ conservative underwriting regarding asset quality, occupancy levels and tenant creditworthiness. Accordingly, we remain cautious regarding our ability to rely on cash-out refinancing at levels we had achieved in recent years to provide funds for investment opportunities and other corporate purposes.

As of October 31, 2016, approximately 85.7%, or $54.5 million, of our mortgage debt maturing in the third and fourth quarters of fiscal year 2017 is debt placed on multifamily assets, and approximately 14.3%, or $9.1 million, is debt placed on commercial properties. Of this $63.6 million, we expect to pay off $1.7 million and refinance $61.9 million in the third and fourth quarter of fiscal year 2017. As of October 31, 2016, approximately 64.4%, or $54.5 million, of our mortgage debt maturing in the next twelve months is debt placed on multifamily assets, and approximately 35.6%, or $30.1 million, is debt placed on commercial properties.

Our revolving, multi-bank line of credit with First International Bank as lead bank had, as of October 31, 2016, lending commitments of $100.0 million at an interest rate of 4.75%. As of October 31, 2016, the line of credit was secured by mortgages on 17 properties and had a minimum outstanding principal balance requirement of $17.5 million. As of October 31, 2016 and April 30, 2016, we had borrowed $47.5 million and $17.5 million, respectively.

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We maintain compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability. At October 31, 2016, our compensating balances totaled $14.8 million and consisted of the following:

Financial Institution
First International Bank, Watford City, ND	$	7,758,000
Associated Bank, Green Bay, WI		3,000,000
The Private Bank, Minneapolis, MN		2,000,000
Bremer Bank, Saint Paul, MN		1,285,000
Dacotah Bank, Minot, ND		250,000
Peoples State Bank, Velva, ND		225,000
American National Bank, Omaha, NE		200,000
Commerce Bank a Minnesota Banking Corporation		100,000
Total	$	14,818,000

Current anticipated total project costs for development projects in progress at October 31, 2016 total approximately $31.8 million, of which approximately $31.4 million has been incurred as of October 31, 2016. As of October 31, 2016, the Operating Partnership had entered into construction loans totaling approximately $22.0 million for development projects in progress. In addition to current planned expenditures for development projects in progress, as of October 31, 2016, we are committed to fund $6.0 million in tenant improvements within approximately the next 12 months.

The issuance of Units for property acquisitions continues to be an expected source of capital for us. There were no Units issued in the three and six months ended October 31, 2016.  In the three and six months ended October 31, 2015, approximately 44,000 Units, valued at issuance at $400,000 were issued in connection with our acquisition of property.

Under our DRIP, common shareholders and Unitholders have an opportunity to use their cash distributions to purchase additional Common Shares, and to purchase additional shares through voluntary cash contributions. As permitted under the DRIP, starting on October 1, 2015, we changed the source from which Common Shares will be purchased under the DRIP to open market transactions, which are not eligible for purchase price discounts. During the six months ended October 31, 2016, no shares were issued under the DRIP. During the six months ended October 31, 2015, approximately 821,000 Common Shares with a total value included in equity of $5.6 million, and an average price per share after applicable discounts of $6.85, were issued under the DRIP.

Cash and cash equivalents at October 31, 2016 totaled $68.7 million, compared to $55.1 million at October 31, 2015, an increase of $13.6 million. Net cash provided by operating activities for the six months ended October 31, 2016 increased by $1.1 million compared to the six months ended October 31, 2015, primarily due to an decrease in accounts receivable and accounts payable net of an increase in net income adjusted for depreciation, loss on impairment, and gain on sale of real estate investments. Net cash provided by investing activities for the six months ended October 31, 2016 decreased by $191.8 million compared to the six months ended October 31, 2015, primarily due to a decrease in proceeds from sale of discontinued operations and payments for acquisition and development of real estate. Net cash used by financing activities for the six months ended October 31, 2016 decreased by $186.6 million compared to the six months ended October 31, 2015, primarily due to a decrease in repurchases of Common Shares and a decrease in principal payments on mortgages payable and revolving lines of credit, net of a decrease in proceeds from mortgage debt and construction debt.

FINANCIAL CONDITION

Mortgage Loan Indebtedness. Mortgage loan indebtedness, including mortgages on properties held for sale, decreased by approximately $42,000 as of October 31, 2016, compared to April 30, 2016, due to loan payoffs. As of October 31, 2016, approximately 73.0% of our $844.6 million of mortgage debt is at fixed rates of interest, with staggered maturities. This limits our exposure to changes in interest rates, which minimizes the effect of interest rate fluctuations on our results of operations and cash flows. As of October 31, 2016, the weighted average rate of interest on our mortgage debt was 4.55%, compared to 4.54% on April 30, 2016.

Property Owned. Property owned was $1.7 billion at October 31, 2016 and April 30, 2016, respectively. During the three months ended October 31, 2016, we had no new acquisitions and disposed of eight properties and an unimproved parcel

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of land, as described above in the “Property Acquisitions and Dispositions” subsection of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cash and Cash Equivalents. Cash and cash equivalents on hand on October 31, 2016 were $68.7 million, compared to $66.7 million on April 30, 2016.

Operating Partnership Units. Outstanding Units in the Operating Partnership were 16.2 million Units at October 31, 2016 and 16.3 Units at April 30, 2016.

Common and Preferred Shares of Beneficial Interest. Common Shares outstanding on October 31, 2016 and April 30, 2016 totaled 121.7 million and 121.1 million, respectively. We issued approximately 492,000 Common Shares, with a total grant-date value of approximately $1.9 million, under our 2015 Incentive Award Plan for executive officer and trustee share based compensation for future performance. We also issued approximately 59,000 Common Shares, with a total grant-date value of approximately $352,000, under our 2008 Incentive Award Plan for trustee share based compensation for fiscal year 2016 performance.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited primarily to fluctuations in the general level of interest rates on our current and future fixed and variable rate debt obligations.

Approximately 73.0% and 77.8% of our mortgage debt, including mortgage debt related to properties held for sale, as of October 31, 2016 and April 30, 2016, respectively, is at fixed interest rates. Therefore, we have little exposure to interest rate fluctuation risk on our existing mortgage debt. Accordingly, interest rate fluctuations during the second quarter of fiscal year 2017 did not have a material effect on us. Even though our goal is to maintain a fairly low exposure to interest rate risk, we may become vulnerable to significant fluctuations in interest rates on any future repricing or refinancing of our fixed or variable rate debt and on future debt.

We primarily use long-term (more than nine years) and medium term (five to seven years) debt as a source of capital. We do not currently use derivative securities, interest rate swaps or any other type of hedging activity to manage our interest rate risk.  As of October 31, 2016, we had the following amounts of future principal and interest payments due on mortgages, including mortgages held for sale, secured by our real estate:

	(In thousands)
	Future Principal Payments
	Remaining
Mortgages	Fiscal 2017			Fiscal 2018			Fiscal 2019			Fiscal 2020			Fiscal 2021			Thereafter		Total		Fair Value
Fixed Rate	$	10,028		$	37,667		$	77,389		$	63,796		$	154,234		$	254,840	$	597,954	$	641,291
Avg Fixed Interest Rate		2.46	%		4.79	%		4.63	%		4.44	%		3.78	%
Variable Rate	$	63,094		$	27,080		$	64,563		$	30,463		$	28		$	608	$	185,836	$	185,836
Avg Variable Interest Rate		2.37	%		3.32	%		3.37	%		5.06	%		3.92	%
Held for Sale	$	45,684		$	819		$	2,326		$	668		$	710		$	10,588	$	60,795	$	70,286
Avg Fixed Interest Rate		1.83	%		5.94	%		5.92	%		5.89	%		5.86	%
																		$	844,585	$	897,413

	(in thousands)
	Future Interest Payments
Long Term Debt	Remaining Fiscal 2017		Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Thereafter		Total
Fixed Rate	$	14,691	$	28,144	$	25,458	$	20,977	$	15,462	$	28,154	$	132,886
Variable Rate		2,465		3,809		2,585		741		25		6		9,631
Held for Sale		1,110		897		846		704		662		966		5,185
													$	147,702

(1) Interest rate given is for the entire year.

The weighted average interest rate on our fixed rate and variable rate debt, excluding mortgages related to assets held for sale, as of October 31, 2016, was 4.55%. Any fluctuations in variable interest rates could increase or decrease our interest expenses. For example, an increase of one percent per annum on our $185.8 million of variable rate mortgage indebtedness would increase our annual interest expense by approximately $1.9 million.

Exposure to interest rate fluctuation risk on our $100.0 million secured line of credit is limited by a cap on the interest rate of 8.65% with a floor of 4.75%. The line of credit has an interest rate equal to the Wall Street Journal Prime Rate plus 1.25%, matures in September 2017 and had an outstanding balance of $47.5 million at October 31, 2016.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures:  

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of October 31, 2016, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting:  

There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the second quarter of fiscal year 2017, we issued an aggregate of 39,051 unregistered Common Shares to limited partners of the Operating Partnership, upon exercise of their Exchange Rights regarding an equal number of Units. All such issuances of Common Shares were exempt from registration as private placements under Section 4(2) of the Securities Act, including Regulation D promulgated thereunder. We have registered the re-sale of such Common Shares under the Securities Act.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

Item 6. Exhibits

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EXHIBIT INDEX

Exhibit No.	Description
10.1*	Agreement for Sale and Purchase of Property – Wyoming Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and LSREF Golden Property 14 (WY), LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and LSREF Golden Ops 14 (WY), LLC as buyers.
10.2*	Agreement for Sale and Purchase of Property – Hermantown Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties as seller and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers.
10.3*	Agreement for Sale and Purchase of Property – Edgewood Vista 1 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties as seller and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers.
10.4*	Agreement for Sale and Purchase of Property – Edgewood Vista 2 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and EVI Grand Cities, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers.
10.5*	Agreement for Sale and Purchase of Property – Edgewood Vista 3 Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties, EVI Billings, LLC, EVI Sioux Falls, LLC and IRET-Minot EV, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers.
10.6*	Agreement for Sale and Purchase of Property – Sartell Senior Housing Assets Portfolio, dated August 26, 2016, by IRET Properties and IRET-SH 1, LLC as sellers and Edgewood Properties, LLLP, Edgewood Properties Managements, LLC and Edgewoodvista Senior Living, Inc. as buyers.
31.1*	Section 302 Certification of Chief Executive Officer
31.2*	Section 302 Certification of Executive Vice President and Chief Financial Officer
32.1*	Section 906 Certifications of Chief Executive Officer
32.2*	Section 906 Certifications of Executive Vice President and Chief Financial Officer
101*	The following materials from our Quarterly Report on Form 10-Q for the quarter ended October 31, 2016 formatted in eXtensible Business Reporting Language (“XBRL”): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) notes to these condensed consolidated financial statements.

* Filed herewith

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INVESTORS REAL ESTATE TRUST

(Registrant)

/s/ Timothy P. Mihalick

Timothy P. Mihalick

Chief Executive Officer

/s/ Ted E. Holmes

Ted E. Holmes

Executive Vice President and Chief Financial Officer

Date: December 12, 2016

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

WYOMING SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN 

LSREF GOLDEN PROPERTY 14 (WY), LLC AND IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (Seller)

AND

LSREF GOLDEN OPS 14 (WY) LLC,  EDGEWOOD PROPERTIES MANAGEMENT LLC,  AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

WYOMING SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company, and IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (collectively, the “Seller”), and LSREF GOLDEN OPS 14 (WY) LLC, a Delaware limited liability company, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Deed(s).  The limited warranty deed(s) to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(l) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(m) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(n) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

(o) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(p) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(q) Lease.  That certain Lease Agreement dated January 15, 2009, by and between Seller, as landlord, and LSREF Golden OPS 14 (WY), LLC, an affiliate of Buyer, as tenant, with respect to the Property. 

(r) Licensing Approvals.  Defined in Section 8.1.7 below.

(s) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance

2

expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

(t) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

(u) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Lease; and (iv) the Personal Property.

(v) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(w) Rent.  All (i) rent payable by Tenant pursuant to the Lease (including without limitation fixed, minimum and base rents), (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(x) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(y) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(z) Seller’s Knowledge.  Defined in Section 7.2 below.

(aa) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(bb) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(cc) Tenant.  The tenant under the Lease and the current operator of the Property.

(dd) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

(ee) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.

3

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of Two Hundred Twenty-Four Thousand Six Hundred Fourteen and 07/100 Dollars ($224,614.07) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional Three Hundred Thirty-Six Thousand Nine Hundred Twenty-One and 11/100 Dollars ($336,921.11) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control. 

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its

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agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule: 

Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$112,307.04
2	30 days after Inspection Date	$149,817.59
3	60 days after Inspection Date	$149,817.59
4	90 days after Inspection Date	$149,592.97

Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Fifty-three Million and 00/100 Dollars ($53,000,000.00), which purchase price shall be allocated to each individual Property as set forth in Exhibit 4.1 attached hereto.    The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs.  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.  If this transaction Closes, percentage rent under the Lease for the year 2016 (if any) shall accrue through October 31, 2016 and shall be paid to Seller at Closing; provided that Buyer shall provide to Seller all information and documents necessary to calculate any such percentage rent no later than December 15, 2016, with such calculation to be an amount mutually agreed upon by Seller and Buyer prior to Closing.

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(c) Taxes.  The parties acknowledge that, pursuant to the Lease, Tenant is obligated to reimburse Seller as landlord for all Taxes and installments of special assessments of the Property.  Seller shall not provide a credit to Buyer at Closing for any proration of Taxes or installments of special assessments that are due and payable in the Closing Year, unless Seller has collected money under the Lease for Taxes and has not paid a corresponding amount to the relevant taxing authority.  Buyer shall provide a credit to Seller for any Taxes or installments of special assessments that are due and payable in the Closing Year that Seller as landlord has paid which are the responsibilities of Tenant pursuant to the Lease and Tenant has not yet reimbursed to Seller as landlord in accordance with the Lease.  Buyer shall pay all Taxes and installments of special assessments due and payable in the Closing Year and for years prior to the Closing Year, if any remain outstanding, and shall upon request furnish evidence of such payment to Title Company.  Buyer shall be solely responsible for all remaining future Taxes and installments of any special assessments.  Real property tax refunds and credits received after the Closing shall belong to Buyer. 

(d) Operating Expenses.  The parties acknowledge that, pursuant to the Lease, Tenant is obligated to pay all Operating Expenses of the Property.  The parties shall not provide any credit for the proration of such Operating Expenses.  Buyer shall ensure that Tenant pays all utility charges for the Property through the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of Tenant).

(e) Tenant Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if Tenant is obligated under the Lease to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(f) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements.

(g) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Tenant for those Operating Expenses incurred during each of Seller’s and Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

4.3 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deeds shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

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Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the

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Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty  (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither

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party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss,

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injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws).    

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Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Tenant; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

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7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. Litigation.  To Seller’s knowledge, except as disclosed in any of the Due Diligence Documents, there is no controversy, investigation, complaint, protest, proceeding, suit, litigation or claim relating to the Property or any part thereof, or relating to Seller, which might adversely affect the Property.

7.1.7. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller, or of any affiliate of Seller, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Seller's Designated Employees any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

7.3. The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

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7.4. Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount that is the allocated purchase price of such Property as set forth on Exhibit 4.1.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

7.5. No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1.1. Authority.  Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to

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consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.  Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property, (ii) is specifically familiar with the Property, and (iii) has inspected and examined, or prior to the Inspection Date will inspect and examine, all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

8.1.7. Licensing Approvals.  As of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if

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applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and

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licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d) Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (x) Tenant shall have performed all obligations under the Lease through the day preceding the Closing Date, including without limitation the payment of all scheduled Rent and Taxes; (y) Buyer having made all deliveries as required by Section 10.5 below; and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

(c) All recording and filing charges in connection with the Deeds.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

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(c) The cost of preparation and recording of all documents (other than the Deeds) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deeds, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deeds, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Lease and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).  Pursuant to Section 4.3 of this Agreement, each Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

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(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deeds, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property. 

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the

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Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller; and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.  Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE

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FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements.    

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $2,500,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted

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hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

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Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment,

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partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEEDS, (iii) ANY FRAUD, INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER, OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

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Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

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17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS

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A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder.  In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016___________________________

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh _____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

[Signature pages continue on following page]

S-1

SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

LSREF GOLDEN OPS 14 (WY), LLC, a Delaware limited liability company

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-2

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-3

Exhibit 1

Legal Description of Land

1. Aspen Wind [4010 N College Dr, Cheyenne, WY]

A tract of land situated in a portion of Tract 10, G & F Diamond Development, a subdivision situated in Section 27, Township 14 North, Range 66 West of the 6th P.M., City of Cheyenne, Laramie County, Wyoming, more particularly described as follows:

Beginning at a brass disk set in the sidewalk being the Southeast corner of Tract 10 of G & F Diamond Development;

thence North 89°33’11” West {record}, North 89°34’39” West {measured}, along the northerly right of way of Rock Springs Street, a distance of 567.74 feet {record} 567.54, feet {measured}, to a ½” diameter iron pipe found on the Southwest corner of said Tract 10;

thence North 00°12’45” East {record}, North 00°10’34” East {measured}, along the easterly right of way of McCann Avenue, a distance of 284.57 feet {record}, 284.48 feet {measured}, to a re-bar with an aluminum cap marked LS 2500;

thence South 89°45’57” East {record}, South 89°49’26” East {measured}, a distance of 165.98 feet {record}, 165.91 feet {measured}, to a  ⅝” x 34” re-bar with an aluminum cap set;

thence North 00°06’05” West {record}, North 00°05’08” West {measured}, a distance of 26.00 feet {record}, 25.86 feet {measured} to a 2” x 34” iron pipe with an aluminum cap set;

thence South 89°45’54” East {record}, South 89°45’13” East {measured}, a distance of 400.00 feet {record}, 400.04 feet {measured}, to a 1½”  diameter aluminum cap found set in sidewalk on the westerly right of way of College Drive;

thence South 00°08’06” East, along said westerly right of way, a distance of 312.68 feet {record}, 312.65 feet {measured}, to the point of beginning.

2. Sierra Hills [4606 N College Dr, Cheyenne, WY]

All of Tract 24, in Dell Range Addition, Second Filing, Laramie County, Wyoming, EXCEPTING THEREFROM the following described (3) tracts of land:

EXCEPTED TRACT I:

The West 174 feet of Tract 24, in Dell Range Addition, Second Filing, Laramie County, Wyoming.

EXCEPTED TRACT II:

That portion conveyed in Warranty Deed from Kenneth L. Fridline and Hurleen P. Fridline, husband and wife, to Edward M. Riedel and Emma L. Riedel, husband and wife, recorded December 11, 1975 in Book 1051, Page 77, more particularly described as follows:

The West 158 feet of the East 431.03 feet of Tract 24, in Dell Range Addition, Second Filing, Laramie County, Wyoming.

EXCEPTED TRACT III:

That portion conveyed in Warranty Deed from Kenneth L. Fridline to The State Highway Commission of Wyoming in Warranty Deed recorded October 4, 1985 in Book 1219, page 561 in Warranty deed from Hurleen P. Fridline to The State Highway Commission of

Exhibit 1 – pg. 1

Wyoming in Warranty Deed recorded October4, 1985 in Book 1219, page 562, more particularly described as follows:

Beginning at the Northeast corner of said Tract 24;

thence North 89°31’58” West, along the North line of said Tract 24, a distance of 273.03 feet;

thence South 00°31’18” East, a distance of 590.19 feet to the South line of said Tract 24;

thence South 89°32’26” East, along said South line, a distance of 257.92 feet to the Southwest corner of that exception recorded in Book 1219 at Pages 561 & 562;

thence North 44°58’27” East, a distance of 21.03 feet to the Northeast corner of said exception, also being a point on the East line of said Tract 24;

thence North 00°30’40” West, along said East line, a distance of 575.15 feet to the point of beginning.

3. Meadow Wind [3955 E 12th St, Casper, WY + Vacant Parcel]

3955 E 12th St, Casper, WY:

A parcel of land being a portion of Block 4, Block 6, Walsh Drive and a 100 foot wide drainage way easement of the “Kelly Heights Addition,” to the City of Casper, Natrona County, Wyoming, more particularly described by metes and bounds as follows:

Commencing at a found 5/8 inch re-bar marking the Northwest corner of the Stoneywood Addition and the Southwest corner of the parcel of land being described herein, being the point of beginning of this legal description;

thence North 00°17’55” West, along the West line of this parcel and the East line of Lots 105 through 101 of said Kelly Heights Addition replat, a distance of 353.30 feet to an aluminum cap at the Northwest corner of this parcel and the Northeast corner of Lot 101 of the Kelly Heights Addition replat;

thence North 89°42’00” East, along the North line of this parcel and the South right-of-way line of East 12th Street, a distance of 555.17 feet to a found aluminum cap at the Northeast corner of this parcel and the Northwest corner of Lot 1 of the Kelly-Gate Addition;

thence South 02°40’00” West, along the East line of this parcel and the West line of the Kelly-Gate Addition, a distance of 215.63 feet to a found nail and brass washer set in concrete at a point of curvature in the East line of this parcel;

thence Southwesterly, along the East line of this parcel and the West line of the Kelly-Gate Addition and the arc of a true curve to the right having a radius of 800.00 feet, a central angle of 09°59’22”, a distance of 139.48 feet, having a chord bearing and distance of South 07°39’41” West, a distance of 139.30 feet, to a found aluminum cap at the Southeast corner of this parcel and the Northeast corner of the Stoneywood Addition;

thence South 89°42’00” West, along the South line of this parcel and the North line of the Stoneywood Addition, a distance of 524.72 feet to the point of beginning. 

Excluded from the above described parcel of land is a tract of land situated in the Northwest corner of the above described parcel, measuring 100.00 feet East-West and 170.00 feet North-South.

Exhibit 1 – pg. 2

Vacant Parcel:  

A parcel of land being a portion of Block 4, “Kelly Heights Addition” to the City of Casper, Natrona County, Wyoming, as per Plat recorded March 29, 1973, in Book 246 of Deeds, page 274, being described as follows:

Beginning at the Northeast corner of Lot 1, Block 4, of said “Kelly Heights Addition” and the Northwest corner of the parcel being described thence N.89°42’00”E., along the Northerly line of said parcel and Block 4 and the Southerly right of way line of East 12th Street, a distance of 100.00 feet to the Northeasterly corner of said parcel; thence into said Block 4 and along the Easterly line of said parcel S.0°18’00”E., 170.00 feet to the Southeasterly corner of said parcel; thence S.89°42’00”W., 100.00 feet to the Southwesterly corner of said parcel; thence along the Westerly line of said parcel, N.0°18’00”W., 170.00 feet to the Northwesterly corner of said parcel and the point of beginning.

4. Park Place [1930 E 12th St, Casper, WY]

A parcel of land platted as Lot 1 of Highland Park Addition No. 3 to the City of Casper, Natrona County, Wyoming, being situate in the N½SE¼ of Section 10, Township 33 North, Range 79 West of the 6th P.M., more particularly described as follows:

Beginning at a brass cap marked “CEPI L.S. 5529,” being the Point of Beginning of this legal description and the Southeast corner of said parcel being described herein, said point of beginning also lies on the North right of way line of East 12th Street and bears South 89°16’27” West, a distance of 724.50 feet from the Southeast corner of NE¼SE¼ of said Section 10;

thence South 89°16’27” West, along the North right of way line of East 12th Street, a distance of 210.00 feet to the Southwest corner of said parcel, being monumented by a ⅝” re-bar with an aluminum cap marked “LS 6010 1994,” said point being on the East right of way line of Lowell Street;

thence North 00°43’47” West, along the East right of way line of Lowell Street a distance of 468.34 feet to a corner on the northerly most line of this parcel being monumented by a ⅝” re-bar and aluminum cap marked “CEPI LS 5528 1996” set;

thence North 89°13’18” East, a distance of 26.33 feet to a brass cap marked “CEPI LS 5529 1995”;

thence South 00°35’05” East, a distance of 38.96 feet to a brass cap marked “CEPI LS 5529 1995”;

thence South 45°54’57” East, a distance of 37.27 feet to a brass cap marked “CEPI LS 5529 1995”;

thence North 89°28’06” East, a distance of 193.60 feet to a corner on the Easterly most line of this parcel being monumented by a brass cap marked “CEPI LS 5529 1995”;

thence South 02°20’09” East, along the easterly line of this parcel, a distance of 160.18 feet to a brass cap marked “CEPI LS 5529 1995”;

thence South 00°43’52” East, along the easterly line of this parcel, a distance of 153.00 feet to a brass cap marked “CEPI LS 5529 1995”;

thence South 23°47’47” West, a distance of 98.22 feet to the Point of Beginning.

5. Spring Wind [1072 N 22nd St, Laramie, WY]

All of Lot 3, Block 6, Fairfield Addition to the City of Laramie, Albany County, Wyoming.

Exhibit 1 – pg. 3

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property (if any).

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property  [Hermantown] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property  [Edgewood Vista 1] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property  [Edgewood Vista 2] by and between IRET Properties, a North Dakota Limited Partnership and EVI Grand Cities, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4.  Agreement for Sale and Purchase of Property  [Edgewood Vista 3] by and between IRET Properties, a North Dakota Limited Partnership, EVI Billings, LLC, EVI Sioux Falls, LLC, and IRET – Minot EV, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5. Agreement for Sale and Purchase of Property  [Sartell] by and between IRET Properties, a North Dakota Limited Partnership and IRET – SH 1, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

Exhibit 3 – pg. 1

Exhibit 4.1

Allocation of Consideration to Individual Property

ID	Name	City	State	Allocated Purchase Price
1	Aspen Wind	Cheyenne	WY	$13,452,000.00
2	Sierra Hills	Cheyenne	WY	$7,380,000.00
3	Meadow Wind	Casper	WY	$10,422,000.00
4	Park Place	Casper	WY	$8,444,000.00
5	Spring Wind	Laramie	WY	$13,302,000.00
Wyoming Senior Housing Assets Subtotal:				$53,000,000.00

Exhibit 4.1 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company ("Assignor"), and LSREF GOLDEN OPS 14 (WY), LLC, a Delaware limited liability company, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Wyoming]  dated effective as of August ____, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

Exhibit 10.4(b) – pg. 1

ASSIGNOR:

LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Vice President

ASSIGNEE:

LSREF GOLDEN OPS 14 (WY), LLC, a Delaware limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 2

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Vice President

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 1

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company (“Seller”), to LSREF GOLDEN OPS 14 (WY), LLC, a Delaware limited liability company, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Wyoming], dated effective as of August ____, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

SELLER:

LSREF GOLDEN PROPERTY 14 (WY), LLC, a Delaware limited liability company

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Exhibit 10.4(d) – pg. 2

EX-10.2

Exhibit 10.2

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

HERMANTOWN SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN 

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (Seller)

AND

EDGEWOODVISTA SENIOR LIVING, INC.,  EDGEWOOD PROPERTIES MANAGEMENT LLC,  AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY 

HERMANTOWN SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (the “Seller”), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Contract For Deed.  That certain Contract For Deed pertaining to the Property, entered into by Seller, as seller, and The Guider Group, LLC and Lake Riley, LLC, as purchaser, dated July 10, 2013, recorded July 24, 2013, in the Office of the County Recorder for St. Louis County, Minnesota as Document No. 01219128.

(l) Deed(s).  The limited warranty deed(s) to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(m) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(n) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(o) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

(p) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(q) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(r) Leases.  The lease or leases in effect or affecting the Property as of the Contract Date. 

(s) Licensing Approvals.  Defined in Section 8.1.7 below.

(t) Master Lease Agreement.  That certain Master Lease Agreement pertaining to the Property, entered into by Seller, as tenant, and The Guider Group, LLC and Lake Riley, LLC, as landlord, dated July 10, 2013. 

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(u) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

(v) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

(w) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Leases;  and (iv) the Personal Property.

(x) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(y) Rent.  All (i) rent payable by Tenant pursuant to the Leases (including without limitation fixed, minimum and base rents), (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(z) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(aa) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(bb) Seller’s Knowledge.  Defined in Section 7.2 below.

(cc) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(dd) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(ee) Tenant.  The tenants under the Leases.

(ff) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

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(gg) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of One Hundred Fifty-five Thousand Eight Hundred Ninety-nine and 12/100 Dollars ($155,899.12) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional Two Hundred Thirty-three Thousand Eight Hundred Forty-eight and 68/100 Dollars ($233,848.68) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute

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Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control. 

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule: 

Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$77,949.56
2	30 days after Inspection Date	$103,984.71
3	60 days after Inspection Date	$103,984.71
4	90 days after Inspection Date	$103,828.81

Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Thirty-Six Million Seven Hundred Eighty-six Thousand and 00/100 Dollars ($36,786,000.00), which purchase price shall be allocated to each individual Property as set forth in Exhibit 4.1 attached hereto.  The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs.  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.  Annual Rent increases pursuant to the Leases are to be paid through the day preceding the Closing Date; provided, however, that if this transaction Closes, Buyer will

5

receive a Rent credit at Closing equal to the annual Rent increases beginning November 1, 2016 through the day preceding the Closing Date, which the parties shall Prorate for the month in which Closing occurs.  Any Capital Expenditures Obligation (as defined in the Leases) of Seller, as landlord, pursuant to the Leases with respect to an annual $350 per unit allowance toward payment or reimbursement of Capital Expenditures (as defined in the Leases) made by Tenant shall be paid by Seller through December 31, 2016, with any unused portion on any Property for the year 2016 to be applied as a credit to the Consideration allocated for that Property at Closing.  If this transaction Closes, percentage rent under the Leases for the year 2016 (if any) shall accrue through October 31, 2016 and shall be paid to Seller at Closing; provided that Buyer shall provide to Seller all information and documents necessary to calculate any such percentage rent no later than December 15, 2016, with such calculation to be an amount mutually agreed upon by Seller and Buyer prior to Closing.

(c) Taxes.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to reimburse Seller as landlord for all Taxes and installments of special assessments of the Property.  Seller shall not provide a credit to Buyer at Closing for any proration of Taxes or installments of special assessments that are due and payable in the Closing Year, unless Seller has collected money under the Leases for Taxes and has not paid a corresponding amount to the relevant taxing authority.  Buyer shall provide a credit to Seller for any Taxes or installments of special assessments that are due and payable in the Closing Year that Seller as landlord has paid which are the responsibilities of Tenant pursuant to the Leases and Tenant has not yet reimbursed to Seller as landlord in accordance with the Leases.  Buyer shall pay all Taxes and installments of special assessments due and payable in the Closing Year and for years prior to the Closing Year, if any remain outstanding, and shall upon request furnish evidence of such payment to Title Company.  Buyer shall be solely responsible for all remaining future Taxes and installments of any special assessments.  Real property tax refunds and credits received after the Closing shall belong to Buyer. 

(d) Operating Expenses.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to pay all Operating Expenses of the Property.  The parties shall not provide any credit for the proration of such Operating Expenses.  Buyer shall ensure that Tenant pays all utility charges for the Property through the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of Tenant).

(e) Tenant Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if Tenant is obligated under the Leases to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(f) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements.

(g) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no

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event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Tenant for those Operating Expenses incurred during each of Seller’s and Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

4.3 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deeds shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or

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otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty  (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will

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be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an

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aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss, injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which

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approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws).    

Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Tenant; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the

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Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. Litigation.  To Seller’s knowledge, except as disclosed in any of the Due Diligence Documents, there is no controversy, investigation, complaint, protest, proceeding, suit, litigation or claim relating to the Property or any part thereof, or relating to Seller, which might adversely affect the Property.

7.1.7. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller, or of any affiliate of Seller, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Seller's Designated Employees any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

7.3. The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this

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Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

7.4. Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount that is the allocated purchase price of such Property as set forth on Exhibit 4.1.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

7.5. No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

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8.1.1. Authority.  Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.  Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property, (ii) is specifically familiar with the Property, and (iii) has inspected and examined, or prior to the Inspection Date will inspect and examine, all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

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8.1.7. Licensing Approvals.  As of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the

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Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d) Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (w) Seller shall have, on or prior to the Closing Date, terminated the Contract For Deed (and the Master Lease Agreement referenced therein) on terms acceptable to Seller in its sole but reasonable discretion; provided, however, Seller's failure to successfully terminate the Contract For Deed and the Master Lease Agreement shall not preclude the Closing of the transactions contemplated in the Purchase Agreements; (x) Tenant shall have performed all obligations under the Leases through the day preceding the Closing Date, including without limitation the payment of all scheduled Rent and Taxes; (y) Buyer having made all deliveries as required by Section 10.5 below; and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

(c) All recording and filing charges in connection with the Deeds.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

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(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

(c) The cost of preparation and recording of all documents (other than the Deeds) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deeds, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deeds, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Leases and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).  Pursuant to Section 4.3 of this Agreement, each Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

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(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deeds, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims

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raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property. 

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller; and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.  Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION

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FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements.    

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $2,500,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of

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such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

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Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present

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condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment, partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEEDS, (iii) ANY FRAUD, INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER, OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

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16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

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17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN

25

CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder.  In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

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18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh _____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

[Signature pages continue on following page]

S-1

SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

EDGEWOODVISTA SENIOR LIVING, INC., a Delaware corporation

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-2

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-3

Exhibit 1

Legal Description of Land

1. EV Hermantown I (fka Duluth) [4195 & 4175 Westberg Rd., Duluth, MN]

The South Half of the Northeast Quarter of the Southwest Quarter, Section 13, Township 50 North, Range 15 West of the Fourth Principal Meridian, St. Louis County, Minnesota;

and 

The Northeast Quarter of the Southeast Quarter of the Southwest Quarter of Section 13 Township 50 North, Range 15 West less the following parcels: The South 70.00 feet and the North 230.00 feet of the South 300.00 feet of the West 290.00 feet of the Northeast Quarter of the Southeast Quarter of the Southwest Quarter, Section 13, Township 50 North, Range 15 West of the Fourth Principal Meridian, St. Louis County, Minnesota.

2. EV Hermantown II [4165 Westberg Rd., Hermantown, MN]

The Southeast Quarter of the Southeast Quarter of the Southwest Quarter of Section 13, Township 50, Range 15, St. Louis County, Minnesota;

and

The South 70.00 feet of the Northeast Quarter of the Southeast Quarter of the Southwest Quarter of Section 13, Township 50, Range 15, and the North 230.00 feet of the South 300.00 feet of the West 290.00 feet of the Northeast Quarter of the Southeast Quarter of the Southwest Quarter, St. Louis County, Minnesota.

Exhibit 1 – pg. 1

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property (if any).

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property  [Wyoming] by and between LSREF Golden Property 14 (WY), LLC and IRET Properties, a North Dakota Limited Partnership, as Seller, and LSREF Golden OPS 14 (WY), LLC, Edgewood Properties Management LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property  [Edgewood Vista 1] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property  [Edgewood Vista 2] by and between IRET Properties, a North Dakota Limited Partnership and EVI Grand Cities, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4.  Agreement for Sale and Purchase of Property  [Edgewood Vista 3] by and between IRET Properties, a North Dakota Limited Partnership, EVI Billings, LLC, EVI Sioux Falls, LLC, and IRET – Minot EV, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5. Agreement for Sale and Purchase of Property  [Sartell] by and between IRET Properties, a North Dakota Limited Partnership and IRET – SH 1, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

Exhibit 3 – pg. 1

Exhibit 4.1

Allocation of Consideration to Individual Property

ID	Name	City	State	Allocated Purchase Price
1	EV Hermantown I	Duluth	MN	$21,627,000.00
2	EV Hermantown II	Hermantown	MN	$15,159,000.00
Hermantown Senior Housing Assets Subtotal:				$36,786,000.00

Exhibit 4.1 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between IRET PROPERTIES, a North Dakota Limited Partnership ("Assignor"), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Hermantown]  dated effective as of August ___, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

Exhibit 10.4(b) – pg. 1

ASSIGNOR:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

ASSIGNEE:

EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 2

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 1

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by IRET PROPERTIES, a North Dakota Limited partnership (“Seller”), to EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Hermantown], dated effective as of August ___, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Exhibit 10.4(d) – pg. 2

EX-10.3

Exhibit 10.3

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

EDGEWOOD VISTA 1  SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN 

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (Seller)

AND

EDGEWOODVISTA SENIOR LIVING, INC., EDGEWOOD PROPERTIES MANAGEMENT LLC,  AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY 

EDGEWOOD VISTA 1  SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (the “Seller”), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Deed(s).  The limited warranty deed(s) to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(l) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(m) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(n) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

(o) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(p) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(q) Leases.  The lease or leases in effect or affecting the Property as of the Contract Date. 

(r) Licensing Approvals.  Defined in Section 8.1.7 below.

(s) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

(t) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

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(u) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Leases;  and (iv) the Personal Property.

(v) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(w) Rent.  All (i) rent payable by Tenant pursuant to the Leases (including without limitation fixed, minimum and base rents), (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(x) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(y) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(z) Seller’s Knowledge.  Defined in Section 7.2 below.

(aa) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(bb) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(cc) Tenant.  The tenants under the Leases.

(dd) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

(ee) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more

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particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of One Hundred Thirty-seven Thousand Twenty-two and 53/100 Dollars ($137,022.53) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional Two Hundred Five Thousand Five Hundred Thirty-three and 79/100 Dollars ($205,533.79) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control. 

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule: 

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Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$68,511.26
2	30 days after Inspection Date	$91,394.03
3	60 days after Inspection Date	$91,394.03
4	90 days after Inspection Date	$91,257.00

Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Thirty-two Million Three Hundred Thirty-one Thousand Eight Hundred Seventy-four and 00/100 Dollars ($32,331,874.00), which purchase price shall be allocated to each individual Property as set forth in Exhibit 4.1 attached hereto.  The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs.  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.  Annual Rent increases pursuant to the Leases are to be paid through the day preceding the Closing Date; provided, however, that if this transaction Closes, Buyer will receive a Rent credit at Closing equal to the annual Rent increases beginning November 1, 2016 through the day preceding the Closing Date, which the parties shall Prorate for the month in which Closing occurs.  Any Capital Expenditures Obligation (as defined in the Leases) of Seller, as landlord, pursuant to the Leases with respect to an annual $350 per unit allowance toward payment or reimbursement of Capital Expenditures (as defined in the Leases) made by Tenant shall be paid by Seller through December 31, 2016, with any unused portion on any Property for the year 2016 to be applied as a credit to the Consideration allocated for that Property at Closing.  If this transaction Closes, percentage rent under the Leases for the year 2016 (if any) shall accrue through October 31, 2016 and shall be paid to Seller at Closing; provided that Buyer shall provide to Seller all information and documents necessary to calculate any such percentage rent no later than December 15, 2016, with such calculation to be an amount mutually agreed upon by Seller and Buyer prior to Closing.

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(c) Taxes.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to reimburse Seller as landlord for all Taxes and installments of special assessments of the Property.  Seller shall not provide a credit to Buyer at Closing for any proration of Taxes or installments of special assessments that are due and payable in the Closing Year, unless Seller has collected money under the Leases for Taxes and has not paid a corresponding amount to the relevant taxing authority.  Buyer shall provide a credit to Seller for any Taxes or installments of special assessments that are due and payable in the Closing Year that Seller as landlord has paid which are the responsibilities of Tenant pursuant to the Leases and Tenant has not yet reimbursed to Seller as landlord in accordance with the Leases.  Buyer shall pay all Taxes and installments of special assessments due and payable in the Closing Year and for years prior to the Closing Year, if any remain outstanding, and shall upon request furnish evidence of such payment to Title Company.  Buyer shall be solely responsible for all remaining future Taxes and installments of any special assessments.  Real property tax refunds and credits received after the Closing shall belong to Buyer. 

(d) Operating Expenses.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to pay all Operating Expenses of the Property.  The parties shall not provide any credit for the proration of such Operating Expenses.  Buyer shall ensure that Tenant pays all utility charges for the Property through the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of Tenant).

(e) Tenant Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if Tenant is obligated under the Leases to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(f) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements.

(g) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Tenant for those Operating Expenses incurred during each of Seller’s and Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

4.3 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deeds shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

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Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the

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Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty  (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither

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party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss,

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injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws).    

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Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Tenant; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

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7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. Litigation.  To Seller’s knowledge, except as disclosed in any of the Due Diligence Documents, there is no controversy, investigation, complaint, protest, proceeding, suit, litigation or claim relating to the Property or any part thereof, or relating to Seller, which might adversely affect the Property.

7.1.7. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller, or of any affiliate of Seller, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Seller's Designated Employees any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

7.3. The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

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7.4. Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount that is the allocated purchase price of such Property as set forth on Exhibit 4.1.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

7.5. No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1.1. Authority.  Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to

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consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.  Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property, (ii) is specifically familiar with the Property, and (iii) has inspected and examined, or prior to the Inspection Date will inspect and examine, all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

8.1.7. Licensing Approvals.  As of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if

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applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and

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licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d) Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (x) Tenant shall have performed all obligations under the Leases through the day preceding the Closing Date, including without limitation the payment of all scheduled Rent and Taxes; (y) Buyer having made all deliveries as required by Section 10.5 below; and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

(c) All recording and filing charges in connection with the Deeds.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

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(c) The cost of preparation and recording of all documents (other than the Deeds) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deeds, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deeds, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Leases and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).  Pursuant to Section 4.3 of this Agreement, each Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

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(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deeds, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property. 

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the

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Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller; and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.  Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE

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FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements.    

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $2,500,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted

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hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

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Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment,

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partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEEDS, (iii) ANY FRAUD, INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER, OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

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Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

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17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS

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A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder.  In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh _____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

[Signature pages continue on following page]

S-1

SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

EDGEWOODVISTA SENIOR LIVING, INC., a Delaware corporation

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-2

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-3

Exhibit 1

Legal Description of Land

1. EV Virginia [605 & 705 17th St. N., Virginia, MN]

Lot 1, Block 1, Edgewood Vista Addition to the City of Virginia, St. Louis County, Minnesota.

2. EV Kalispell [141 Interstate Lane, Kalispell, MT]

Lot 4 of Interstate Brands Subdivision, according to the map or plat thereof on file and of record in the office of the Clerk and Recorder, Flathead County, Montana.

Less and excepting therefrom any right, title or interest in any minerals, mineral rights or related matters, including but not limited to oil, gas, coal or other hydrocarbons.

3. EV Omaha [17620 Poppleton St., Omaha, NE]

Lot 1, Spring Ridge Replat 4, an Administrative Subdivision, being a replat of Lot 16, Spring Ridge Replat Three, a subdivision, as surveyed, platted and recorded in Douglas County, Nebraska.

4.  EV Hastings [2400 W. 12th St., Hastings, NE]

Lot 6, Block 1, Westridge Addition to the City of Hastings, Adams County, Nebraska.

Exhibit 1 – pg. 1

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property (if any).

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property  [Wyoming] by and between LSREF Golden Property 14 (WY), LLC and IRET Properties, a North Dakota Limited Partnership, as Seller, and LSREF Golden OPS 14 (WY), LLC, Edgewood Properties Management LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property  [Hermantown] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property  [Edgewood Vista 2] by and between IRET Properties, a North Dakota Limited Partnership and EVI Grand Cities, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4.  Agreement for Sale and Purchase of Property  [Edgewood Vista 3] by and between IRET Properties, a North Dakota Limited Partnership, EVI Billings, LLC, EVI Sioux Falls, LLC, and IRET – Minot EV, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5. Agreement for Sale and Purchase of Property  [Sartell] by and between IRET Properties, a North Dakota Limited Partnership and IRET – SH 1, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

Exhibit 3 – pg. 1

Exhibit 4.1

Allocation of Consideration to Individual Property

ID	Name	City	State	Allocated Purchase Price
1	EV Virginia	Virginia	MN	$27,300,000.00
2	EV Kalispell	Kalispell	MT	$2,565,000.00
3	EV Omaha	Omaha	NE	$1,060,000.00
4	EV Hastings	Hastings	NE	$1,406,874.00
Edgewood Vista 1 Senior Housing Assets Subtotal:				$32,331,874.00

Exhibit 4.1 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between IRET PROPERTIES, a North Dakota Limited Partnership ("Assignor"), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Edgewood Vista 1]  dated effective as of August ___, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

Exhibit 10.4(b) – pg. 1

ASSIGNOR:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

ASSIGNEE:

EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 2

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 1

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by IRET PROPERTIES,  a  North Dakota Limited Partnership (“Seller”), to EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Edgewood Vista 1], dated effective as of August ___, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Exhibit 10.4(d) – pg. 2

EX-10.4

Exhibit 10.4

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

EDGEWOOD VISTA 2  SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN 

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP AND EVI GRAND CITIES, LLC (Seller)

AND

EDGEWOODVISTA SENIOR LIVING, INC.,  EDGEWOOD PROPERTIES MANAGEMENT LLC,  AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY 

EDGEWOOD VISTA 2  SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (the “Seller”), and EDGEWOODVISTA SENIOR LIVING, INC.,a  North Dakota corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Deed(s).  The limited warranty deed(s) to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(l) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(m) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(n) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

(o) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(p) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(q) Leases.  The lease or leases in effect or affecting the Property as of the Contract Date. 

(r) Licensing Approvals.  Defined in Section 8.1.7 below.

(s) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

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(t) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

(u) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Leases;  and (iv) the Personal Property.

(v) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(w) Rent.  All (i) rent payable by Tenant pursuant to the Leases (including without limitation fixed, minimum and base rents), (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(x) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(y) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(z) Seller’s Knowledge.  Defined in Section 7.2 below.

(aa) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(bb) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(cc) Tenant.  The tenants under the Leases.

(dd) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

(ee) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

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2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of Three Hundred One Thousand Fifty-four and 91/100 Dollars ($301,054.91) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional Four Hundred Fifty-one Thousand Five Hundred Eighty-two and 36/100 Dollars ($451,582.36) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control. 

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a

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non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule: 

Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$150,527.45
2	30 days after Inspection Date	$200,803.62
3	60 days after Inspection Date	$200,803.62
4	90 days after Inspection Date	$200,502.57

Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Seventy-one Million Thirty-seven Thousand and 00/100 Dollars ($71,037,000.00), which purchase price shall be allocated to each individual Property as set forth in Exhibit 4.1 attached hereto.  The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs.  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.  Annual Rent increases pursuant to the Leases are to be paid through the day preceding the Closing Date; provided, however, that if this transaction Closes, Buyer will receive a Rent credit at Closing equal to the annual Rent increases beginning November 1, 2016 through the day preceding the Closing Date, which the parties shall Prorate for the month in which Closing occurs.  Any Capital Expenditures Obligation (as defined in the Leases) of Seller, as landlord, pursuant to the Leases with respect to an annual $350 per unit allowance toward payment or reimbursement of Capital Expenditures (as defined in the Leases) made by Tenant shall be paid by Seller through December 31, 2016, with any unused portion on any Property for the year 2016 to be applied as a credit to the

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Consideration allocated for that Property at Closing.  If this transaction Closes, percentage rent under the Leases for the year 2016 (if any) shall accrue through October 31, 2016 and shall be paid to Seller at Closing; provided that Buyer shall provide to Seller all information and documents necessary to calculate any such percentage rent no later than December 15, 2016, with such calculation to be an amount mutually agreed upon by Seller and Buyer prior to Closing.

(c) Taxes.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to reimburse Seller as landlord for all Taxes and installments of special assessments of the Property.  Seller shall not provide a credit to Buyer at Closing for any proration of Taxes or installments of special assessments that are due and payable in the Closing Year, unless Seller has collected money under the Leases for Taxes and has not paid a corresponding amount to the relevant taxing authority.  Buyer shall provide a credit to Seller for any Taxes or installments of special assessments that are due and payable in the Closing Year that Seller as landlord has paid which are the responsibilities of Tenant pursuant to the Leases and Tenant has not yet reimbursed to Seller as landlord in accordance with the Leases.  Buyer shall pay all Taxes and installments of special assessments due and payable in the Closing Year and for years prior to the Closing Year, if any remain outstanding, and shall upon request furnish evidence of such payment to Title Company.  Buyer shall be solely responsible for all remaining future Taxes and installments of any special assessments.  Real property tax refunds and credits received after the Closing shall belong to Buyer. 

(d) Operating Expenses.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to pay all Operating Expenses of the Property.  The parties shall not provide any credit for the proration of such Operating Expenses.  Buyer shall ensure that Tenant pays all utility charges for the Property through the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of Tenant).

(e) Tenant Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if Tenant is obligated under the Leases to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(f) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements.

(g) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Tenant for those Operating Expenses incurred during each of Seller’s and

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Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

4.3 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deeds shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller

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has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty  (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

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6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of

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Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss, injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws).    

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Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Tenant; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

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7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. Litigation.  To Seller’s knowledge, except as disclosed in any of the Due Diligence Documents, there is no controversy, investigation, complaint, protest, proceeding, suit, litigation or claim relating to the Property or any part thereof, or relating to Seller, which might adversely affect the Property.

7.1.7. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller, or of any affiliate of Seller, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Seller's Designated Employees any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

7.3. The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

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7.4. Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount that is the allocated purchase price of such Property as set forth on Exhibit 4.1.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

7.5. No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1.1. Authority.  Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to

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consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.  Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property, (ii) is specifically familiar with the Property, and (iii) has inspected and examined, or prior to the Inspection Date will inspect and examine, all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

8.1.7. Licensing Approvals.  As of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if

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applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and

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licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d) Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (x) Tenant shall have performed all obligations under the Leases through the day preceding the Closing Date, including without limitation the payment of all scheduled Rent and Taxes; (y) Buyer having made all deliveries as required by Section 10.5 below; and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

(c) All recording and filing charges in connection with the Deeds.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

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(c) The cost of preparation and recording of all documents (other than the Deeds) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deeds, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deeds, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Leases and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).  Pursuant to Section 4.3 of this Agreement, each Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

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(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deeds, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property. 

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the

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Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller; and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.  Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE

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FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements.    

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $2,500,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted

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hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

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Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment,

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partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEEDS, (iii) ANY FRAUD, INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER, OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

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Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

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17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS

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A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder.  In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh _____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

[Signature pages continue on following page]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

EDGEWOODVISTA SENIOR LIVING, INC., a Delaware corporation

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-1

SELLER SUBSIDIARY ENTITIES JOINDER SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

IN WITNESS WHEREOF, each of the undersigned Seller entities identified on Schedule 1 has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the Contract Date.

SELLER:

EVI Grand Cities, LLC, a North Dakota limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016______________________

[Signature pages continue on following page]

S-2

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-3

Schedule 1

List of Seller Subsidiary Entities Joining in Agreement

Owner of EV East Grand Forks, East Grand Forks, MN:

EVI Grand Cities, LLC, a North Dakota limited liability company

Schedule 1 – pg. 1

Exhibit 1

Legal Description of Land

1. EV Fargo [4304-4440 37th Ave. S., Fargo, ND]

Lots Two and Three, Block One, Vista Village Third Addition to the City of Fargo, a Replat of Lot Two, Block Four, Vista Village Addition to the City of Fargo, situate in the County of Cass and the State of North Dakota.

and

Lots Three, Four, Six, Seven, Eight and Nine, Block Four, of Vista Village Addition to the City of Fargo, a part of the Southwest Quarter of Section Twenty-seven, Township One Hundred Thirty‑nine North of Range Forty-nine West of the Fifth Principal Meridian, situate in the County of Cass and the State of North Dakota.

2. EV Brainerd [14890 Beaver Dam Rd., Brainerd, MN]

Parcel 1:  

That part of the North 660.00 feet of the West 660.00 feet of Government Lot Two (2), Section Four (4), Township One Hundred Thirty-three (133), Range Twenty-eight (28), lying Northeasterly of the centerline of Crow Wing County Highway No. 20 (Beaver Dam Road) as said centerline is described in Book 361 of Deeds, page 145.

Parcel 2:  

That part of Government Lot Three (3), Section Four (4), Township One Hundred Thirty‑three (133), Range Twenty-eight (28), lying Easterly of the following described line: Beginning at an iron pipe marked RLS 3091 on the North line of said Government Lot 3, distant 77.65 feet South 89 degrees 07 minutes 44 seconds West of the Northeast corner of said Government Lot 3; thence South 46 degrees 02 minutes 54 seconds West, 23.00 feet to an iron pipe marked RLS 3091; thence continuing South 46 degrees 02 minutes 54 seconds West 170 feet, more or less, to the centerline of Crow Wing County Highway 20 (Beaver Dam Road), as said centerline is described in Book 361 of Deeds, page 145; thence Southeasterly, along said centerline, 341.0 feet, more or less, to a point on the East line of said Government Lot 3 and there terminating.

3. EV East Grand Forks [608 5th Ave. NW, East Grand Forks, MN]

Parcel 1: 

Lot 2, Block 1, Burlington Heights First Resubdivision to the City of East Grand Forks, Minnesota, Polk County, Minnesota, except the North 190 feet thereof.

Parcel 2: 

The North 190 feet of Lot 2, Block 1, Burlington Heights First Resubdivision to the City of East Grand Forks, Minnesota, Polk County, Minnesota.

Exhibit 1 – pg. 1

4. EV Bismarck [3406 Dominion St., Bismarck, ND]

Lot One (1), Block Two (2), Replat of North Hills Twelfth Addition to the City of Bismarck, Burleigh County, North Dakota.

5.  EV Spearfish [540 Falcon Crest Dr., Spearfish, SD]

Block 5 of Falcon Crest Subdivision, being a Subdivision of Tract C and Tract D of Miller Addition to the City of Spearfish, all located in the E½NE¼NW¼ and W½NW¼NE¼ of Section 24, T6N, R2E, Lawrence County, South Dakota, EXCEPT Rolling Hills Addition, according to the Plat filed as Document No. 2002-2843.

Exhibit 1 – pg. 2

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property (if any).

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property  [Wyoming] by and between LSREF Golden Property 14 (WY), LLC and IRET Properties, a North Dakota Limited Partnership, as Seller, and LSREF Golden OPS 14 (WY), LLC, Edgewood Properties Management LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property  [Hermantown] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property  [Edgewood Vista 1] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4.  Agreement for Sale and Purchase of Property  [Edgewood Vista 3] by and between IRET Properties, a North Dakota Limited Partnership, EVI Billings, LLC, EVI Sioux Falls, LLC, and IRET – Minot EV, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5. Agreement for Sale and Purchase of Property  [Sartell] by and between IRET Properties, a North Dakota Limited Partnership and IRET – SH 1, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer.

Exhibit 4.1 – pg. 1

Exhibit 4.1

Allocation of Consideration to Individual Property

ID	Name	City	State	Allocated Purchase Price
1	EV Fargo	Fargo	ND	$24,406,000.00
2	EV Brainerd	Brainerd	MN	$13,628,000.00
3	EV East Grand Forks	Grand Forks	MN	$6,666,000.00
4	EV Bismarck	Bismarck	ND	$12,212,000.00
5	EV Spearfish	Spearfish	SD	$14,125,000.00
Edgewood Vista 2  Senior Housing Assets Subtotal:				$71,037,000.00

Exhibit 4.1 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between IRET PROPERTIES, a North Dakota limited partnership andEVI GRAND CITIES, LLC, a North Dakota limited liability company ("Assignor"), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Edgewood Vista 2]  dated effective as of August ___, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

Exhibit 10.4(b) – pg. 1

ASSIGNOR:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Grand Cities, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

[Signature pages continue on following page]

Exhibit 10.4(b) – pg. 2

ASSIGNEE:

EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 3

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

Exhibit 10.4(c) – pg. 1

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Grand Cities, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 2

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by IRET PROPERTIES, a North Dakota limited partnership andEVI GRAND CITIES, LLC, a North Dakota limited liability company (collectively, “Seller”), to EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Edgewood Vista 2], dated effective as of August ___, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Grand Cities, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(d) – pg. 2

EX-10.5

Exhibit 10.5

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

EDGEWOOD VISTA 3  SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN 

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP, EVI BILLINGS, LLC, EVI SIOUX FALLS, LLC, AND IRET – MINOT EV, LLC (Seller)

AND

EDGEWOODVISTA SENIOR LIVING, INC., EDGEWOOD PROPERTIES MANAGEMENT LLC,  AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY 

EDGEWOOD VISTA 3  SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP (the “Seller”), and EDGEWOODVISTA SENIOR LIVING, INC.,  a  North Dakota corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Deed(s).  The limited warranty deed(s) to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(l) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(m) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(n) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

(o) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(p) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(q) Leases.  The lease or leases in effect or affecting the Property as of the Contract Date. 

(r) Licensing Approvals.  Defined in Section 8.1.7 below.

(s) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

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(t) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

(u) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Leases;  and (iv) the Personal Property.

(v) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(w) Rent.  All (i) rent payable by Tenant pursuant to the Leases (including without limitation fixed, minimum and base rents), (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(x) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(y) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(z) Seller’s Knowledge.  Defined in Section 7.2 below.

(aa) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(bb) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(cc) Tenant.  The tenants under the Leases.

(dd) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

(ee) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

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2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of One Hundred Twenty-two Thousand Seventy-seven and 35/100 Dollars ($122,077.35) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional One Hundred Eighty-three Thousand One Hundred Sixteen and 03/100 Dollars ($183,116.03) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control.

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a

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non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule: 

Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$61,038.68
2	30 days after Inspection Date	$81,425.59
3	60 days after Inspection Date	$81,425.59
4	90 days after Inspection Date	$81,303.52

Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Twenty-eight Million Eight Hundred Five Thousand Four Hundred Six and 00/100 Dollars ($28,805,406.00), which purchase price shall be allocated to each individual Property as set forth in Exhibit 4.1 attached hereto.  The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs.  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.  Annual Rent increases pursuant to the Leases are to be paid through the day preceding the Closing Date; provided, however, that if this transaction Closes, Buyer will receive a Rent credit at Closing equal to the annual Rent increases beginning November 1, 2016 through the day preceding the Closing Date, which the parties shall Prorate for the month in which Closing occurs.  Any Capital Expenditures Obligation (as defined in the Leases) of Seller, as landlord, pursuant to the Leases with respect to an annual $350 per unit allowance toward payment or reimbursement of Capital Expenditures (as defined in the Leases) made by Tenant shall be paid by Seller through December 31, 2016, with any unused portion on any Property for the year 2016 to be applied as a credit to the

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Consideration allocated for that Property at Closing.  If this transaction Closes, percentage rent under the Leases for the year 2016 (if any) shall accrue through October 31, 2016 and shall be paid to Seller at Closing; provided that Buyer shall provide to Seller all information and documents necessary to calculate any such percentage rent no later than December 15, 2016, with such calculation to be an amount mutually agreed upon by Seller and Buyer prior to Closing.

(c) Taxes.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to reimburse Seller as landlord for all Taxes and installments of special assessments of the Property.  Seller shall not provide a credit to Buyer at Closing for any proration of Taxes or installments of special assessments that are due and payable in the Closing Year, unless Seller has collected money under the Leases for Taxes and has not paid a corresponding amount to the relevant taxing authority.  Buyer shall provide a credit to Seller for any Taxes or installments of special assessments that are due and payable in the Closing Year that Seller as landlord has paid which are the responsibilities of Tenant pursuant to the Leases and Tenant has not yet reimbursed to Seller as landlord in accordance with the Leases.  Buyer shall pay all Taxes and installments of special assessments due and payable in the Closing Year and for years prior to the Closing Year, if any remain outstanding, and shall upon request furnish evidence of such payment to Title Company.  Buyer shall be solely responsible for all remaining future Taxes and installments of any special assessments.  Real property tax refunds and credits received after the Closing shall belong to Buyer. 

(d) Operating Expenses.  The parties acknowledge that, pursuant to the Leases, Tenant is obligated to pay all Operating Expenses of the Property.  The parties shall not provide any credit for the proration of such Operating Expenses.  Buyer shall ensure that Tenant pays all utility charges for the Property through the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of Tenant).

(e) Tenant Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if Tenant is obligated under the Leases to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(f) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements.

(g) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Tenant for those Operating Expenses incurred during each of Seller’s and

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Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

4.3 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deeds shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller

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has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty  (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

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6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of

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Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss, injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws).    

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Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Tenant; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

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7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. Litigation.  To Seller’s knowledge, except as disclosed in any of the Due Diligence Documents, there is no controversy, investigation, complaint, protest, proceeding, suit, litigation or claim relating to the Property or any part thereof, or relating to Seller, which might adversely affect the Property.

7.1.7. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller, or of any affiliate of Seller, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Seller's Designated Employees any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

7.3. The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

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7.4. Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount that is the allocated purchase price of such Property as set forth on Exhibit 4.1.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

7.5. No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1.1. Authority.  Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to

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consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.  Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property, (ii) is specifically familiar with the Property, and (iii) has inspected and examined, or prior to the Inspection Date will inspect and examine, all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

8.1.7. Licensing Approvals.  As of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if

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applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder, manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and

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licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d) Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (x) Tenant shall have performed all obligations under the Leases through the day preceding the Closing Date, including without limitation the payment of all scheduled Rent and Taxes; (y) Buyer having made all deliveries as required by Section 10.5 below; and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

(c) All recording and filing charges in connection with the Deeds.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

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(c) The cost of preparation and recording of all documents (other than the Deeds) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deeds, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deeds, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Leases and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).  Pursuant to Section 4.3 of this Agreement, each Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

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(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deeds, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property. 

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the

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Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller; and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.  Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE

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FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements.    

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $2,500,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted

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hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

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Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment,

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partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEEDS, (iii) ANY FRAUD, INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER, OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

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Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

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17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS

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A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder.  In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh _____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

 [Signature pages continue on following page]

S-1

SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

EDGEWOODVISTA SENIOR LIVING, INC., a Delaware corporation

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-2

SELLER SUBSIDIARY ENTITIES JOINDER SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

IN WITNESS WHEREOF, each of the undersigned Seller entities identified on Schedule 1 has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the Contract Date.

SELLER:

EVI Billings, LLC, a North Dakota limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016___________________________

EVI Sioux Falls, LLC, a North Dakota limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016___________________________

IRET – Minot EV, LLC, a North Dakota limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016___________________________

[Signature pages continue on following page]

S-3

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-4

Schedule 1

List of Seller Subsidiary Entities Joining in Agreement

Owner of EV Billings, Billings, MT:

EVI Billings, LLC, a North Dakota limited liability company

Owner of EV Sioux Falls, Sioux Falls, SD:

EVI Sioux Falls, LLC, a North Dakota limited liability company

Owner of EV Minot, Minot, ND:

IRET – Minot EV, LLC, a North Dakota limited liability company

Schedule 1 – pg. 1

Exhibit 1

Legal Description of Land

1. EV Missoula [2815 Palmer St., Missoula, MT]

Lot 40 of Reserve Street Industrial Center – Phase XI, a platted subdivision in Missoula County, Montana, according to the official recorded Plat thereof of record in Book 20 of Plats at page 8, records of Missoula County, Montana.

Less and excepting therefrom any right, title or interest in any minerals, mineral rights or related matters, including but not limited to oil, gas, coal, and other hydrocarbons.

2. EV Belgrade [1011 Cardinal Dr., Belgrade, MT]

Lots 1 and 2 in Ballpark II Subdivision, Phase I, a tract of land being a portion of Tract 3 of Certificate of Survey No. 729D and Tract B of Certificate of Survey No. 729C, situated in the SE¼ of Section 35, Township 1 North, Range 4 East, P.M.M., Gallatin County, Montana, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana.

3. EV Billings [1225 Wicks Lane, Billings, MT]

Parcel 1:

That part of the Southwest quarter Southeast quarter of Section 14, Township 1 North, Range 26 East, of the Principal Montana Meridian, in the City of Billings, described as Tract A-1A of Certificate of Survey No. 1935 Amending Tract A-1, on file in the office of the Clerk and Recorder of Yellowstone County, Montana, under Document No. 1333470.

Parcel 2:

That part of the Southeast quarter of Section 14, Township 1 North, Range 26 East, of the Principal Montana Meridian, in the City of Billings, described as Tracts 1 and 2 of Certificate of Survey No. 200 Amended, on file in the office of the Clerk and Recorder of Yellowstone County, Montana, under Document No. 466767.

4.  EV Sioux Falls [3401 Ralph Rogers Rd., Sioux Falls, SD]

Lot A3 of Tract Two (2) of Lundstrom’s Second Subdivision to the City of Sioux Falls, Lincoln County, South Dakota, according to the Plat recorded in Book Q of Plats on page 28 thereof.

5.  EV Fremont [2910 Clarkson St., Fremont, NE]

Lot 1, Shalimar Third Addition, an addition to the City of Fremont, Dodge County, Nebraska.

Exhibit 1 – pg. 1

6.  EV Columbus [3386 53rd Ave., Columbus, NE]

Lot 1, Klein Subdivision, a Subdivision of Lot 1, Block C, Westbrook Addition to the City of Columbus, Platte County, Nebraska.

7.  EV Norfolk [1109 Pasewalk Ave., Norfolk, NE]

Lots 2 and 3, Gordon Moritz Addition in the City of Norfolk, being part of the Southwest ¼ of the Northwest ¼ of Section 27, Township 24 North, Range 1 West of the 6th P.M., Madison County, Nebraska, and a replat of Lots 1 and 2, Block 11 and Lot 1 of C.S. Hayes Addition and the vacated 12th Street adjacent thereto; EXCEPT a parcel described as follows:  Beginning at the Northeast corner of Block A, C.S. Hayes Addition to the City of Norfolk, Madison County, Nebraska; thence East along the South line of Pasewalk Avenue on an assumed bearing of N90°00’E 70.0 feet; thence S00°00’W 40.0 feet to a pin set; thence S14°58’W 51.95 feet to a pin set on the Easterly right of way of the abandoned Union Pacific Railroad; thence S37°43’30"W 66.00 feet on said Easterly right of way to a pin found; thence S89°56’30"W 126.45 feet to a pin found; thence N37°43’30"E 180.19 feet to the point of beginning.

8.  EV Grand Island [214 N. Piper, Grand Island, NE]

Lot 2, Warren Third Subdivision in the City of Grand Island, Hall County, Nebraska, according to the recorded plat thereof.

9.  EV Minot [800 16th Avenue SE, Minot, ND]

Lots 1, 2, and 3, South Park Terrace Fourteenth Addition to the City of Minot, Ward County, North Dakota.

Surface interest only.

Exhibit 1 – pg. 2

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property (if any).

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property  [Wyoming] by and between LSREF Golden Property 14 (WY), LLC and IRET Properties, a North Dakota Limited Partnership, as Seller, and LSREF Golden OPS 14 (WY), LLC, Edgewood Properties Management LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property  [Hermantown] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property  [Edgewood Vista 1] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4.  Agreement for Sale and Purchase of Property  [Edgewood Vista 2] by and between IRET Properties, a North Dakota Limited Partnership and EVI Grand Cities, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5. Agreement for Sale and Purchase of Property  [Sartell] by and between IRET Properties, a North Dakota Limited Partnership and IRET – SH 1, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

Exhibit 3 – pg. 1

Exhibit 4.1

Allocation of Consideration to Individual Property

ID	Name	City	State	Allocated Purchase Price
1	EV Missoula	Missoula	MT	$2,788,406.00
2	EV Belgrade	Belgrade	MT	$1,450,000.00
3	EV Billings	Billings	MT	$3,011,000.00
4	EV Sioux Falls	Sioux Falls	SD	$3,671,000.00
5	EV Freemont	Freemont	NE	$1,237,000.00
6	EV Columbus	Columbus	NE	$1,148,000.00
7	EV Norfolk	Norfolk	NE	$1,237,000.00
8	EV Grand Island	Grand Island	NE	$1,060,000.00
9	EV Minot	Minot	ND	$13,203,000.00
Edgewood Vista 3 Senior Housing Assets Subtotal:				$28,805,406.00

Exhibit 4.1 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between IRET PROPERTIES, a North Dakota Limited Partnership,  EVI BILLINGS, LLC, a North Dakota limited liability company, EVI SIOUX FALLS, LLC, a North Dakota limited liability company, and IRET – MINOT EV, LLC, a North Dakota limited liability company (collectively, "Assignor"), and EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Edgewood Vista 3]  dated effective as of August ___, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

Exhibit 10.4(b) – pg. 1

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

ASSIGNOR:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Billings, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EVI Sioux Falls, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

IRET – Minot EV, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

[Signature pages continue on following page]

Exhibit 10.4(b) – pg. 2

ASSIGNEE:

EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 3

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

Exhibit 10.4(c) – pg. 1

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Billings, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EVI Sioux Falls, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

IRET – Minot EV, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 2

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by IRET PROPERTIES, a North Dakota Limited Partnership, EVI BILLINGS, LLC, a North Dakota limited liability company, EVI SIOUX FALLS, LLC, a North Dakota limited liability company, and IRET – MINOT EV, LLC, a North Dakota limited liability company (collectively, “Seller”), to EDGEWOODVISTA SENIOR LIVING, INC., a North Dakota corporation, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Edgewood Vista 3], dated effective as of August ___, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By: IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

EVI Billings, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EVI Sioux Falls, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

IRET – Minot EV, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(d) – pg. 2

EX-10.6

Exhibit 10.6

EXECUTION VERSION

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SARTELL SENIOR HOUSING ASSETS PORTFOLIO

BETWEEN

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP AND IRET – SH 1, LLC (Seller)

AND

EDGWOODVISTA SENIOR LIVING, INC.,  EDGEWOOD PROPERTIES MANAGEMENT LLC, AND EDGEWOOD PROPERTIES, LLLP(Buyer)

THE SUBMISSION OF THIS DOCUMENT FOR EXAMINATION, NEGOTIATION AND SIGNATURE DOES NOT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF,

OR AN OPTION FOR THE PROPERTY.

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY 

SARTELL SENIOR HOUSING ASSETS PORTFOLIO

This AGREEMENT FOR SALE AND PURCHASE OF PROPERTY (this “Agreement”) is made and entered into effective as of the later date of signature set forth on the signature page (the “Contract Date”), by and between IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP and IRET – SH 1, LLC, a North Dakota limited liability company (collectively, the “Seller”), and EDGEWOODVISTA Senior Living, Inc., a Delaware corporation,  EDGEWOOD PROPERTIES MANAGEMENT LLC,  a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, the “Buyer”).  The current notice address of each party is set forth in Section 15 below.

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

RECITALS

WHEREAS, Seller owns certain assisted living, independent living and memory care facilities commonly known as Legends at Heritage Place (the “SeniorFacility”), and certain townhome facilities commonly known as Pinecone Townhome Villas (the “TownhomeFacility”), each located in the City of Sartell, Minnesota and legally described on Exhibit 1.  Each of the foregoing is individually referred to in this Agreement as a “Facility” and collectively referred to in this Agreement as the “Facilities.”

WHEREAS, Buyer desires to acquire and Seller desires to transfer to Buyer, substantially all of the Property used in the operation of the Facilities, including the real property, business and goodwill of Seller associated with the Property.

AGREEMENT

NOW, THEREFORE, the parties agree as follows:

Section 1.Definitions.  For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(a) Acquisition Proposal.  Acquisition Proposal means any unsolicited, bona fide offer or proposal by any person or entity in respect of a transaction to acquire all (but not less than all) of the properties which are (i) subject to this Agreement and (ii) subject to the Purchase Agreements identified on Exhibit 3.

(b) Building.  The building(s) located on the Land.

(c) Buyer’s Broker.  None; Buyer is not represented by a broker in this transaction. 

(d) Closing.  The closing and consummation of the purchase and the sale of the Property pursuant hereto.

(e) Closing Agent.    Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth, which shall also act as escrow agent pursuant to the terms and conditions of this Agreement.    

(f) Closing Date.  The date on which the Closing occurs as provided in Section 10.1 hereof.

(g) Closing Year.  The calendar year in which the Closing occurs.

(h) Code.  The Internal Revenue Code of 1986, as amended.

(i) Consideration.  Defined in Section 4.1 below.

(j) Contract Date.  The date upon which this Agreement shall be deemed effective, which shall be the later date of signature of the parties set forth on the signature page.

(k) Deed.  The limited warranty deed to be executed by Seller, in form reasonably approved by Buyer, Seller, and the Title Company.

(l) Documentary Assets.  Documentary Assets means all of the engineering reports for the Facilities, building plans for the Facilities, and environmental reports regarding the Real Property to the extent such documents are in the possession or control of Seller.

(m) Due Diligence Documents.  The documents and information set forth on Exhibit 2, to be provided to Buyer by Seller pursuant to Section 6.1 below.

(n) Environmental Laws.  Any applicable statute, code, enactment, ordinance, rule, regulation, permit, consent, approval, authorization, license, judgment, order, writ, common law rule (including, but not limited to, the common law respecting nuisance and tortious liability), decree, injunction, or other requirement having the force and effect of law, whether local, state, territorial or national, at any time in force or effect relating to:  (i) emissions, discharges, spills, releases or threatened releases of Hazardous Substances into ambient air, surface water, ground water, watercourses, publicly or privately owned treatment works, drains, sewer systems, wetlands, septic systems or onto land; (ii) the use, treatment, storage, disposal, handling, manufacturing, transportation or shipment of Hazardous Substances; (iii) the regulation of storage tanks or sewage disposal systems; or (iv) otherwise relating to pollution or the protection of human health or the environment.

(o) Hazardous Substances.  All substances, wastes, pollutants, contaminants and materials regulated, or defined or designated as hazardous, extremely or imminently hazardous, dangerous, or toxic, under the following federal statutes and their state counterparts, including any implementing regulations:  the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. §§ 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; or any other federal, state, or municipal statute, law or ordinance regulating or otherwise dealing with or affecting materials deemed dangerous or hazardous to human health or the environment; with petroleum and petroleum products including crude oil and any fractions thereof; with asbestos; and with natural gas, synthetic gas, and any mixtures thereof.

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(p) Improvements.  The Building and any other buildings, structures, sidewalks, drives, parking lots, landscaping and improvements located upon the Land, including all systems, facilities, fixtures, machinery, equipment and conduits to provide fire protection, security, heat, exhaust, ventilation, air conditioning, electrical power, light, plumbing, refrigeration, gas, sewer, and water thereto (including all replacements or additions thereto between the Contract Date and the Closing Date).

(q) Land.  Fee title absolute or such other specified estate listed on Exhibit 1 in each tract or parcel of land legally described in Exhibit 1,  together with all privileges, rights, easements, and appurtenances thereto belonging.

(r) Licensing Approvals.  Defined in Section 8.1.7 below.

(s) Operating Expenses.  Utility charges (including without limitation water, electricity, sewer, gas, and telephone), Taxes, special assessments, operation expenses, maintenance expenses, fees paid or payable under any licenses and permits in respect to the Property, and any other recurring costs or expenses relating or pertaining to the Property.

(t) Personal Property.  The tangible and intangible personal property owned by Seller and located at, or used in connection with, the Property (if any), including, without limitation, all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), those vehicles owned by Seller and used in connection with the Senior Facility,  and operating manuals associated with the construction and operation of the Improvements, together with all replacements or additions thereto between the Contract Date and the Closing Date. 

(u) Property.  All of Seller’s right, title and interest in, to and under the following: (i) the Land; (ii) the Improvements; (iii) the Resident Contracts; (iv) Supplies;  (v) the Personal Property and (vi) the Documentary Assets.

(v) Prorate.  The division of income and expenses of the Property between Seller and Buyer based on their respective periods of ownership during the Closing Year and as of 12:01 a.m. local time where the Land is located on the Closing Date.

(w) Rent.  All (i) rent payable by Residents, (ii) if any, all parking and storage revenue, and (iii) if any, all other income generated by or otherwise derived from the Property.

(x) Resident Contracts.  The resident contract(s) with respect to the Senior Facility and/or the lease(s) with respect to the Townhome Facility in effect or affecting the Property as of the Contract Date.

(y) Residents.  The residents and/or tenants of the Facilities.

(z) Seller's Board of Directors.  The Board of Directors of IRET, Inc., a North Dakota corporation, the general partner of IRET Properties, a North Dakota Limited Partnership.

(aa) Seller’s Broker.  BMO Capital Markets, who is representing Seller in this transaction. 

(bb) Seller Contracts.     The material contracts, leases and other agreements pertaining to the Facilities.  

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(cc) Seller’s Knowledge.  Defined in Section 7.8 below.

(dd) Superior Proposal.  Superior Proposal means any bona fide written Acquisition Proposal received by the Seller after the date hereof that Seller’s Board of Directors determines in good faith is more favorable to the Seller's equity holders, taking into account all relevant legal, financial, regulatory and other material factors (including the likelihood the transaction subject to the Superior Proposal would be consummated), than the transactions contemplated by this Agreement and the Purchase Agreements identified in Exhibit 3.  

(ee) Supplies.  All consumable inventory, supplies and food stuffs located at and intended for use at the Facilities. 

(ff) Taxes.  All general real estate (including special assessments), ad valorem, sales, and personal property taxes assessed against the Property.

(gg) Title Commitments.  Commitments for ALTA Owner’s Title Insurance Policies for the Property, issued by Title Company in the full amount of the Consideration, agreeing to insure title to the Property on or after the Contract Date, showing Seller as owner of the Property, and indicating the conditions upon which Title Company will issue full extended coverage over all general title exceptions contained in such policies, and including such endorsements as Buyer may request.

(hh) Title Company.  Stewart Title of Colorado, Inc., 55 Madison Street, Suite 400, Denver, CO 80206, Attn:  Carma Weymouth.  The parties agree that the Title Company shall issue the Title Commitments and the Title Policies.    

Section 2.Agreement to Sell and to Purchase; Other Purchase Agreements.    

2.1  Agreement to Sell and to Purchase.  Subject to and in accordance with the terms, conditions and provisions hereof, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller.

2.2 Other Purchase Agreements.  Buyer and Seller acknowledge that Buyer and Seller, their affiliates and/or subsidiaries are also party(ies) to those certain other Agreements for Sale and Purchase of Property, identified on Exhibit 3 attached hereto (each referred to as a “Purchase Agreement” and, collectively, as the “Purchase Agreements”), relating to the sale of certain senior housing properties more particularly described and defined in the Purchase Agreements.  Buyer and Seller further acknowledge that they intend for the Closing of this transaction to require the Closing of the transactions contemplated in the Purchase Agreements and for the closing of the transactions contemplated in the Purchase Agreements to require the Closing of this transaction.  Buyer and Seller agree that in the event Buyer elects to terminate this Agreement for any reason as expressly permitted pursuant to the provisions hereof (other than termination as a result of (i) the willful or intentional breach or default under this Agreement by Seller or (ii) Seller's failure to remove a Financial Encumbrance as defined in Section 5.3), then such termination shall be deemed a termination of all Purchase Agreements; provided, however, Seller in its sole discretion may waive the termination of any or all Purchase Agreements and elect to proceed with the transaction pursuant to the remaining terms and conditions of such Purchase Agreement(s).

Section 3.Earnest Money. 

3.1Deposit and Disposition.  Simultaneous with the execution and delivery of this Agreement, Buyer is depositing with Closing Agent the cash sum of Fifty-nine Thousand Three Hundred

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Thirty-two and 02/100 Dollars ($59,332.02) (the “Earnest Money”).  If this Agreement is not terminated by Buyer before the Inspection Date (as defined in Section 6.3), Buyer shall increase the Earnest Money by depositing an additional Eighty-eight Thousand Nine Hundred Ninety-eight and 03/100 Dollars ($88,998.03) with Closing Agent within two (2) business days after the Inspection Date.  The Earnest Money shall be held by Closing Agent until disbursed as set forth in this Agreement.  Buyer shall execute and deliver any appropriate W-9 forms requested by Closing Agent.  If and only if (a) Buyer acquires the Property, and (b) the Closing of the transaction contemplated in this Agreement is the final closing among the Purchase Agreements, then the Earnest Money shall be paid to Seller and applied as a credit against the Consideration.  If the Closing of the transaction contemplated in this Agreement is not the final closing among the Purchase Agreements, then the Earnest Money shall not be applied as a credit against the Consideration in this transaction, but shall rather be applied as a credit against the consideration of such final closing.  If all of the conditions precedent set forth in this Agreement are not met or resolved, or if Buyer terminates this Agreement as expressly permitted pursuant to the provisions hereof, then Closing Agent shall return the Earnest Money to Buyer, subject to Section 3.3 below.  If all of the conditions precedent set forth in this Agreement have been satisfied or waived by Buyer, and if thereafter Buyer fails to acquire the Property pursuant to the terms of this Agreement, then the Earnest Money shall be delivered to Seller and shall be retained by Seller as liquidated damages.  If there is a dispute between Buyer and Seller as to the distribution of the Earnest Money, or if for any other reason Closing Agent in good faith elects not to make any such disbursement, then Closing Agent shall continue to hold the Earnest Money until otherwise directed by written instructions executed both by Seller and Buyer, or by a final judgment of a court of competent jurisdiction.  Upon request, Buyer and Seller shall execute Closing Agent’s standard earnest money escrow agreement; provided, however, that if there is any conflict or inconsistency between such escrow agreement and this Agreement, then this Agreement shall control. 

3.2Investments.  Following the collection of the Earnest Money, Closing Agent shall, at the written request of Buyer, invest the Earnest Money in:  (a) obligations of the United States government, its agencies or independent departments; (b) certificates of deposit issued by a banking institution with assets in excess of $1 billion and with which Closing Agent has a substantial banking relationship; or (c) either a non-interest bearing account providing F.D.I.C. insurance in the full amount of the Earnest Money, or an interest-bearing account at a banking institution with assets in excess of $1 billion, and with which Closing Agent has a substantial banking relationship.No investment of the Earnest Money shall have a maturity date beyond the Closing Date.

3.3 Non-Refundable Earnest Money.  Except as specifically set forth in this Agreement, the Earnest Money shall be non-refundable to Buyer in accordance with the following schedule:    

Deadline	Go Hard Date	Earnest Money Amount
1	Inspection Date	$29,666.01
2	30 days after Inspection Date	$39,574.46
3	60 days after Inspection Date	$39,574.46
4	90 days after Inspection Date	$39,515.13

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Section 4.Consideration and Prorations.

4.1Consideration.  The “Consideration” shall be the sum of Fourteen Million and 00/100 Dollars ($14,000,000.00).  The parties shall make the prorations and allocations set forth in this section as a credit or debit to the Consideration.  The balance of the Consideration shall be paid by Buyer to Escrow Agent, to be released to Seller at Closing, by wire transfer of immediately available funds by not later than 12:00 p.m. Central Time.

4.2Prorations.

(a) General.  For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs.  All prorations shall be made on the basis of the actual number of days of the year and month that shall have elapsed prior to the Closing Date.  There will be no proration for insurance, it being understood and agreed that Seller will cancel their insurance and that Buyer will be required to secure its own insurance. 

(b) Rent.  The parties shall Prorate all Rent actually received by Seller for the month in which Closing occurs other than Delinquent Rent (which is defined and covered in Section 4.2(e) below).  At Closing, to the extent actually received by Seller prior to Closing, Seller shall pay to Buyer any and all prepaid Rent relating or pertaining to the Property.  If Seller receives payment for Rent (other than Delinquent Rent) after Closing, Seller shall immediately pay to Buyer the portion of such payment which relates to the period on and after the Closing Date, and any portion of such payment which relates to the period prior to Closing which was credited to Seller at Closing.    

(c) Taxes.  The parties shall Prorate all Taxes payable for the Closing Year, on a calendar year basis, utilizing actual final tax bills if available prior to Closing.  If final tax bills are not available, the parties shall Prorate Taxes on the basis of the projected Taxes if a projection is available from the applicable taxing authority or, if a projection is not available, on the basis of the most recent final tax bills.  Seller shall pay all Taxes for years prior to the Closing Year, and shall upon request furnish evidence of such payment to Title Company.  Regarding special assessments, it is the intent of the parties to Prorate any installments of special assessments that are payable in the Closing Year, and that Buyer shall be solely responsible for all remaining future installments of any such special assessments.  Real property tax refunds and credits received after the Closing which are attributable to Taxes payable for years prior to the Closing Year shall belong to Seller.  Any such refunds and credits attributable to Taxes payable for the Closing Year shall be apportioned between Seller and Buyer as of Closing after deducting the reasonable out-of-pocket expenses of collection thereof.  If any tax appeal or certiorari proceedings has not been finally resolved or settled prior to the Closing, and relates to any Taxes payable for the years prior to the Closing Year, then Seller shall be entitled to control the disposition of any such tax appeal or certiorari proceeding; any resulting refunds for years prior to the Closing Year shall belong to Seller, and any refund for the Closing Year shall be apportioned in accordance with the preceding sentence.  The apportionment and adjustment obligations set forth in this subsection shall survive the Closing.  To the extent that local custom for prorating Taxes in the state in which a Property is located varies from the proration method described above, such local custom shall be applied as to the Property located in that state.

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(d) Operating Expenses.  Except for Taxes, which are covered by Section 4.2(c) above, the parties shall Prorate all Operating Expenses.  The prorations under this subsection shall be based on actual invoices if reasonably possible.  If actual invoices are not available in advance of Closing, then the prorations shall be calculated based on Seller's good faith estimates thereof.  Buyer shall order final meter readings to be made as of the Closing Date for all utility services serving the Property.  Buyer shall coordinate the transfer of all utilities to Buyer effective on the Closing Date.  Seller shall pay all utility charges for the Property (excluding any utilities held in the name of any Residents) through the day preceding the Closing Date.  Commencing on the Closing Date, Buyer shall pay all utility charges for the Property (excluding any utilities held in the name of any Residents).    

(e) Delinquent Rent.  For purposes of this Section 4.2, “Delinquent Rent” shall mean any Rent that, under the terms of the applicable Resident Contract, was more than 30 days past due as of the Closing Date or which has not been received in good funds by Seller on or prior to the Closing Date.  Delinquent Rent shall not be accrued or prorated at Closing.  Any Delinquent Rent that is applicable to Seller’s period of ownership that is received by Buyer after the Closing Date shall be paid to Seller in accordance with the terms hereof; provided, however, that all Rent collected by Buyer after the Closing Date shall be applied first to payment of all Rent due Buyer from the applicable Resident, then to Rent attributable to the month in which the Closing occurs (and prorated with respect to each parties period of ownership) and then after any deduction allowed by this subsection for collection costs, to all Delinquent Rent due to Seller.  Seller shall have the right to use whatever means Seller determines prior to Closing to collect Delinquent Rent including, without limitation, commencing collection actions against Residents owing Delinquent Rent.  Following Closing, Buyer shall use good faith commercially reasonable efforts to collect any Delinquent Rent.  If Buyer commences any action or proceeding against any Resident and as a result thereof collects any Delinquent Rent which Buyer is required to remit to Seller, Buyer shall be entitled to deduct and retain a portion of the amount collected which is equal to the prorata share of the reasonable third party expenses incurred by Buyer in connection with the collection of any such Delinquent Rent.  For a period of 120 days following the Closing, Buyer shall not waive any Delinquent Rent or modify or amend any Resident Contract so as to reduce the Delinquent Rent owed by the Resident for any period in which Seller is entitled to receive such Delinquent Rent, without first obtaining Seller’s written consent (which consent shall not be unreasonably withheld or conditioned). 

(f) Resident Obligations.  Notwithstanding anything in this Section 4.2 to the contrary, if any Resident is obligated under its Resident Contract to directly pay any Operating Expenses (including without limitation Taxes), then said items will not be prorated between the parties.

(g) Proration Statement.  As soon as reasonably possible prior to Closing, Seller and Buyer shall work together in good faith to prepare a joint statement of the prorations required by this Section (“Proration Statement”), and shall deliver the Proration Statement to the Closing Agent for use in preparing the final settlement statements. 

(h) Post-Closing Reconciliation.  As soon as reasonably possible after Closing, but in no event more than ninety (90) days after Closing, the parties shall work in good faith to complete a reconciliation of all prorations (“Reconciliation”).  If there is an error on the Proration Statement used at Closing or, if after the actual figures are available as to any items that were estimated on the Proration Statement, then the proration or apportionment shall be adjusted based on the actual amounts.  As soon as reasonably possible, but in no

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event more than 60 days after Closing, Seller shall provide to Buyer an accounting detailing all of the Operating Expenses attributable to the Closing Year that were actually paid by Seller.  Either party owing the other party a sum of money based on the Reconciliation shall pay said sum to the other party within five (5) business days of the completion of the Reconciliation.  Seller and Buyer shall each be responsible for the accounting and validity of billings to Residents for those Operating Expenses incurred during each of Seller’s and Buyer’s respective periods of ownership of the Property.  This subsection shall survive Closing.

8.3 Resident Deposits.  At Closing Seller shall provide Buyer with an accounting of all security deposits or other refundable deposits received from (i) current or prospective residents of the Facilities and (ii) residents that have departed the Facilities within thirty (30) days prior to Closing (to the extent Seller requests Buyer to be responsible for refunding such residents and transfers the applicable deposits to Buyer), that have not yet been refunded to such residents as of the Closing Date (the “Resident Deposits”).  Such accounting shall set forth the names of the residents or prospective residents for whom such funds are held, the amounts held on behalf of each resident or prospective resident and the Seller’s warranty that the accounting is true, correct and complete.  On the Closing Date Seller shall transfer the Resident Deposits to the bank accounts designated by Buyer and Buyer shall assume the financial and custodial obligations with respect thereto.  Notwithstanding the foregoing, Seller will indemnify and hold Buyer harmless from all liabilities, claims and demands in the event the amount of the Resident Deposits transferred to the Buyer’s bank account did not represent the full amount of such Resident Deposits then or thereafter shown to have been delivered to Seller by the current residents or prospective residents of the Facilities.

8.4 Contingent Payment.  Notwithstanding anything in this Agreement to the contrary, if any of the Properties are sold by Buyer within twelve (12) months after the Closing Date, Buyer shall pay to Seller an amount equal to five percent (5%) of the Consideration allocated to such Property.  The Deed shall contain a deed restriction granting Seller the right to receive such additional sum from Buyer.

8.5 Assumed Obligations.  In connection with Buyer’s purchase of the Facilities, Buyer will only assume obligations of Seller that arise on or after the Closing Date with respect to those Seller Contracts which are assumed by Buyer.  All other liabilities and obligations of Seller will remain the sole obligation of Seller.

Section 5.    Title and Survey.

5.1Title Commitments.  As soon as reasonably possible after the Contract Date, Seller shall coordinate the Title Company’s delivery to Buyer of the Title Commitments, in the amount of the Consideration.  The Title Commitments shall show the condition of title to the Land and Improvements, shall name Buyer as the proposed insured, and shall include legible copies of all recorded exceptions and covenants, conditions, easements, and restrictions affecting the Property.  The Title Commitments shall also contain the conditions upon which the Title Company will issue the owners title insurance policies at Closing pursuant to the Title Commitment (the “Title Policy”).  However, this condition shall be deemed satisfied if the Title Policies (or any such endorsements or reinsurance and/or coinsurance) is not issued by reason of Buyer’s failing to satisfy (a) the Title Company’s routine underwriting requirements (including the “written or pre-printed requirements” set forth in the applicable commitment) for issuance thereof, or (b) any other requirements of Buyer specified by the Title Company in writing prior to the Inspection Date for issuance thereof. 

5.2New Survey.  Seller shall deliver to Buyer, as part of the Due Diligence Documents, a copy of the most recent surveys of the Property in Seller’s possession (the “Existing Survey”).  In the event

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Buyer commissions new surveys of the Property (the “New Survey”), then Seller shall provide all cooperation reasonably requested by Buyer regarding the preparation of the New Surveys.  Buyer shall be responsible for all costs associated with the New Surveys.  The New Surveys shall be certified to Seller, Buyer, and the Title Company.  Seller shall receive a signed original of the final New Surveys as soon as it is available and in any event, at or prior to Closing.

5.3Title Notice.  If the Title Commitments or Existing Surveys disclose matters that are not acceptable to Buyer (“Unpermitted Exceptions”), then Buyer shall notify Seller in writing (the “Title Notice”) of Buyer’s objections within the later of (i) ten (10) days after Buyer has received both the Title Commitments and the Existing Surveys, or (ii) ten (10) days prior to the Inspection Date (the “Objection Period”).  Mortgages, deeds of trust, assignment of leases and rents and Uniform Commercial Code financing statements (collectively, referred to as “Financial Encumbrances”) shall be deemed to be objected to and shall be removed prior to or at the Closing.  In the event that Buyer notifies Seller of any objections within the Objection Period, then Seller shall notify Buyer in writing, within ten (10) days following the date of receipt of Buyer’s notice of such objections, that either: (a) the Unpermitted Exceptions will be, prior to Closing, removed from the Commitments, insured over by the Title Company pursuant to an endorsement to the Title Policies, or otherwise cured to Buyer’s reasonable satisfaction; or (b) Seller declines to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller fails to deliver such written notice to Buyer within such 10-day period, then Seller shall be deemed to have declined to arrange to have the Unpermitted Exceptions removed, insured over, or otherwise cured.  If Seller declines to arrange to remove, insure over, or otherwise cure any of the Unpermitted Exceptions, then Buyer shall elect, through written notice to Seller within ten (10) days after Buyer’s receipt of Seller’s written declination, to:  (a) terminate this Agreement and receive refund of the Earnest Money irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3; or (b) waive such objections and take title subject to the Unpermitted Exceptions that Seller has declined to remove, insure over, or otherwise cure.  The Closing Date shall be adjusted, if necessary, to allow for any elections allowed or required by this Section.

5.4Pre-Closing “Gap” Title Obligations.  Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of any objections to title raised by the Title Company after Buyer’s receipt of the initial Title Commitments, or of any material defect shown on the New Surveys that was not disclosed on the Existing Surveys; provided that Buyer must notify the Seller of such objection to title within ten (10) days of being made aware of the existence of any such new objection.  If Buyer sends a Gap Notice to the Seller, Buyer and the Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 5.3 hereof.

Section 6.Buyer’s Inspection.

6.1Document Inspection.  Buyer and Seller acknowledge that Buyer (by itself or through such agents, consultants and others as Buyer shall designate) may inspect, test and analyze the Property (provided that any inspections or testing of the Land or Improvements shall be conducted in accordance with Section 6.2 below).  Seller will, within twenty (20) days after the Contract Date, deliver to Buyer complete copies of the Due Diligence Documents set forth on Exhibit 2.  In addition to the Due Diligence Documents, Seller will make available for Buyer's inspection any appraisals with respect to the Property; provided, however, that said appraisals are subject to confidentiality and are limited to use for mortgage lending sources only.  Buyer hereby agrees that said appraisals shall not be distributed to financing sources other than regulated financial service companies relying on the contents of such appraisals in order to provide mortgage debt. Notwithstanding anything in this Agreement to the contrary, Buyer acknowledges and understands that some of the materials delivered by Seller have been prepared by parties other than Seller or Seller's current property manager.  Seller makes no representation or warranty whatsoever, express or implied, as to the completeness, content, or accuracy of any delivered materials.

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6.2Physical Inspection.  Buyer and its consultants and agents shall have the right, from time to time prior to the earlier of the Closing or termination of this Agreement, to enter upon the Property to examine the same and the condition thereof, and to conduct such investigations, inspections, tests and studies as Buyer shall determine to be reasonably necessary.  Buyer agrees to conduct such activities during normal business hours to the extent practicable.  Buyer agrees to pay all costs of such investigations, inspections, tests and studies and to indemnify and hold Seller harmless from and against any claims for injury or death to persons or damage to property arising out of any action of any person or firm entering the Property on Buyer’s behalf as aforesaid (provided that for the avoidance of doubt, the foregoing indemnity shall not be applicable if such claims arise from or are in connection with any such damages to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated), which indemnity shall survive the Closing or any termination of this Agreement without the Closing having occurred.  Prior to performing any environmental investigation of the Property (other than a Phase I environmental site assessment), Buyer shall notify Seller of the name of the environmental consultant that will conduct the investigation.  Buyer shall not have the right to disturb the soil at the Property, or to perform any destructive or invasive testing, without Seller’s prior written consent.  In requesting any such consent, Buyer shall provide Seller with a proposed written work plan describing the investigation, the name of the contractor that will perform the investigation, evidence of insurance coverage for the contractor, and in the case of soil testing a site plan showing where the soil will be disturbed.  Buyer shall provide Seller, at no cost to Seller, within ten (10) days following Buyer’s receipt of same, with a complete copy of any reports related to any such environmental, soil, or destructive/invasive testing.  Neither Buyer nor any of Buyer’s consultants shall release or report the findings of any tests to any state or federal agency or other party without Seller’s prior written consent.

6.3Inspection Period; Seller's Fiduciary Out.  Buyer shall have until that date which is sixty (60) days after the Contract Date (the 60th-day being the  “Inspection Date”) in which to make such investigations, inspections, tests and studies permitted herein with respect to the Property, the Due Diligence Documents, and any other thing or matter relating to the Property as Buyer reasonably deems appropriate, and, at the sole discretion of Buyer, to terminate this Agreement on or before such Inspection Date if Buyer is not, for any reason or for no reason, satisfied with the Property.  If Buyer terminates this Agreement on or before the Inspection Date, then the Earnest Money shall be returned to Buyer and neither party shall have any further obligation to the other except as to provisions herein which are to survive termination.    

6.3.1.Subject to the terms of this Section 6.3, during the period commencing on the Contract Date and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms, or the Closing, the Seller shall not, nor shall it authorize or knowingly permit its directors, officers, employees, affiliates, financial advisors, legal counsel, accountants and other agents and representatives (“Representatives”) to (i) solicit, initiate, cause, or knowingly facilitate or encourage the submission of, any Acquisition Proposal, (ii) enter into any agreement, agreement-in-principle or letter of intent with respect to or accept any Acquisition Proposal (or resolve to or publicly propose to do any of the foregoing), or (iii) participate or engage in any negotiations regarding, or furnish to any Person any information with respect to, any Acquisition Proposal.

6.3.2.Notwithstanding anything to the contrary set forth in this Section 6.3 or elsewhere in this Agreement, if, at any time prior to the Inspection Date, (i) Seller receives an Acquisition Proposal from a third party under circumstances in which Seller and its Representatives have complied with their obligations under this Section 6.3 and (ii) Seller’s Board of Directors determines in good faith (after consultation with Seller’s financial advisor and legal counsel) that such Acquisition Proposal is, or reasonably could lead to, a Superior Proposal, Seller may, subject to providing Buyer prior written notice (which notice shall contain a statement to the effect that the

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Board of Directors has made the determination required by this Section 6.3.2), participate or engage in any negotiations with such third party, or disclose or provide any non-public information or data relating to Seller to, or afford access to the properties, assets, books or records or Representatives of Seller to, any such third party and any potential financing sources of such third party, provided that the provision of any non-public information or data to such third party is pursuant to a confidentiality agreement and a copy of any such non-public information or data is delivered simultaneously to Buyer to the extent it has not previously been so furnished to Buyer.

6.3.3. In addition to any notice obligations contemplated by this Section 6.3, Seller shall as promptly as practicable (and in any event within 48 hours) notify Buyer of Seller's receipt of any Acquisition Proposal.

6.3.4.Notwithstanding anything herein to the contrary, if at any time prior to the Inspection Date Seller has received a Superior Proposal, Seller may terminate this Agreement and all other Purchase Agreements and enter into a definitive written agreement providing for such Superior Proposal simultaneously with the termination of this Agreement. In the event of such termination, (i) all Earnest Money shall be returned to Buyer, irrespective of whether such money has “gone hard” as provided in Section 3.3, and (ii) Seller shall immediately pay to Buyer an aggregate additional amount of $2,000,000 collectively with all other Purchase Agreements (the “Breakage Fee”).

6.4Liability Insurance.  Buyer agrees that it will cause it and any person accessing the Property for purposes of this inspection to be covered by not less than $2,000,000 commercial general liability insurance (with, in the case of Buyer’s coverage, a contractual liability endorsement, in support of Buyer’s indemnity obligations under this Agreement), insuring all activity and conduct of such person while exercising such right of access, and providing that Seller and its affiliates are additional insureds, issued by a licensed insurance company authorized to do business in each state in which a Property is located and otherwise reasonably acceptable to Seller.

6.5Indemnity.  Buyer agrees to indemnify, defend and hold harmless Seller and its affiliates, members, partners, subsidiaries, shareholders, officers, directors and agents from any actually incurred loss, injury, damage, cause of action, liability, claim, lien, cost or expense, including reasonable attorneys’ fees and costs (collectively, “Damages”), arising from the exercise by Buyer or its employees, consultants, agents or representatives of the right of access under this Agreement or out of any of the foregoing (provided that for the avoidance of doubt, Damages shall not be deemed to have arisen from or in connection with any such access or inspection to the extent resulting from a pre-existing condition, unless exacerbated or adversely affected by Buyer or any of its employees, consultants, agents, prospective lenders (and their consultants) or representatives, and, in such case, only to the extent so exacerbated).  The indemnity in this subsection shall survive the Closing or any termination of this Agreement.

6.6Restoration.  Buyer agrees at its own expense to promptly repair or restore the Property, or, at Seller’s option, to reimburse Seller for any repair or restoration costs, if any inspection or test requires or results in any damage to or alteration of the condition of the Property.  The obligations set forth in this subsection shall survive the Closing or any termination of this Agreement.

6.7Confidentiality.   Buyer agrees to maintain in confidence the information contained in the Due Diligence Documents (the “Transaction Information”).  Buyer shall not disclose any portion of the Transaction Information to any person or entity and shall maintain the Transaction Information in the strictest confidence; provided, however, that Buyer may disclose the Transaction Information:  (a) to Buyer’s agents to the extent that such agents reasonably need to know such Transaction Information in order to assist, and perform services on behalf of, Buyer; (b) to the extent required by any governmental

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authority; (c) to the extent required by any applicable statute, law, or regulation; and (d) in connection with any litigation that may arise between the parties in connection with the transactions contemplated by this Agreement.  Buyer agrees that the Transaction Information shall be used solely for purposes of evaluating the acquisition and potential ownership and operation of the Property.  In the event this Agreement is terminated for any reason whatsoever, Buyer shall promptly return to Seller the Due Diligence Documents. The undertakings of Buyer pursuant to this Section shall survive the termination of this Agreement, but shall terminate upon Closing if this transaction closes.

The parties agree that, prior to Closing, and except for disclosures required by law or governmental regulations applicable to such party, and disclosures to such party’s advisors or consultants, no party may, with respect to this Agreement and the transactions contemplated hereby, make any public announcements or issue press releases regarding this Agreement or the transactions contemplated hereby to any third party without the prior written consent of the other party hereto; provided, however, that notwithstanding anything to the contrary contained in this Agreement, (a) Seller may file a Securities and Exchange Commission's disclosure Form 8-K and/or a Form 10-Q upon the execution and delivery of this Agreement and may disclose any and all necessary material information required to be disclosed thereunder, including without limitation the inclusion of a copy of this Agreement thereto, and (b) after Closing (i) either party may make a press release or other disclosure which shall be subject to the approval of the other party, which approval shall not be unreasonably withheld, denied or conditioned; and (ii) any party or an affiliate of such party may make any public statement, filing or other disclosure which any of them reasonably believes to be required or desirable under applicable securities laws (provided, however, such party shall not disclose the allocated Purchase Price or the specific Properties included in this transaction, unless securities counsel for such party has advised that the same is required by applicable securities laws). 

Section 7.Seller’s Representations, Warranties and Covenants.

7.1. Seller’s Representations, Warranties and Covenants.  In addition to any other express representations, warranties and covenants provided by Seller to Buyer elsewhere in this Agreement, Seller represents, warrants and covenants to Buyer as of the Contract Date:

7.1.1. Authority.  Seller is formed pursuant to, and in good standing under, the laws of the State of Delaware.  Seller is authorized to own and operate real estate in the State in which the Land is located.  Seller is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.  This Agreement and all exhibits and documents to be delivered by Seller pursuant to this Agreement have been duly executed and delivered by Seller and constitute the valid and binding obligations of Seller, enforceable in accordance with their terms.  Seller has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Seller; (ii) any material instrument, contract, or other agreement to which Seller is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

7.1.2. Environmental Matters.  To the best of Seller’s knowledge, without investigation, except as disclosed in any of the Due Diligence Documents:  (i) Hazardous Substances have not been used, generated, transported, treated, stored, released, discharged or disposed of in, onto, under or from the Property in violation of any Environmental Laws by Seller or by Residents; (ii) there are no underground tanks or any other underground storage facilities located on the Property; and (iii) there are no wells or private sewage disposal or treatment facilities located on the Property.

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7.1.3. Non-Foreign Status.  Seller is not a “foreign person” as that term is defined in the Code and the regulations promulgated pursuant thereto.

7.1.4. Anti-Terrorism Laws.  Neither Seller, nor any of its affiliated entities, is in violation of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Seller nor, to the knowledge of Seller, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Seller is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Seller nor, to the knowledge of Seller, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

7.1.5. Governmental Matters.  Seller has not received written notice from any governmental body having jurisdiction over the Property of:  (a) any pending or contemplated annexation or condemnation proceedings, or purchase in lieu of the same, affecting or which may affect all or any part of the Property; (b) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of the Property; (c) any uncured violation of any legal requirement, restriction, condition, covenant or agreement affecting the Property or the use, operation, maintenance or management of the Property; (d) any uncured violations of laws, codes or ordinances affecting the Property; or (e) any violation of the terms of any permit required for the operation of the Property as presently operated.

7.1.6. No Bankruptcy.  Seller:  (a) is not in receivership or dissolution; (b) has not made any assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature; (c) has not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any jurisdiction and no such petition has been filed against Seller or any of its property or affiliates, if any; and (d) none of the foregoing are pending or threatened.

7.2. Title to Assets.  Seller holds good and marketable title to the Personal Property, free and clear of restrictions on or conditions to transfer or assignment, and at the time of Closing free and clear of liens, pledges, charges or encumbrances.

7.3. Condition of Assets.  The Facilities currently have, and at Closing will have, all of the assets necessary to operate the Facilities in the manner in which they were operated as of August 1, 2016.     

7.4. Financial Statements.  Financial statements for the Facilities for the three most recently completed fiscal years will be delivered to Buyer twenty (20) days after the Contract Date, and monthly financial statements for each month until Closing will be provided within thirty (30) days after the end of

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each month.   All financial statements present fairly the financial condition and results of operations of the Facilities at the dates and for the periods presented, subject, in the case of statements other than for fiscal years, to normal year-end adjustments. 

7.5. Contracts and Commitments.  Full and complete copies of the Seller Contracts have been or will be delivered to Buyer in accordance with Section 6.1 of this Agreement.  The Seller Contracts are in full force and effect in all material respects, except for Resident Contracts that may have terminated prior to the Closing Date.  Provided Buyer complies with all applicable laws, rules and regulations from and after the Closing Date, neither the execution of this Agreement nor the completion of the transaction contemplated by this Agreement conflicts with, or results in a breach of, any Seller Contract.  Seller further warrants that, except for delays, minor failure to meet specifications or other minor defaults which are normal in the conduct of the business of Seller, Seller complied with the provisions of all Seller Contracts applicable to Seller, and, to Seller’s knowledge, (a) all other parties to the Seller Contracts have complied with the provisions of the Seller Contracts applicable to such other parties, (b) none of such other parties are in default under any Seller Contract, and (c) no event has occurred which, but for the passage of time or the giving of notice, would constitute a default under a Seller Contract. 

7.6. Litigation.

7.6.1There is no litigation pending against Seller, nor, to the best of Seller's Knowledge,  any litigation, proceeding, or governmental investigation threatened against Seller that relates to or affects the Property or the Facilities.

7.6.2Seller is not subject to any order, writ, injunction, or decree of any court or federal, state, provincial, municipal, or governmental department, commission, board, bureau, agency, or instrumentality that relates to or affects the Property or the Facilities, except as may be generally issued or binding on the assisted living facility industry generally, and to the best of Seller’s knowledge, Seller is not in default with respect to any such order, writ, injunction, or decree.

6.7 Operational Deficiencies.  Seller has made available or will make available for review by Buyer all survey reports, statements of deficiency, plans of correction, waivers or other investigatory reports regarding corrective or remedial action from licensing agencies or other governmental agencies related to the Facilities (to the extent such items are in Seller’s possession and received by Seller in the past year), and will provide copies of any additional such notices or documents through the Closing Date.

6.8 All references in this Section 7 or elsewhere in this Agreement and/or in any other document or instrument executed by Seller in connection with or pursuant to this Agreement, "to Seller's knowledge" or "to the best of Seller’s knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Dave Pankow, Ted Holmes and Michael Bosh (the “Seller's Designated Employees”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed by imputation or otherwise, to refer to the knowledge of Seller or any affiliate of Seller, or of any other Employee, officer, director, shareholder, manager, or representative of Seller, or any affiliate thereof, or to impose upon said Seller’s Designated Employee, any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains. Notwithstanding anything expressed or implied herein, the Seller's Designated Employees are acting for and on behalf of Seller, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Seller's Designated Employees for any obligations, liabilities or other agreements of Seller contained herein.

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6.9 The representations, warranties and covenants of Seller contained in this section are made on the Contract Date and shall be deemed remade by Seller, and shall be true in all material respects, as of the Closing Date.  Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided that the representations and warranties in Sections 7.1.1, 7.1.3 and 7.1.4 shall survive indefinitely.  If Seller learns that any of said representations or warranties has become inaccurate between the Contract Date and the Closing Date, then Seller shall promptly notify Buyer in writing of such change.  The Closing Date shall be automatically extended for ten (10) days in order to allow Seller to cure such change.  If Seller cures such change, then this Agreement shall proceed to Closing.  If Seller does not cure such change, then Buyer may either (a) terminate this Agreement by written notice to Seller, in which case the Earnest Money shall be returned to Buyer and the parties shall have no further rights or obligations hereunder, except for those which expressly survive such termination, or (b) waive such right to terminate and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.  If Buyer elects option (b) in the preceding sentence, then the representations and warranties shall be deemed to be automatically amended to reflect said change. 

6.10 Seller shall have no liability to Buyer by reason of a breach or default of any of Seller's representations, unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within fifteen (15) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's Warranty Notice.  No claim for breach of any representation or warranty of Seller shall be actionable or payable unless the valid claims for all such breaches collectively aggregate more than $10,000.00, in which event the full amount of such claims shall be actionable.  In no event shall the aggregate liability of Seller to Buyer by reason of a breach or default of one or more of Seller's representations exceed three percent (3%) of the Consideration for the entire portfolio contemplated by this Agreement and the Purchase Agreements; provided, however, if such claim relates to a breach relating to an individual Property, Seller's liability shall not exceed the amount of the Consideration.  Seller's liability shall be limited to actual damages and shall not include consequential, special or punitive damages.  Any litigation with respect to any representation must be commenced within sixty (60) days from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default.  Any proceeding or litigation based upon a claim of fraud, misrepresentation or similar theory shall be commenced by Buyer within fifteen (15) months of the Closing Date and, if appropriate proceedings are not commenced within such time period, Buyer shall be deemed to have waived any such claim.

6.11 No member, manager, partner, shareholder, officer, employee or agent of or consultant to, or of, Seller shall be held to any personal liability hereunder, and no resort shall be had to their property or assets, or the property or assets of Seller for the satisfaction of any claims hereunder or in connection with the affairs of Seller.  Furthermore, prior to Closing, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds or awards thereof.  Prior to Closing, Buyer shall have no recourse against any other property or assets of Seller, the general account of Seller, any separate account of Seller, or to any of the past, present or future, direct or indirect, shareholders, partners, members, managers, principals, directors, officers, agents, incorporators, affiliates or representatives of Seller (collectively, “Seller Parties”) or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitration award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in this subsection, prior to Closing, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Buyer’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise.  Prior to Closing, Buyer shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in

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the Property or any proceeds thereof.  The provisions of this Section shall survive the Closing or earlier termination of this Agreement.

Section 8.Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1. Buyer’s Representations, Warranties and Covenants.  Buyer represents and warrants that, as of the Contract Date:

8.1.1. Authority.    Buyer is a validly formed entity under the laws of the state in which it was formed, is in good standing in said state, and is duly authorized to do all things required of it under or in connection with this Agreement.  At Closing, Buyer will be qualified to do business in all states in which the Land is located, and to own and operate real estate in all such states.  This Agreement and all exhibits and documents to be delivered by Buyer pursuant to this Agreement have been duly executed and delivered by Buyer and constitute the valid and binding obligations of Buyer, enforceable in accordance with their terms.  Buyer has all necessary authority, has taken all action necessary to enter into this Agreement and to consummate the transactions contemplated hereby, and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement will not conflict with or constitute a breach or default under (i) the organizational documents of the Buyer; (ii) any material instrument, contract, or other agreement to which Buyer is a party which affects any of the Property; or (iii) any statute or any regulation, order, judgment, or decree of any court or governmental or regulatory body.

8.1.2. No Bankruptcy.    Buyer is not subject to any proceeding in bankruptcy or any proceeding for dissolution or liquidation.

8.1.3. Litigation.  There is no action, suit or proceeding pending or, to Buyer's knowledge, threatened against Buyer in any court or by or before any other governmental agency or instrumentality which would materially and adversely affect the ability of Buyer to carry out the transactions contemplated by this Agreement.

8.1.4. ERISA.  Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974.

8.1.5. Due Diligence Representation.  Buyer represents and warrants to Seller that Buyer (i) is an experienced and sophisticated purchaser of properties such as the Property and (ii) prior to the Inspection Date will inspect and examine all aspects of the Property and its current condition that Buyer believes to be relevant to its decision to consummate its purchase of the Property.  This Section 8.1.5 shall survive the Closing or earlier termination of this Agreement. 

8.1.6. Anti-Terrorism Laws.  Neither Buyer, nor any of its affiliated entities, is in violation of any of the Anti-Terrorism Laws, including the Executive Order and the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law No. 107-56.  Neither Buyer nor, to the knowledge of Buyer, any of its affiliated entities, or their respective brokers or agents acting or benefiting in any capacity in connection with the purchase of the Property, is any of the following:  (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which Buyer is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Laws; (iv) a Person or entity that commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; or (v) a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury

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Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list.  Neither Buyer nor, to the knowledge of Buyer, any of its brokers or other agents acting in any capacity in connection with the purchase of the Property:  (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person as described above; (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any of the Anti-Terrorism Laws.

8.1.7. Licensing Approvals.  Within ninety (90) days of the Contract Date, Buyer has submitted, or caused its designated third-party manager or operator of senior living facilities to submit, a completed application with schedules and required background information to the appropriate licensing authority in order to obtain all licensing approvals and other approvals required by any governmental authority as deemed by Buyer to be required for Buyer or Buyer's manager (or their respective affiliates) to operate each Property, and approvals required to process a change of ownership or new application for Medicaid certification, if applicable ("Licensing Approvals").  Buyer shall diligently pursue in good faith the Licensing Approvals, including without limitation, completing information requested in a timely manner, attaching required information and exhibits to the Licensing Approvals applications and promptly responding to requests made in connection with the Licensing Approvals.  If Buyer does not obtain all Licensing Approvals on or before the Closing Date, Seller and Buyer shall enter into a form of transition agreement ("Transition Agreement") with respect to the Properties for which Licensing Approvals are not obtained on or before the Closing Date as may be required pursuant to applicable law or as required by applicable governmental entities.  At least five (5) Business Days prior to the Closing Date, Buyer shall deliver a list of Properties to Seller for which Buyer reasonably anticipates the Licensing Approvals will be received by Buyer or Buyer's manager or operator on or before the Closing Date (so that the transition date under the Transition Agreement will be the same date as the Closing Date).  If any Licensing Approvals are not obtained on or before the expiration of twelve (12) full calendar months following the Closing, then Seller and Buyer shall renegotiate the Transition Agreements upon such terms and conditions as are reasonably acceptable to Seller and Buyer.  For those Properties in states that require that advance notice be given to residents in connection with the transactions contemplated by this Agreement, as soon as practical after the date hereof, Seller will dispatch notification letters prepared by Buyer to each resident of such Properties as may be necessary to comply with and as may be required by applicable law and containing such other information as Buyer may reasonably request, including without limitation information concerning Buyer and/or Buyer's manager.  In the event of a termination of this Agreement, Seller shall not be responsible to Buyer for the payment of any amounts pursuant to this Section 8.1.7.  Seller shall cooperate with and take all actions reasonably necessary and requested to assist Buyer and/or Buyer's manager to obtain such Licensing Approvals and other approvals required by any governmental authority, including without limitation, with respect to inspections at the Properties necessary to obtain the Licensing Approvals, the assignment of any existing Medicaid provider agreements and contracts or the obtaining of new Medicaid provider agreements or contracts for Properties with such existing agreements or contracts at Buyer's option, at no cost to Seller, and providing notices required by applicable law or agreements to be given to governmental entities or other persons, subject to the prior written approval of Buyer. 

8.2. All references in this Section 8 or elsewhere in this Agreement and/or in any other document or instrument executed by Buyer in connection with or pursuant to this Agreement, "to Buyer's knowledge" or "to the best of Buyer's knowledge" and words of similar import shall refer solely to facts within the current, actual knowledge of Philip Gisi, Rex Carlson, Jon Strinden, and Russel Kubik, (the “Buyer's Designated Employee”), without independent inquiry or investigation, and without any actual or implied duty to inquire or investigate, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Buyer, or of any affiliate of Buyer, or of any other employee, officer, director, shareholder,

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manager, agent, or representative of Seller, or any affiliate thereof, or to impose upon said Buyer's Designated Employee any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains.  Notwithstanding anything expressed or implied herein, the Buyer's Designated Employee is acting for and on behalf of Buyer, and is in no manner expressly or impliedly making any representations or warranties in an individual capacity.  Nothing expressed or implied herein shall be deemed to create any personal liability on the Buyer's Designated Employee for any obligations, liabilities or other agreements of Buyer contained herein.

8.3. The representations, warranties and covenants of Buyer contained in this Section is made on the Contract Date and shall be deemed remade by Buyer, and shall be true in all material respects, as of the Closing Date.  The representations, warranties and covenants contained in this Section shall survive Closing for a period of twelve (12) months.

Section 9.Conditions to Closing.  Buyer’s obligation to proceed to Closing under this Agreement is subject to:  (a) Seller having made all deliveries as required by Section 10.4 below; (b) Buyer's ownership of the Property shall have been approved by all appropriate state and local regulatory and licensing authorities and agencies, including receipt by Buyer of all consents, approvals, licenses and certificates as may be necessary for Buyer lawfully to own the Property; (c) all representations and warranties made in this Agreement by Seller will be true as of the Closing Date, as though such representations and warranties had been made on and as of the Closing Date; and (d)  Buyer having obtained acquisition debt financing to purchase the Property.  In the event Buyer fails to obtain acquisition debt financing or the necessary approvals to own the Property on or before the Closing Date, then Buyer shall have the right, through written notice to Seller, to terminate this Agreement, and receive a partial refund of the Earnest Money, subject to Section 3 of this Agreement.  Seller’s obligation to proceed to Closing under this Agreement is subject to: (y) Buyer having made all deliveries as required by Section 10.5 below;  and (z) the Seller shall have been paid the entire Consideration, subject to adjustments and prorations as set forth herein. 

Section 10.Closing.

10.1Time and Place.  Provided that all of the conditions set forth in this Agreement are theretofore fully satisfied or performed, the Closing shall be held on January 18, 2017, or such later date as may be mutually agreed upon by the parties, but in no event later than April 28, 2017 (the “Closing” or “Closing Date”).  Both parties will use good faith efforts to: (i) close on January 18, 2017, or as soon thereafter as is reasonably possible, and (ii) to close on this Agreement and the other Purchase Agreements on the same date.  In the event that Buyer requests to close on this Agreement on a date different than closing on the other Purchase Agreements, Seller shall be entitled in its sole discretion to determine the order in which the closings will occur.  In the event the Parties are unable to mutually agree upon a Closing Date other than January 18, 2017, then the Closing Date shall be April 28, 2017.  If Closing has not occurred by April 28, 2017, for any reason other than Seller’s material default under this Agreement, then Seller in its sole discretion may at any time thereafter terminate this Agreement and retain any portion of the Earnest Money to which it is entitled pursuant to Section 3 of this Agreement.  Closing shall occur through a mail escrow style closing with the Closing Agent.

10.2Buyer’s Costs.  Buyer shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The premiums and other costs of the Title Policies (including any coverages or endorsements required by Buyer or Buyer’s lender).

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(c) All recording and filing charges in connection with the Deed.

(d) The cost of preparation of the New Surveys.

(e) All costs and expenses associated with Buyer’s due diligence.

(f) Its own attorneys.

10.3Seller’s Costs.  Seller shall pay:

(a) One-half of all escrow and closing agent charges.

(b) The cost of preparation of the Title Commitments.

(c) The cost of preparation and recording of all documents (other than the Deed) reasonably necessary to place record title in the condition warranted by Seller in this Agreement.

(d) Any form of deed tax or transfer tax imposed by any state or federal entity by virtue of the sale of the Property, or recording of the Deed, to Buyer.

(e) Its own attorneys.

10.4Seller’s Closing Deliveries.  Seller shall obtain and deliver to Buyer at the Closing the following documents (all of which shall be duly executed and, if required for recording, acknowledged, which documents Buyer agrees to execute and acknowledge where required):

(a) The Deed, conveying to Buyer all of Seller’s right, title and interest in and to the Property, subject only to: (i) non-delinquent real property taxes and all assessments and unpaid installments thereof, in each case, which are not delinquent; (ii) the Resident Contracts and other agreements entered into pursuant to the terms of this Agreement; (iii)  any other lien, encumbrance, easement or other exception or matter voluntarily imposed or consented to by Buyer prior to or as of the Closing; (iv) all exceptions (including printed exceptions, other than printed exceptions to the extent such matters are removed by delivery of Seller’s Title Affidavits) to title contained or disclosed in the Title Commitments other than the Unpermitted Exceptions identified within time periods allowed under this Agreement and not thereafter waived or deemed waived by Buyer; and (v) if the New Survey is not obtained by Buyer, all matters, rights and interests that would be discovered by a thorough inspection or professional survey of the Property (alternatively, if the New Survey is obtained by Buyer, all such matters disclosed on such New Survey).    Pursuant to Section 4.3 of this Agreement, the Deed shall contain a deed restriction granting Seller the right to receive an additional sum from Buyer equal to five percent (5%) of the Consideration allocated to any Property resold within the first twelve (12) months of the Closing Date.

(b) Keys, custody, and control over the Facilities and the Property.

(c) A General Assignment and Assumption Agreement in the form attached as Exhibit 10.4(b) hereto for each Property. 

(d) A Non-Foreign Certificate in the form attached as Exhibit 10.4(c) hereto.

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(e) If there is any Personal Property being conveyed to Buyer, a Bill of Sale in the form attached as Exhibit 10.4(d) hereto for each Property.

(f) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Buyer or the Title Company to consummate the transaction contemplated by this Agreement.

(g) Such further documents as Buyer or the Title Company may reasonably request to carry out the provisions of this Agreement.

(h) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(i) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed Transition Agreement, with all exhibits and schedules attached thereto.

(j) Documentation evidencing termination of Facility management contract.

10.5Buyer’s Closing Deliveries.  Buyer shall deliver to Seller at Closing:

(a) The Consideration, as prorated and allocated pursuant to this Agreement.

(b) An executed counterpart of the General Assignment and Assumption Agreement for each Property.

(c) An executed settlement statement reflecting the prorations and adjustments required under this Agreement.

(d) Any additional tax forms, recordation forms, 1099s or other documents as may be reasonably required by the Seller or the Title Company to consummate the transaction contemplated by this Agreement.

(e) Such further documents as Seller or the Title Company may reasonably request to carry out the provisions of this Agreement.

(f) With respect to any Property in which Buyer (and/or its manager or operator, as applicable) has not received all Licensing Approvals on or prior to the Closing Date, a signed counterpart Transition Agreement, with all exhibits and schedules attached thereto.

10.6 Closing Escrow.  Buyer and/or Seller at their option may deposit the respective Closing deliveries described in Sections 10.4 and 10.5 with Closing Agent with appropriate instructions for recording and disbursement consistent with this Agreement.  Except for the Deed, Buyer and Seller may deliver electronic versions, by facsimile or electronic mail, of the executed documents required to be delivered pursuant to this Agreement at Closing; provided, however, the Buyer and Seller shall deliver originally executed documents promptly after the Closing. 

Section 11.  General Indemnification.  Subject to the express provisions of this Agreement, Buyer agrees to indemnify, to defend, and to hold Seller harmless from all claims, demands, causes of action, and

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suit or suits of any nature whatsoever arising out of or relating to its ownership and/or operation of the Property and any and all activities relating thereto first accruing after the Closing.

11.1Subject to the express provisions of this Agreement, Seller agrees to indemnify, defend and hold Buyer harmless from all third party claims arising out of or relating to Seller’s ownership of the Property accruing prior to Closing.  As used in the preceding sentence, "third party claims" excludes claims raised by Buyer, any entity or person affiliated with or related to Buyer in any way, and claims raised by any governmental or quasi-governmental entity related to the Property.    

Section 12.Default and Remedies.

12.1Seller’s Default.  Should Seller breach any of Seller’s covenants, representations, or warranties contained in this Agreement, Buyer may, upon ten (10) days’ written notice to Seller, and provided such breach or failure is not cured within such 10-day period:

(a) terminate this Agreement, without further liability on Buyer’s part and, in such event, Buyer shall be entitled to a return of the Earnest Money and following such return of the Earnest Money and reimbursement, Seller and Buyer shall have no further liability hereunder; and/or

(b) enforce specific performance of this Agreement, provided such action is commenced within 120 days after the date of Buyer’s written notice to Seller pursuant to this Section; provided, however, if Buyer pursues the remedy of specific performance but the same is not ultimately available to Buyer as a remedy for Seller’s breach of this Agreement, Buyer shall then be entitled to a return of the Earnest Money.

12.2Buyer’s Default.  In the event Buyer defaults in its obligations to close the purchase of the Property, or in the event Buyer otherwise defaults hereunder prior to Closing, then (a) Seller shall receive the Earnest Money as fixed and liquidated damages, this Agreement shall terminate, and neither party shall have any further liability hereunder, except for those liabilities which expressly survive the termination of this Agreement and Buyer shall immediately direct the Title Company to pay the Earnest Money to Seller;  and/or (b) enforce specific performance of this Agreement, in which case the Earnest Money shall apply as a credit towards the purchase price ordered by the court ordering specific performance.   Seller shall have no other remedy for any pre-Closing default by Buyer, including any right to damages.  BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT:  (1) THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; (2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICAL TO DETERMINE; (3) BUYER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF BUYER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE EARNEST MONEY SHALL BE AND DOES CONSTITUTE VALID LIQUIDATED DAMAGES.  All of the foregoing shall be without limitation upon the rights and remedies of Seller hereunder, at law or in equity, in the event of a default by Buyer pursuant to Sections 6.2, 6.5, 8, 12.3, or 17.3, or pursuant to any covenant, agreement, indemnity, representation or warranty of Buyer that survives the Closing or the termination of this Agreement.NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS

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SECTION, IF BUYER BRINGS AN ACTION AGAINST SELLER FOR AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT, RECORDS A LIS PENDENS OR OTHERWISE ENJOINS OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO CONSENT TO OR INSTRUCT RELEASE OF THE EARNEST MONEY TO SELLER IF REQUIRED BY CLOSING AGENT (EACH A “BUYER’S ACTION”), SELLER SHALL NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION FROM BRINGING AN ACTION AGAINST BUYER SEEKING EXPUNGEMENT OR RELIEF FROM ANY IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER OR INCUR AS A RESULT OF ANY BUYER’S ACTION BUT ONLY TO THE EXTENT THAT SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET FORTH HEREIN.  NOTHING IN THIS AGREEMENT SHALL, HOWEVER, BE DEEMED TO LIMIT BUYER’S LIABILITY TO SELLER FOR DAMAGES OR INJUNCTIVE RELIEF FOR BREACH OF BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED BELOW.  NOTWITHSTANDING THE FOREGOING, BUYER MAY FILE A LIS PENDENS TO THE EXTENT NECESSARY TO PRESERVE A CLAIM FOR SPECIFIC PERFORMANCE.

12.3Attorneys’ Fees to Prevailing Party.  In the event of any litigation between the parties hereto under any of the provisions of this Agreement, the non-prevailing party to such litigation agrees to pay to the prevailing party all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in such litigation.  The parties agree that the court presiding over the litigation shall determine whether a party is a “prevailing party,” and shall determine the reasonable amount of attorney’s fees and costs recoverable.  The parties agree that the amount of attorneys’ fees and costs which may be awarded must bear a reasonable relationship to, and must be limited by the court to a reasonable amount in view of, the amount recovered by the prevailing party in such matter.

12.4  Cross-Default.  A default by either party under any other Purchase Agreement or the Purchase Agreements shall automatically be deemed to be a default by such party under this Agreement and a default by either party under this Agreement shall automatically be deemed to be a default by such party under the other Purchase Agreements. 

Section 13.Condemnation.  If, between the Contract Date and the Closing Date, any condemnation or eminent domain proceedings are initiated or threatened that might result in the taking of any part of the Improvements or the Land or access to the Land from adjacent roadways, then Buyer at its sole discretion may elect to terminate this Agreement without cost, obligation, or liability on the part of Buyer, in which event this Agreement shall terminate all rights and obligations of the parties hereunder shall cease and the Earnest Money shall be returned to Buyer,  irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If this Agreement is not terminated, then Seller shall assign to Buyer all of Seller’s right, title, and interest in and to any award pertaining to the Property made in connection with such condemnation or eminent domain proceedings.  Buyer shall notify Seller within fifteen (15) days after its receipt of written notice from Seller of such condemnation or eminent domain proceeding, whether it elects to exercise its right to terminate.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 14.  Damage or Destruction.  Seller shall bear all risk of loss to the Property until the Closing Date.  If, between the Contract Date and the Closing Date, all or any portion of the Property is damaged or destroyed by fire or other casualty and the cost to repair and restore the Property is more than $1,000,000.00, then Buyer at its sole discretion may elect to terminate this Agreement without cost,

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obligation, or liability on Buyer’s part, in which event all rights and obligations of the parties hereunder shall cease and the Earnest Money will be returned to Buyer, irrespective of whether any or all of the Earnest Money has “gone hard” as described in Section 3.3.  If either this Agreement is not terminable in accordance with the foregoing, or is terminable but is not terminated, then Seller shall, upon Closing, assign to Buyer all of Seller’s right, title, and interest in and to any insurance proceeds, including without limitation any rent loss insurance proceeds (except for proceeds for rent losses prior to Closing), payable as a result of such damage or destruction, plus Seller shall pay to Buyer the amount of any deductible losses under such insurance policies and at Closing shall have no further repair or restoration obligations.  Seller shall advise Buyer regarding the insurance policies covering such damage or destruction and the probable amount of any insurance proceeds payable as a result of such damage or destruction.  Buyer shall notify Seller within fifteen (15) days after receipt of written notice from Seller of such damage or destruction of its election.  If Buyer fails to notify Seller of its election within said 15-day period, such failure shall constitute an election not to terminate this Agreement as aforesaid.  The Closing Date shall be adjusted, if necessary, to allow for such election.

Section 15.Notices.  Wherever any notice or other communication is required or permitted hereunder, such notice or other communication shall be in writing and shall be delivered by hand, by nationally-recognized overnight express delivery service, or by electronic “email” transfer (conditioned on delivery of a copy of such notice by nationally-recognized overnight express delivery service, which notice shall be deposited for delivery within one business day after delivery of such electronic “email” transfer) to the addresses set out below or at such other addresses as are specified by written notice delivered in accordance herewith:

BUYER:Edgewood Properties, LLLP

322 Demers Avenue, Suite 500

Grand Forks, ND 58201

Attn:  Jon Strinden

Telephone: (701) 757-5470

E-mail: jon.strinden@edgewoodvista.com

With a copy to:Fredrikson & Byron P.A.

51 Broadway, Suite 400

Fargo, ND 58102-4991

Attn:  Michael S. Raum

Telephone: (701) 237-8212

E-mail: mraum@fredlaw.com

SELLER:IRET Properties, a North Dakota Limited Partnership

Attn:  General Counsel

1400 31st Avenue SW, Suite 60 (overnight delivery)

Minot, ND  58701

Telephone:  (701) 837-4738

Email:  mabosh@iret.com

With a copy to:Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

Attn:  Alan W. Van Dellen

Telephone: (612) 335-1949

E-mail: alan.vandellen@stinson.com

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CLOSING AGENT:Stewart Title of Colorado, Inc.

55 Madison Street, Suite 400

Denver, CO 80206

Attn:  Carma Weymouth

Telephone: (303) 780-4015

E-mail: cweymouth@stewart.com

Such notices shall be deemed received (a) as of the date of delivery, if delivered by hand by 4:00 p.m. Central on a business day, (b) as of the next business day, if tendered to an overnight express delivery service by the applicable deadline for overnight service, or (c) as of the date of email transmission, if properly transmitted by email prior to 4:00 p.m. Central on a business day.  If a notice is hand delivered or transmitted by email after 4:00 p.m. Central on a business day, then any such notice shall be deemed received as of the next business day.

Section 16.Condition of Property.

16.1. No Warranties.  THE ENTIRE AGREEMENT BETWEEN THE SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT.  THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH AND STIPULATED IN THIS AGREEMENT.  WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS (PATENT AND LATENT) AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE, MEMBER, OFFICER OR PRINCIPAL OF SELLER OR ANY OTHER PARTY (EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT) AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY OR THE AREAS SURROUNDING THE PROPERTY, OR AS TO ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO THE INCOME OR EXPENSE IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH.  BUYER ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE EXPRESSLY ELSEWHERE PROVIDED IN THIS AGREEMENT, NEITHER SELLER, NOR ANY AGENT, MEMBER, OFFICER, EMPLOYEE OR PRINCIPAL OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED.  THIS PARAGRAPH SHALL SURVIVE CLOSING AND DELIVERY OF THE DEED, AND SHALL BE DEEMED INCORPORATED BY REFERENCE AND MADE A PART OF ALL DOCUMENTS DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE SALE OF THE PROPERTY.

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16.2. Change of Conditions.  Buyer shall accept the Property at Closing in the same condition as the Property is as of the Contract Date, as such condition shall have changed by reason of wear and tear and natural deterioration and, subject to Sections 14 and 15 hereof, condemnation or damage by fire or other casualty.  Without limiting the generality of the foregoing, Buyer specifically acknowledges that the fact that any portion of the Property may not be in working order or condition at the Closing Date by reason of wear and tear and natural deterioration or damage by fire or other casualty, or by reason of its present condition, shall not relieve Buyer of its obligation to complete closing under this Agreement and pay the full Consideration.  Seller has no obligation to make any repairs or replacements required by reason of wear and tear and natural deterioration or condemnation or fire or other casualty, but may, at its option and its cost (including the use of insurance proceeds as herein provided), make any such repairs and replacements prior to the Closing Date.

16.3. Condition of Delivery.  Seller has no obligation to deliver the Property in a "broom clean" condition, and at Closing Seller may leave in the Property all items of personal property and equipment, partitions and debris as are now presently therein and as would accumulate in the normal course of operating and maintaining the Property.

16.4. Release.  WITHOUT LIMITING THE PROVISIONS OF SECTION 16.1 ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER, FOR ITSELF AND ITS AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS, HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, MEMBERS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS, AGENTS AND AFFILIATES FROM ANY AND ALL RIGHTS, CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND DISBURSEMENTS WHETHER SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS"), WHICH BUYER HAS OR MAY HAVE IN THE FUTURE, ARISING FROM OR RELATING TO (i) ANY DEFECTS (PATENT OR LATENT), ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION, ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION ARISING UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1), WHETHER ARISING BASED ON EVENTS THAT OCCURRED BEFORE, DURING, OR AFTER SELLER’S PERIOD OF OWNERSHIP OF THE PROPERTY AND WHETHER BASED ON THEORIES OF INDEMNIFICATION, CONTRIBUTION OR OTHERWISE.  THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS UNDER THE ENVIRONMENTAL LAWS (AS DEFINED IN SECTION 1) OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT.  BUYER ACKNOWLEDGES THAT BUYER HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF BUYER'S SELECTION AND BUYER IS GRANTING THIS RELEASE OF ITS OWN VOLITION AND AFTER CONSULTATION WITH BUYER'S COUNSEL.  THE RELEASE SET FORTH HEREIN DOES NOT APPLY TO (i) THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, (ii) ANY INDEMNITY OR WARRANTY EXPRESSLY MADE BY SELLER IN ANY DOCUMENT DELIVERED BY SELLER AT CLOSING, INCLUDING WITHOUT LIMITATION ANY WARRANTY MADE AS TO THE CONDITION OF TITLE IN THE DEED, (iii) ANY FRAUD,

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INTENTIONAL MISREPRESENTATION OR INTENTIONAL CONCEALMENT OF SELLER OR (iv) ANY THIRD PARTY LIABILITY CLAIM.  BUYER ACKNOWLEDGES THAT BUYER HAS CAREFULLY REVIEWED THIS SECTION 16.4 AND DISCUSSED ITS IMPORT WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL PART OF THIS AGREEMENT.

16.5. Effect of Disclaimers.  Buyer acknowledges and agrees that the Consideration has been negotiated to take into account that the Property is being sold subject to the provisions of this Section 16 and that Seller would have charged a higher purchase price if the provisions in this Section 16 were not agreed upon by Buyer.

Section 17.Miscellaneous.

17.1. Governing Law; Headings; Rules of Construction.  This Agreement shall be governed by and construed in accordance with the internal laws of the State in which the Land is located, without reference to the conflicts of laws or choice of law provisions thereof.  The titles of sections and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein.  All references herein to the singular shall include the plural, and vice versa.  The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel, and thus, this Agreement shall not be construed against the maker thereof.  The parties each consent to the sole and exclusive jurisdiction and venue of the state and federal courts of North Dakota and irrevocably waive any and all objections they may have to such jurisdiction and venue for any reason whatsoever.

17.2. Assignment.  Neither Buyer nor Seller shall assign any of their rights hereunder without the prior written consent of the other.  Notwithstanding anything herein to the contrary, upon advance written notice to Seller and the Closing Agent, but without the prior written consent of the Seller, Buyer may assign all of its rights hereunder to one or more entities in which Buyer has a direct ownership interest of at least fifty-one percent (51%).  Buyer acknowledges and agrees that an assignment to such an entity under this Section 17.2 will not release Buyer from any liability or obligation under this Agreement, and that Buyer shall remain liable to Seller after such assignment as a principal and not as a surety or guarantor.

17.3. Brokers.  Buyer and Seller each warrant and represent to the other that such representing and warranting party has not employed or made any commitment to a broker or agent (including without limitation any real estate or securities broker, agent, dealer, or salesperson) in connection with the transaction contemplated hereby, except for Buyer’s Broker and Seller’s Broker.  Each party agrees to indemnify and hold the other harmless from any loss or cost suffered or incurred by it as a result of the indemnifying parties’ representation herein being untrue.  Seller shall be responsible for the payment of any resulting fee or expenses relating to the Seller’s Broker.  Buyer shall be responsible for the payment of any resulting fee or expenses relating to the Buyer’s Broker.

17.4. No Waiver.  Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of either party’s right to demand exact compliance with the terms hereof, except the Closing of this Agreement shall constitute waiver of all conditions to Closing except to the extent otherwise agreed in writing at Closing.

17.5. Entire Agreement.  This Agreement contains the entire agreement of the parties hereto with respect to the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein or incorporated herein by reference shall be of any force or effect.

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17.6. Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.7. Amendments.  No amendment to this Agreement shall be binding on any of the parties hereof unless such amendment is in writing and is executed by the party against whom enforcement of such amendment is sought.

17.8. Possession.  Possession of the Property shall be given by Seller to Buyer at Closing.

17.9. Date for Performance.  If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regular business day.

17.10. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

17.11. Time of the Essence.  Time shall be of the essence of this Agreement and each and every term and condition hereof.

17.12. Severability.  This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements of such parties.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall for any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.

17.13. Survival.  Except as otherwise expressly provided herein, neither this Agreement nor any provision contained herein shall be cancelled or merged with any deed or other instrument on, as of, at or by reason of the Closing, and the covenants and obligations of the parties shall survive the Closing.

17.14. Further Assurances.  After the Closing, Buyer and Seller shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) such instruments and take such other actions as may be reasonably necessary or advisable to carry out their respective obligations under this Agreement and under any exhibit, document, certificate, or other instrument delivered pursuant thereto.

17.15. Seller 1031 Exchange.  Buyer and Seller agree to cooperate with each other for the purpose of a possible tax deferred exchange pursuant to Section 1031 of the Code.  Neither party shall incur any additional liability or financial obligation as a consequence of the other party’s possible exchange, and the exchanging party agrees to indemnify and hold the other party harmless from any liability that may arise from the exchanging party’s participation therein.

17.16. Exhibits.  Attached hereto and forming an integral part of this Agreement are multiple exhibits, all of which are hereby incorporated into this Agreement as fully as if the contents thereof were set out in full herein at each point of reference thereto.

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17.17. Waiver of Jury Trial.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY THE OTHER PARTY AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT.  Each party hereby authorizes and empowers the other to file this Section and this Agreement with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial.

Section 18.Closing Agent Duties and Disputes.

18.1Other Duties of Closing Agent.  Closing Agent shall not be bound in any way by any other agreement or contract between Seller and Buyer, whether or not Closing Agent has knowledge thereof.  Closing Agent’s only duties and responsibilities with respect to the Earnest Money shall be to hold, in trust, the Earnest Money and other documents delivered to it as agent and to dispose of the Earnest Money and such documents in accordance with the terms of this Agreement.  Without limiting the generality of the foregoing, Closing Agent shall have no responsibility to protect the Earnest Money and shall not be responsible for any failure to demand, collect or enforce any obligation with respect to the Earnest Money or for any diminution in value of the Earnest Money from any cause, other than Closing Agent’s gross negligence or willful misconduct.  Closing Agent may, at the expense of Seller and Buyer, consult with counsel and accountants in connection with its duties under this Agreement.  Closing Agent shall not be liable to the parties hereto for any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel and accountants.  Closing Agent shall not be obligated to take any action hereunder that may, in its reasonable judgment, result in any liability to it unless Closing Agent shall have been furnished with reasonable indemnity satisfactory in amount, form and substance to Closing Agent.

18.2Disputes.  Closing Agent is acting as a stakeholder only with respect to the Earnest Money.  If, after the Inspection Date, there is any dispute as to whether Closing Agent is obligated to deliver the Earnest Money or as to whom the Earnest Money is to be delivered, Closing Agent shall not make any delivery, but shall hold the Earnest Money until receipt by Closing Agent of an authorization in writing, signed by all the parties having an interest in the dispute, directing the disposition of the Earnest Money, or, in the absence of authorization, Closing Agent shall hold the Earnest Money until the final determination of the rights of the parties in an appropriate proceeding.  Closing Agent shall have no responsibility to determine the authenticity or validity of any notice, instruction, instrument, document or other item delivered to it, and it shall be fully protected in acting in accordance with any written notice, direction or instruction given to it under this Agreement and believed by it to be authentic.  If written authorization is not given, or proceedings for a determination are not begun, within 30 days after the date scheduled for the closing of title and diligently continued, Closing Agent may, but is not required to, bring an appropriate action or proceeding for leave to deposit the Earnest Money with a court of the State of Colorado pending a determination.  Closing Agent shall be reimbursed for all costs and expenses of any action or proceeding, including, without limitation, attorneys’ fees and disbursements incurred in its capacity as Closing Agent, by the party determined not to be entitled to the Earnest Money.  Upon making delivery of the Earnest Money in the manner provided in this Agreement, Closing Agent shall have no further liability hereunder. 

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In no event shall Closing Agent be under any duty to institute, defend or participate in any proceeding that may arise between Seller and Buyer in connection with the Earnest Money.

18.3Reports.  Closing Agent shall be responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or returns required under any state or local laws) in connection with the closing of the transaction contemplated by this Agreement.  This provision shall survive the Closing.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and sealed by its duly authorized signatory, effective as of the day and year first above written.

[Signature pages to follow]

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SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: /s/ Michael A. Bosh_____________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

Date:  8-26-2016________________________

IRET – SH 1, LLC,  a North Dakota limited liability company

By: /s/ Michael A. Bosh______________

Print Name:  Michael A. Bosh

Print Title:  Vice President

Date: 8-26-2016___________________________

[Signature pages continue on following page]

S-1

SIGNATURE PAGE

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

BUYER:

EDGEWOODVISTA SENIOR LIVING, INC., a Delaware corporation

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President and CEO_________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: /s/ Jon E. Strinden________________

Print Name:  Jon E. Strinden___________

Print Title:  President_________________

Date: 8-24-2016_____________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: /s/ Philip Gisi____________________

Print Name:  Philip Gisi_______________

Print Title:  President

Date: 8-24-2016_____________________

[Signature pages continue on following page]

S-2

CONSENT OF CLOSING AGENT

TO

AGREEMENT FOR SALE AND PURCHASE OF PROPERTY

The undersigned Closing Agent hereby: (i) acknowledges receipt of the Earnest Money and a copy of the foregoing Agreement, (ii) agrees to act as Closing Agent under said Agreement, (iii) agrees to be the person responsible for reporting the transaction to the Internal Revenue Service under then-current Treasury Regulations, and (iv) be bound by said Agreement in the performance of its duties as Closing Agent.

STEWART TITLE GUARANTY COMPANY

By: /s/ Karyn K. Rieb

Karyn K. Rieb

[Print Name]

     Its: Authorized Agent

Title

S-3

Exhibit 1

Legal Description of Land

Legends at Heritage Place [677 Brianna Dr., Sartell, MN]

Lot One (1), Block One (1), Heritage Place Two, according to the recorded plat thereof, Stearns County, Minnesota.

Pinecone Townhome Villas

Lot One (1), Block Eight (8), Heritage Place, according to the recorded plat thereof, Stearns County, Minnesota.

Exhibit 1 – pg. 1

Exhibit 2

List of Due Diligence Documents

To the extent that such documents exist in Seller's possession or control:

1. A list of the Personal Property.

2. Copies of all real estate tax statements associated with the Property for the current year and for the preceding 3 years.

3. Most recent existing survey.

4. Most recent Property Condition Reports for the Property.

5. Most recent environmental reports for the Property.

6. Resident Contracts, or a sample of each form of Resident Contract and a schedule of all Resident Contracts subject to each such form identifying the Resident, all applicable fees, and the commencement and termination dates thereof.

7. Survey reports, statements of deficiency, plans of correction, waivers or other investigatory reports regarding corrective or remedial action from licensing agencies or other governmental agencies related to the Facilities (to the extent such items are received by Seller in the past year).

8. Seller Contracts.

9. Financial statements for the Facilities for the three most recently completed fiscal years and monthly financial statements for each month until Closing, to be provided with 30 days of the end of each month.

Exhibit 2 – pg. 1

Exhibit 3

List of Purchase Agreements

1. Agreement for Sale and Purchase of Property [Wyoming] by and between LSREF Golden Property 14 (WY), LLC and IRET Properties, a North Dakota Limited Partnership, as Seller, and LSREF Golden OPS 14 (WY), LLC, Edgewood Properties Management LLC, and Edgewood Properties, LLLP, as Buyer.

2. Agreement for Sale and Purchase of Property [Hermantown] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

3. Agreement for Sale and Purchase of Property [Edgewood Vista 1] by and between IRET Properties, a North Dakota Limited Partnership, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

4. Agreement for Sale and Purchase of Property  [Edgewood Vista 2] by and between IRET Properties, a North Dakota Limited Partnership and EVI Grand Cities, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

5.  Agreement for Sale and Purchase of Property  [Edgewood Vista 3] by and between IRET Properties, a North Dakota Limited Partnership, EVI Billings, LLC, EVI Sioux Falls, LLC, and IRET – Minot EV, LLC, as Seller, and EdgewoodVista Senior Living Inc., Edgewood Properties Management, LLC, and Edgewood Properties, LLLP, as Buyer. 

Exhibit 3 – pg. 1

Exhibit 10.4(b)

Form of General Assignment and Assumption Agreement

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into as of __________, 20__, between IRET PROPERTIES, a North Dakota limited partnership ("Assignor"), and ____________________________, a ________, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership (collectively, "Assignee").

WITNESSETH:

Terms not defined herein shall have the meanings ascribed thereto in the Agreement for Sale and Purchase of Property [Sartell]  dated effective as of August ___, 2016 (the "Agreement"), between Assignor and Assignee.  The Agreement is hereby incorporated by reference.

That Assignor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby conveys, grants, bargains, sells, transfers, sets over, assigns, releases, delivers and confirms to Assignee, all of Assignor's right, title and interest in and to:

1. Assignor’s interest in the leases and occupancy agreements identified on Exhibit "A" attached hereto (the "Leases"), together with Assignor’s interest in any guaranty of any of the Leases;

2. Assignor’s interest in all warranties, guarantees, plans, specifications, documents, instruments, licenses, permits, approvals, authorizations, certificates (including certificates of occupancy), and operating manuals associated with the construction and operation of the Property (as defined in the Agreement of Sale).

Assignee hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period on or after the date hereof (the "Assignee’s Obligations") and (ii) indemnifies, defends and holds harmless Assignor from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignee’s Obligations.

Assignor hereby (i) expressly assumes the obligation for the performance of all of the obligations of Assignor under the Leases and Service Agreements in respect of the period prior to the date hereof (the "Assignor’s Obligations") and (ii) indemnifies, defends and holds harmless Assignee from and against any and all claims, actions, demands, liabilities, suits, causes of action, damages, costs or expenses (including, without limitation, attorneys' fees and disbursements) relating to the Assignor’s Obligations. 

This General Assignment and Assumption Agreement shall inure to the benefit of all parties hereto and their respective heirs, successors and assigns.  The indemnification provisions in this General Assignment and Assumption Agreement shall supplement, not replace, any indemnification provisions contained within the Agreement.  This General Assignment and Assumption Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this General Assignment and Assumption Agreement as of the day and year first above written.

Exhibit 10.4(b) – pg. 1

ASSIGNOR:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

ASSIGNEE:

_________________________________, a ____________________

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES MANAGEMENT, LLC, a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability limited partnership

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(b) – pg. 2

Exhibit 10.4(c)

Form of Non-Foreign Certificate

CERTIFICATE OF NON-FOREIGN

STATUS BY ENTITY (NON-INDIVIDUAL) TRANSFEROR

1.Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person.

2.In order to inform _____________________________ (hereinafter referred to as the “Buyer”) that withholding of tax is not required upon disposition of a U.S. real property interest by the seller/transferor named below (hereinafter referred to as the “Seller”), the undersigned hereby certifies and declares by means of this certificate, the following on behalf of the Seller:

a. That the Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations).

b. That the Seller’s employer identification number is 91-1764859.

c. That the Seller’s office address is 1400 31st Avenue SW, Suite 60, Minot, North Dakota.

3.The Seller understands that this certificate may be disclosed to the Internal Revenue Service by the Buyer and that any false statement contained in this certificate may be punished by fine, imprisonment, or both.

4.The Seller understands that the Buyer is relying on this certificate in determining whether withholding is required and the Buyer may have liabilities if any statement in this certificate is false.  The Seller hereby indemnifies the Buyer, and agrees to hold the Buyer harmless, from any liability or cost which the Buyer may incur as a result of: (i) the Seller’s failure to pay any U.S. Federal income tax which the Seller is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein.

Under penalties of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief it is true, correct and complete.  I further declare that I have authority to sign this document on behalf of the Seller.

EXECUTED in Ward County, State of North Dakota, on ____________, 20__.

SELLER:

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Exhibit 10.4(c) – pg. 1

Print Title:  Executive Vice President

For federal income tax purposes, the Buyer should not record this certificate with the county recorder, nor should the certificate be filed with the IRS, but it should be kept with the Buyer’s tax records relating to the subject real estate transfer.  

Exhibit 10.4(c) – pg. 2

Exhibit 10.4(d)

Form of Bill of Sale

BILL OF SALE

This Bill of Sale is made and executed effective as of _________, 20__ (the “Closing Date”), by IRET PROPERTIES, a North Dakota limited partnership and IRET – SH 1, LLC, a North Dakota corporation (collectively, “Seller”), to ______________________________, a ___________________________, EDGEWOOD PROPERTIES MANAGEMENT LLC, a North Dakota limited liability company, and EDGEWOOD PROPERTIES, LLLP, a North Dakota limited liability partnership (collectively, “Buyer”).

RECITALS

A.Seller and Buyer have entered into an Agreement for Sale and Purchase of Property  [Sartell], dated effective as of August ___, 2016 (the “Agreement”), pursuant to which Seller has agreed to convey to Buyer one or more certain tracts of land more particularly described and defined as the “Land” in the Agreement (the “Land”), together with such other property interests as constitute the “Property” (as defined in the Agreement).

B.Seller desires to assign, to transfer, and to convey to Buyer, subject to the terms and conditions of this Bill of Sale and of the Agreement, the “Personal Property” (as hereinafter defined).

NOW THEREFORE, in consideration of the receipt of good and valuable consideration in hand paid by Buyer to Seller, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller does hereby grant, bargain, sell, assign, transfer, set over, convey, and deliver to Buyer, its legal representatives, its successors, and its assigns, effective as of the Closing Date, all of Seller’s right, title, and interest in and to all fixtures (other than tenant trade fixtures), equipment (excluding construction equipment and materials), apparatus, machinery, appliances, furnishings, and all other tangible personal property owned by Seller that is located on the Land and used in connection with the operation and ownership of the Land and “Improvements” (as defined in the Agreement), and all leasehold improvements located thereon (all such property not so expressly excluded being herein collectively referred to as the “Personal Property”).

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective on the date first above written.

[signature page to follow]

Exhibit 10.4(d) – pg. 1

IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP

By:  IRET, Inc., a North Dakota corporation, its General Partner

By: ________________________________

Print Name:  Michael A. Bosh

Print Title:  Executive Vice President

IRET – SH 1, LLC,  a North Dakota limited liability company

By: ________________________________

Print Name:  ________________________

Print Title:  _________________________

Exhibit 10.4(d) – pg. 2

EX-31.1

Exhibit 31.1

Certifications

I, Timothy P. Mihalick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust;

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 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 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.

Date: December 12, 2016

By:	/s/ Timothy P. Mihalick
	Timothy P. Mihalick, Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, Ted E. Holmes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust;

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 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 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.

Date: December 12, 2016

By:	/s/ Ted E. Holmes
	Ted E. Holmes, Executive Vice President and Chief
	Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Investors Real Estate Trust (the “Company”) on Form 10-Q for the quarter ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof, (the “Report”), I, Timothy P. Mihalick, Chief Executive Officer 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 to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ Timothy P. Mihalick

Timothy P. Mihalick

Chief Executive Officer

December 12, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification is furnished, and shall not be deemed filed, as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Investors Real Estate Trust (the “Company”) on Form 10-Q for the quarter ended October 31, 2016, as filed with the Securities and Exchange Commission on the date hereof, (the “Report”), I, Ted E. Holmes, Executive Vice President and Chief Financial Officer 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 to the best of my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

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

/s/ Ted E. Holmes

Ted E. Holmes

Executive Vice President and Chief Financial Officer

December 12, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification is furnished, and shall not be deemed filed, as provided by Rule 13a-14(b) promulgated under the Securities Act of 1934 and Item 601(b) (32) (ii) of Regulation S-K.

XML

Document and Entity Information - shares	6 Months Ended
	Oct. 31, 2016	Dec. 05, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	INVESTORS REAL ESTATE TRUST
Entity Central Index Key	0000798359
Current Fiscal Year End Date	--04-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		121,748,585
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Oct. 31, 2016	Apr. 30, 2016
Real estate investments
Property owned	$ 1,665,354	$ 1,681,471
Less accumulated depreciation	(321,790)	(312,889)
Total property owned	1,343,564	1,368,582
Development in progress	20,921	51,681
Unimproved land	19,069	20,939
Total real estate investments	1,383,554	1,441,202
Other assets
Assets held for sale and assets of discontinued operations	191,233	220,537
Cash and cash equivalents	68,729	66,698
Other investments		50
Receivable arising from straight-lining of rents, net of allowance of $299 and $333, respectively	7,660	7,179
Accounts receivable, net of allowance of $192 and $97, respectively	9,815	1,524
Real estate deposits	1,370
Prepaid and other assets	3,496	2,937
Intangible assets, net of accumulated amortization of $5,261 and $6,230, respectively	842	1,858
Tax, insurance, and other escrow	4,786	5,450
Property and equipment, net of accumulated depreciation of $1,051 and $1,058, respectively	928	1,011
Goodwill	1,645	1,680
Deferred charges and leasing costs, net of accumulated amortization of $3,603 and $3,719, respectively	5,261	4,896
TOTAL ASSETS	1,679,319	1,755,022
LIABILITIES
Liabilities held for sale and liabilities of discontinued operations	69,326	77,488
Accounts payable and accrued expenses	40,382	39,727
Revolving line of credit	47,500	17,500
Mortgages payable, net of unamortized loan costs of $4,222 and $4,931, respectively	779,568	812,393
Construction debt and other	82,742	82,130
TOTAL LIABILITIES	1,019,518	1,029,238
COMMITMENTS AND CONTINGENCIES (NOTE 6)
REDEEMABLE NONCONTROLLING INTERESTS - CONSOLIDATED REAL ESTATE ENTITIES	8,585	7,522
Investors Real Estate Trust shareholders' equity
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 121,701,433 shares issued and outstanding at October 31, 2016, and 121,091,249 shares issued and outstanding at April 30, 2016)	920,759	922,084
Accumulated distributions in excess of net income	(489,356)	(442,000)
Total Investors Real Estate Trust shareholders' equity	570,077	618,758
Noncontrolling interests – Operating Partnership (16,228,507 units at October 31, 2016 and 16,285,239 units at April 30, 2016)	71,994	78,484
Noncontrolling interests - consolidated real estate entities	9,145	21,020
Total equity	651,216	718,262
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	1,679,319	1,755,022
Series A Preferred Stock [Member]
Investors Real Estate Trust shareholders' equity
Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares)	27,317	27,317
Series B Preferred Stock [Member]
Investors Real Estate Trust shareholders' equity
Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares)	$ 111,357	$ 111,357

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($)	Oct. 31, 2016	Apr. 30, 2016
Other assets
Intangible assets, accumulated amortization	$ 5,261,000	$ 6,230,000
Property and equipment, accumulated depreciation	1,051,000	1,058,000
Deferred charges and leasing costs, accumulated amortization	3,603,000	3,719,000
LIABILITIES
Mortgages payable, loan costs	$ 4,222,000	$ 4,931,000
EQUITY
Common Shares of Beneficial Interest, no par value (in dollars per share)	$ 0	$ 0
Common Shares of Beneficial Interest, shares issued (in shares)	121,701,433	121,091,249
Common Shares of Beneficial Interest, shares outstanding (in shares)	121,701,433	121,091,249
Noncontrolling interests - Operating Partnership (in shares)	16,228,507	16,285,239
Receivable Arising from Straight-Lining of Rents [Member]
Other assets
Accounts receivable, allowance	$ 299,000	$ 333,000
Accounts Receivable [Member]
Other assets
Accounts receivable, allowance	$ 192,000	$ 97,000
Series A Preferred Stock [Member]
EQUITY
Preferred Shares of Beneficial Interest, par value (in dollars per share)	$ 0	$ 0
Preferred Shares of Beneficial Interest, shares issued (in shares)	1,150,000	1,150,000
Preferred Shares of Beneficial Interest, shares outstanding (in shares)	1,150,000	1,150,000
Preferred Shares of Beneficial Interest, aggregate liquidation preference	$ 28,750,000	$ 28,750,000
Series B Preferred Stock [Member]
EQUITY
Preferred Shares of Beneficial Interest, par value (in dollars per share)	$ 0	$ 0
Preferred Shares of Beneficial Interest, shares issued (in shares)	4,600,000	4,600,000
Preferred Shares of Beneficial Interest, shares outstanding (in shares)	4,600,000	4,600,000
Preferred Shares of Beneficial Interest, aggregate liquidation preference	$ 115,000,000	$ 115,000,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
REVENUE
Real estate rentals	$ 45,859	$ 41,868	$ 90,844	$ 82,618
Tenant reimbursement	4,750	4,478	9,376	8,773
TOTAL REVENUE	50,609	46,346	100,220	91,391
EXPENSES
Property operating expenses, excluding real estate taxes	15,814	15,052	31,871	28,540
Real estate taxes	5,759	4,899	11,336	9,715
Depreciation and amortization	13,531	12,405	27,798	23,622
Impairment of real estate investments		1,873	54,153	3,158
General and administrative expenses	2,702	2,933	5,308	5,387
Acquisition and investment related costs	4	391	47	398
Other expenses	816	813	1,668	1,230
TOTAL EXPENSES	38,626	38,366	132,181	72,050
Operating (loss) income	11,983	7,980	(31,961)	19,341
Interest expense	(10,626)	(8,741)	(20,990)	(16,555)
Loss on extinguishment of debt		(106)		(106)
Interest income	600	565	1,172	1,121
Other income	37	100	510	151
Income (loss) before (loss) gain on sale of real estate and other investments, and income from discontinued operations	1,994	(202)	(51,269)	3,952
(Loss) gain on sale of real estate and other investments	(103)		8,855	(175)
Income (loss) from continuing operations	1,891	(202)	(42,414)	3,777
Income from discontinued operations	10,399	16,879	14,110	17,627
NET INCOME (LOSS)	12,290	16,677	(28,304)	21,404
Net (income) loss attributable to noncontrolling interests – Operating Partnership	(1,174)	(1,527)	2,122	(1,713)
Net loss attributable to noncontrolling interests – consolidated real estate entities	484	1,516	16,139	1,515
Net income (loss) attributable to Investors Real Estate Trust	11,600	16,666	(10,043)	21,206
Dividends to preferred shareholders	(2,878)	(2,878)	(5,757)	(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	$ 8,722	$ 13,788	$ (15,800)	$ 15,449
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted		$ (0.01)	$ (0.23)
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted	$ 0.07	0.12	0.10	$ 0.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	0.07	0.11	(0.13)	0.12
DIVIDENDS PER COMMON SHARE	$ 0.13	$ 0.13	$ 0.26	$ 0.26

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited) - USD ($) shares in Thousands, $ in Thousands	Series A Preferred Stock [Member] ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME [Member]	Series A Preferred Stock [Member]	Series B Preferred Stock [Member] ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME [Member]	Series B Preferred Stock [Member]	PREFERRED SHARES [Member]	Common Shares and Limited Partnership Units [Member]	ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME [Member]	NONREDEEMABLE NONCONTROLLING INTERESTS [Member]	Total
Balance at Apr. 30, 2015					$ 138,674	$ 951,868	$ (438,432)	$ 88,844	$ 740,954
Balance (in shares) at Apr. 30, 2015					5,750	124,455
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to Investors Real Estate Trust and noncontrolling interests							21,206	287	21,493
Distributions - common shares and units							(32,525)	(3,626)	(36,151)
Distributions - preferred shares	$ (1,186)	$ (1,186)	$ (4,571)	$ (4,571)					(5,757)
Distribution reinvestment and share purchase plan						$ 5,619			5,619
Distribution reinvestment and share purchase plan (in shares)						821
Shares issued and share-based compensation						$ 482			482
Shares issued and share-based compensation (in shares)						220
Partnership units issued								400	400
Redemption of units for common shares						$ 855		(855)
Redemption of units for common shares (in shares)						154
Shares repurchased						$ (21,931)			(21,931)
Shares repurchased (in shares)						(2,852)
Other								(6,236)	(6,236)
Balance at Oct. 31, 2015					$ 138,674	$ 936,893	(455,508)	78,814	698,873
Balance (in shares) at Oct. 31, 2015					5,750	122,798
Balance at Apr. 30, 2016					$ 138,674	$ 922,084	(442,000)	99,504	718,262
Balance (in shares) at Apr. 30, 2016					5,750	121,091
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income attributable to Investors Real Estate Trust and noncontrolling interests							(10,043)	(18,116)	(28,159)
Distributions - common shares and units							(31,556)	(4,234)	(35,790)
Distributions - preferred shares	$ (1,186)	$ (1,186)	$ (4,571)	$ (4,571)					(5,757)
Shares issued and share-based compensation						$ 1,218			1,218
Shares issued and share-based compensation (in shares)						553
Redemption of units for common shares						$ 134		(134)
Redemption of units for common shares (in shares)						57
Contributions from nonredeemable noncontrolling interests - consolidated real estate entities								7,150	7,150
Distributions to nonredeemable noncontrolling interests - consolidated real estate entities								(155)	(155)
Acquisition of nonredeemable noncontrolling interests – consolidated real estate entities						$ (2,677)		(2,261)	(4,938)
Other								(615)	(615)
Balance at Oct. 31, 2016					$ 138,674	$ 920,759	$ (489,356)	$ 81,139	$ 651,216
Balance (in shares) at Oct. 31, 2016					5,750	121,701

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$ (28,304)	$ 21,404
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	28,548	28,594
Depreciation and amortization from discontinued operations	64	5,300
(Gain) loss on sale of real estate, land, other investments and discontinued operations	(15,358)	(23,733)
Gain on extinguishment of debt and discontinued operations	72	904
Share-based compensation expense	865	605
Impairment of real estate investments	54,153	3,598
Bad debt expense	371	162
Changes in other assets and liabilities:
Receivable arising from straight-lining of rents	(487)	512
Accounts receivable	(588)	1,230
Prepaid and other assets	(541)	379
Tax, insurance and other escrow	(200)	565
Deferred charges and leasing costs	(851)	(576)
Accounts payable, accrued expenses and other liabilities	(2,357)	(4,626)
Net cash provided by operating activities	35,388	34,318
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to notes receivable	(8,196)
Proceeds from real estate deposits		2,837
Payments for real estate deposits	(1,370)	(792)
Decrease in other investments	50
Decrease in lender holdbacks for improvements	1,925	3,258
Increase in lender holdbacks for improvements	(614)	(578)
Proceeds from sale of discontinued operations	43,896	364,559
Proceeds from sale of real estate and other investments	13,875	6,783
Insurance proceeds received	481	432
Payments for acquisitions of real estate assets		(71,381)
Payments for development and re-development of real estate assets	(10,897)	(79,298)
Payments for improvements of real estate assets	(23,641)	(13,510)
Payments for improvements of real estate assets from discontinued operations		(4,993)
Net cash provided by investing activities	15,509	207,317
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable	1,113	51,070
Principal payments on mortgages payable	(53,208)	(205,833)
Proceeds from revolving lines of credit	30,000	43,000
Principal payments on revolving lines of credit		(106,855)
Proceeds from construction debt	11,174	46,775
Proceeds from sale of common shares under distribution reinvestment and share purchase program		1,493
Proceeds from noncontrolling partner - consolidated real estate entities	8,696	826
Payments for acquisition of noncontrolling interests - consolidated real estate entities	(4,938)
Repurchase of common shares		(21,931)
Distributions paid to common shareholders	(31,556)	(28,528)
Distributions paid to preferred shareholders	(5,757)	(5,757)
Distributions paid to noncontrolling interests - Unitholders of the Operating Partnership	(4,234)	(3,496)
Distributions paid to noncontrolling interests - consolidated real estate entities	(155)	(6,236)
Net cash (used) provided by financing activities	(48,866)	(235,472)
NET DECREASE IN CASH AND CASH EQUIVALENTS	2,031	6,163
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	66,698	48,970
CASH AND CASH EQUIVALENTS AT END OF YEAR	68,729	55,133
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distribution reinvestment plan - shares issued		3,997
Operating partnership distribution reinvestment plan - shares issued		130
Operating partnership units converted to shares	134	855
Real estate assets acquired through the issuance of operating partnership units		400
Increase to accounts payable included within real estate investments	3,188	1,241
Construction debt reclassified to mortgages payable	10,549	41,649
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized of $298 and $3,367, respectively	$ 17,457	$ 16,846

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for interest	$ 298	$ 3,367

XML

ORGANIZATION

6 Months Ended

Oct. 31, 2016

ORGANIZATION [Abstract]

ORGANIZATION

NOTE 1 • ORGANIZATION

Investors Real Estate Trust (“IRET”, “we” or “us”) is a self-advised real estate investment trust engaged in acquiring, owning and leasing real estate. We have elected to be taxed as a Real Estate Investment Trust (“REIT”) under Sections 856-860 of the Internal Revenue Code of 1986, as amended. As a REIT, we are subject to a number of organizational and operational requirements, including a requirement to distribute 90% of ordinary taxable income to shareholders, and, generally, are not subject to federal income tax on net income, except for taxes on undistributed REIT taxable income and taxes on the income generated by our taxable REIT subsidiary (“TRS”). Our TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We have considered estimated future taxable income and have determined that there were no material income tax provisions or material net deferred income tax items for our TRS for the six months ended October 31, 2016 and 2015. Our properties are located mainly in the states of North Dakota and Minnesota, but also in the states of Idaho, Iowa, Kansas, Montana, Nebraska, South Dakota, Wisconsin and Wyoming. As of October 31, 2016, we held for investment 86 multifamily properties with 12,751 apartment units and 2.7 million net rentable square feet in 30 healthcare and 14 other properties. We held for sale 14 multifamily property, 27 healthcare properties, 2 retail properties and 1 parcel of land as of October 31, 2016. We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, a North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities.

All references to IRET, we or us refer to Investors Real Estate Trust and its consolidated subsidiaries.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Oct. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 • BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. Our fiscal year ends April 30th.

Our interest in the Operating Partnership was 88.2% of the limited partnership units of the Operating Partnership (“Units”) as of October 31, 2016 and 88.1% as of April 30, 2016. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their Units for cash any time following the first anniversary of the date they acquired such Units (“Exchange Right”). When a limited partner exercises the Exchange Right, we have the right, in our sole discretion, to acquire such Units by either making a cash payment or exchanging the Units for our common shares of beneficial interest (“Common Shares”), on a one-for-one basis. The Exchange Right is subject to certain conditions and limitations, including the limited partner may not exercise the Exchange Right more than two times during a calendar year and the limited partner may not exercise for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for less than all of the Units held by such limited partner. The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year, a greater number of redemptions during a calendar year or other limitations to their Exchange Right.

The condensed consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our other operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership and income and expenses.

UNAUDITED INTERIM FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, as filed with the SEC on June 29, 2016.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 does not apply to lease contracts accounted for under ASC 840, Leases.The ASU is effective for fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with variable interest entities, and (iv) provide a scope exception for certain entities. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-02 as of May 1, 2016, as more fully described in the Variable Interest Entity section below.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-03 as of May 1, 2016.

In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Under ASU 2015-05, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The ASU is effective for fiscal years beginning after December 15, 2015. Our adoption of the guidance in ASU 2015-05 did not have a material impact on our operating results or financial position.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, accrual of compensation cost, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS

We periodically evaluate our long-lived assets, including investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the six months ended October 31, 2016, we recognized impairments of $40.9 million, $5.8 million,  $4.7 million, and $2.8 million, respectively, on three multifamily properties and one parcel of unimproved land in Williston, North Dakota, due to deterioration of this energy-impacted market, which resulted in poor leasing activity and declining rental rates during the three months ended July 31, 2016, which should generally be a strong leasing period. These properties were written-down to estimated fair value based on an independent appraisal in the case of one property and management cash flow estimates and market data in the case of the remaining assets. The properties impaired for $40.9 million, $4.7 million, and $2.8 million are owned by joint venture entities in which we currently have an approximately 71.5%,  60% and 70% interest, respectively, but which are consolidated in our financial statements.

During the six months ended October 31, 2015, we incurred a loss of approximately $3.6 million due to impairment of one office property and one parcel of land and eight multifamily properties. We recognized impairment of approximately $440,000 on an office property in Eden Prairie, Minnesota, which was written-down to estimated fair value during the first quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. We recognized impairment of $1.3 million on a parcel of land in Grand Chute, Wisconsin based on its sale listing price and our intent to dispose of the property. We recognized impairment of $1.9 million on eight multifamily properties in St. Cloud, Minnesota which were written-down to estimated fair value during the second quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. The impairment loss of the Eden Prairie, Minnesota property for the first quarter of fiscal year 2016 is reported in discontinued operations. See Note 7 for additional information.

HELD FOR SALE

We classify properties as held for sale when they meet the U.S. GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset (disposal group), (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets (disposal groups), and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale. Liabilities classified as held for sale consist of liabilities to be included in the transaction and liabilities directly associated with assets that will be transferred in the transaction. Twenty-seven healthcare properties, fourteen multifamily properties, two commercial properties, and one parcel of land were classified as held for sale at October 31, 2016. Thirty-five healthcare properties, one multifamily property, one industrial property and three parcels of unimproved land were classified as held for sale at April 30, 2016.

COMPENSATING BALANCES AND OTHER INVESTMENTS; HOLDBACKS

We maintain compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability. At October 31, 2016, our compensating balances totaled $14.8 million and consisted of the following:

Financial Institution
First International Bank, Watford City, ND	$	7,758,000
Associated Bank, Green Bay, WI		3,000,000
The PrivateBank, Minneapolis, MN		2,000,000
Bremer Bank, Saint Paul, MN		1,285,000
Dacotah Bank, Minot, ND		250,000
Peoples State Bank, Velva, ND		225,000
American National Bank, Omaha, NE		200,000
Commerce Bank a Minnesota Banking Corporation		100,000
Total	$	14,818,000

We have a number of mortgage loans under which the lender retains a portion of the loan proceeds or requires a deposit for the payment of construction costs or tenant improvements. The decrease of $1.9 million in lender holdbacks for improvements reflected in the Condensed Consolidated Statements of Cash Flows for the six months ended October 31, 2016 is due primarily to the release of loan proceeds to us upon completion of construction and tenant improvement projects, while the increase of approximately $614,000 represents additional amounts retained by lenders for new projects.

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

Upon acquisition of real estate, we record the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill. We amortize identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease). In the six months ended October 31, 2016 and 2015, respectively, we added $0 and $1.3 million in new intangible assets and $0 and approximately $101,000 of new intangible liabilities. The weighted average lives of the intangible assets acquired in the six months ended October 31, 2016 and 2015 are 0 and .08 years, respectively. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Condensed Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Condensed Consolidated Statements of Operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value.

Our identified intangible assets and intangible liabilities atOctober 31, 2016 and April 30, 2016 were as follows:

	(in thousands)
	October 31, 2016		April 30, 2016
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	6,103	$	8,088
Accumulated amortization		(5,261)		(6,230)
Net carrying amount	$	842	$	1,858
Identified intangible liabilities (included in other liabilities):
Gross carrying amount	$	157	$	159
Accumulated amortization		(65)		(55)
Net carrying amount	$	92	$	104

The amortization of acquired below-market leases and acquired above-market leases reduced rental income by approximately $4,000 for the three months ended October 31, 2016 and 2015, and approximately $9,000 and $11,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	(11)
2019		(20)
2020		(16)
2021		(13)
2022		(6)

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was approximately $321,000 and $331,000 for the three months ended October 31, 2016 and 2015, respectively, and approximately $995,000 and $523,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	269
2019		170
2020		104
2021		78
2022		25

The excess of the cost of an acquired property over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Our goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The book value of goodwill as of October 31, 2016 and April 30, 2016 was $1.6 million and $1.7 million, respectively. The annual review at April 30, 2016 indicated no impairment to goodwill and there was no indication of impairment at October 31, 2016.  During the six months ended October 31, 2016, we classified as held for sale of one commercial property to which goodwill had been assigned, and as a result, approximately $17,000 of goodwill was derecognized. Approximately $35,000 and $17,000 of goodwill is included in assets held for sale at October 31, 2016 and April 30, 2016, respectively. During the six months ended October 31, 2015, we disposed of seven commercial properties to which goodwill had been assigned, and as a result, approximately $193,000 of goodwill was derecognized.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.  On the Condensed Consolidated Statements of Operations, we combined utilities, maintenance, insurance, property management expenses and other property expenses onto a single line called property operating expenses, excluding real estate taxes. We also combined depreciation/amortization related to real estate investments and amortization related to non-real estate investments onto a single line called depreciation and amortization. Additionally on the Condensed Consolidated Statements of Operations, we reclassed acquisition and project costs from other expenses to acquisition and investment related costs.

We report, in discontinued operations, the results of operations and the related gains or losses of properties that have either been disposed of or classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. As the result of discontinued operations, retroactive reclassifications that change prior period numbers have been made. See Note 7 for additional information. During the fourth quarter of fiscal year 2016, we classified as discontinued operations 34 senior housing properties, of which 8 were sold during the second quarter of fiscal year 2017 and 26 remained held for sale at October 31, 2016.

PROCEEDS FROM FINANCING LIABILITY

During fiscal year 2014, we sold a non-core assisted living property in exchange for $7.9 million in cash and a $29.0 million contract for deed. The buyer leased the property back to us, and also granted us an option to repurchase the property at a specified price at or prior to July 31, 2018. We accounted for the transaction as a financing liability due to our continuing involvement with the property and recorded the $7.9 million in sales proceeds within other liabilities on the Condensed Consolidated Balance Sheets.  The balance of the liability as of October 31, 2016 was $7.9 million.

VARIABLE INTEREST ENTITY

As discussed in the Recent Accounting Pronouncements section, effective May 1, 2016, we adopted the guidance in ASU 2015-02.  As a result, the Operating Partnership and each of our less than wholly-owned real estate partnerships have been deemed to have the characteristics of a variable interest entity (“VIE”).  However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the recognized amounts in our condensed consolidated balance sheets and statements of operations or amounts reported in our condensed consolidated statements of cash flows. We determined that an additional six consolidated partnerships, including the Operating Partnership, are VIEs under the new standard because the limited partners are not able to exercise substantive kick-out or participating rights. We are the VIEs primary beneficiary and the partnerships are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs, and have both the power to direct the activities of the VIEs that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

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EARNINGS PER SHARE

6 Months Ended

Oct. 31, 2016

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 3 • EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of Common Shares outstanding during the period. We have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Upon the exercise of Exchange Rights, and in our sole discretion, we may issue shares in exchange for Units on a one-for-one basis after a minimum holding period of one year. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and six months ended October 31, 2016 and 2015:

	(in thousands, except per share data)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
NUMERATOR
Income (loss) from continuing operations – Investors Real Estate Trust	$	2,426	$	1,474	$	(22,488)	$	5,341
Income from discontinued operations – Investors Real Estate Trust		9,174		15,192		12,445		15,865
Net income (loss) attributable to Investors Real Estate Trust		11,600		16,666		(10,043)		21,206
Dividends to preferred shareholders		(2,878)		(2,878)		(5,757)		(5,757)
Numerator for basic earnings per share – net income (loss) available to common shareholders		8,722		13,788		(15,800)		15,449
Noncontrolling interests – Operating Partnership		1,174		1,527		(2,122)		1,713
Numerator for diluted earnings (loss) per share	$	9,896	$	15,315	$	(17,922)	$	17,162
DENOMINATOR
Denominator for basic earnings per share weighted average shares		121,154		124,665		121,135		124,757
Effect of convertible operating partnership units		16,264		13,900		16,276		13,929
Denominator for diluted earnings per share		137,418		138,565		137,411		138,686
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	—	$	(.01)	$	(.23)	$	—
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.07		.12		.10		.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	.07	$	.11	$	(.13)	$	.12

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EQUITY

6 Months Ended

Oct. 31, 2016

EQUITY [Abstract]

EQUITY

NOTE 4 • EQUITY

Equity Awards. During the second quarter of fiscal year 2017, we issued approximately 120,792 Common Shares, with a total grant-date value of approximately $502,000, under our 2015 Incentive Award Plan, for executive officer share based compensation for future performance. During the first quarter of fiscal year 2017, we issued approximately 378,000 Common Shares, with a total grant-date value of approximately $1.4 million, under our 2015 Incentive Award Plan, for executive officer and trustee share based compensation for future performance. We also issued approximately 59,000 Common Shares, with a total grant-date value of approximately $352,000, under our 2008 Incentive Award Plan, for trustee share based compensation for fiscal year 2016 performance. During the first quarter of fiscal year 2016, we issued approximately 220,000 Common Shares, net of withholding, with a total grant-date value of approximately $1.6 million, under our 2008 Incentive Award Plan, for executive officer and trustee share based compensation for fiscal year 2015 performance. No shares were issued under an incentive award plan during the second quarter of fiscal year 2016.

DRIP. We have implemented a Distribution Reinvestment and Share Purchase Plan (“DRIP”), which provides our common shareholders and the unitholders of the Operating Partnership an opportunity to invest their cash distributions in Common Shares and to purchase additional Common Shares through voluntary cash contributions. A DRIP participant cannot purchase additional Common Shares in excess of $10,000 per month, unless waived by us. We did not issue any waivers during the three months ended October 31, 2016 and 2015.

As permitted under the DRIP, starting on October 1, 2015, we changed the source from which Common Shares will be purchased under the DRIP to open market transactions, which are not eligible for purchase price discounts. During the three months ended October 31, 2016, no shares were issued under the DRIP. During the three months ended October 31, 2015, approximately 55,000 Common Shares with a total value included in equity of $377,000, and an average price per share after applicable discounts of $6.87, were issued under the DRIP.  During the six months ended October 31, 2016, no shares were issued under the DRIP.  During the six months ended October 31, 2015, approximately 821,000 Common Shares with a total value included in equity of $5.6 million, and an average price per share after applicable discounts of $6.85 were issued under the DRIP.

Exchange Rights. Pursuant to the exercise of Exchange Rights, during the three months ended October 31, 2016 and 2015, respectively, approximately 56,700 and 75,500 Common Shares were issued in exchange for Units, with a total value of approximately $134,000 and $279,000 included in equity.  During the six months ended October 31, 2016 and 2015, approximately 56,700 and 154,000 Common Shares were issued in exchange for Units, with a total value of approximately $134,000 and $855,000 included in equity.

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SEGMENT REPORTING

6 Months Ended

Oct. 31, 2016

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 5 • SEGMENT REPORTING

We report our results in two reportable segments, which are aggregations of similar properties: multifamily and healthcare, excluding our senior housing properties, which are classified as held for sale and discontinued operations at October 31, 2016.   

We measure the performance of our segments based on net operating income (“NOI”), which we define as total real estate revenues and gain on involuntary conversion less real estate expenses (which consist of utilities, maintenance, real estate taxes, insurance, property management expenses and other property expenses). During the first quarter of fiscal year 2017, we removed offsite costs associated with property management and casualty-related amounts from our assessment of segment performance as a result of our announced strategic shift to focus solely on our multifamily segment. These expenses were removed from the operating results reviewed by our chief operating decision maker to allow for the assessment of direct property costs in NOI, excluding allocated costs. We believe that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of core operations that is unaffected by depreciation, amortization, financing and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with US GAAP and should not be considered an alternative to net income, net income available for common shareholders or cash flow from operating activities as a measure of financial performance.

The revenues and NOI for these reportable segments are summarized as follows for the three and six month periods ended October 31, 2016 and 2015, along with reconciliations to the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.

	(in thousands)
Three Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	36,250	$	11,661	$	2,698	$	—	$	50,609
Real estate expenses		15,566		4,151		730		1,126		21,573
Net operating income (loss)	$	20,684	$	7,510	$	1,968	$	(1,126)	$	29,036
Depreciation and amortization										(13,531)
General and administrative expenses										(2,702)
Acquisition and investment related costs										(4)
Other expenses										(816)
Interest expense										(10,626)
Interest and other income										637
Income before loss on sale of real estate and other investments and income from discontinued operations										1,994
Loss on sale of real estate and other investments										(103)
Income from continuing operations										1,891
Income from discontinued operations										10,399
Net income									$	12,290

	(in thousands)
Six Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	71,290	$	23,202	$	5,728		—	$	100,220
Real estate expenses		30,445		8,343		1,456		2,963		43,207
Net operating income (loss)	$	40,845	$	14,859	$	4,272		(2,963)		57,013
Depreciation and amortization										(27,798)
Impairment of real estate investments										(54,153)
General and administrative expenses										(5,308)
Acquisition and investment related costs										(47)
Other expenses										(1,668)
Interest expense										(20,990)
Interest and other income										1,682
Loss before gain on sale of real estate and other investments and income from discontinued operations										(51,269)
Gain on sale of real estate and other investments										8,855
Loss from continuing operations										(42,414)
Income from discontinued operations										14,110
Net loss									$	(28,304)

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

	(in thousands)
Three Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	32,176	$	11,351	$	2,819	$	—	$	46,346
Real estate expenses		14,191		3,834		620		1,306		19,951
Net operating income (loss)	$	17,985	$	7,517	$	2,199	$	(1,306)		26,395
Depreciation and amortization										(12,405)
Impairment of real estate investments										(1,873)
General and administrative expenses										(2,933)
Acquisition and investment related costs										(391)
Other expenses										(813)
Interest expense										(8,741)
Loss on debt extinguishment										(106)
Interest and other income										665
Loss from continuing operations										(202)
Income from discontinued operations										16,879
Net income									$	16,677

	(in thousands)
Six Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	63,609	$	22,130	$	5,652	$	—	$	91,391
Real estate expenses		27,631		7,316		1,228		2,080		38,255
Net operating income (loss)	$	35,978	$	14,814	$	4,424	$	(2,080)		53,136
Depreciation and amortization										(23,622)
Impairment of real estate investments										(3,158)
General and administrative expenses										(5,387)
Acquisition and investment related costs										(398)
Other expenses										(1,230)
Interest expense										(16,555)
Loss on debt extinguishment										(106)
Interest and other income										1,272
Income before gain on sale of real estate and other investments										3,952
Loss on sale of real estate and other investments										(175)
Income from continuing operations										3,777
Income from discontinued operations										17,627
Net income									$	21,404

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of October 31, 2016, and April 30, 2016, along with reconciliations to the condensed consolidated financial statements:

	(in thousands)
As of October 31, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,226,198	$	342,242	$	96,914	$	1,665,354
Less accumulated depreciation		(212,922)		(88,669)		(20,199)		(321,790)
Total property owned	$	1,013,276	$	253,573	$	76,715	$	1,343,564
Assets held for sale and assets from discontinued operations								191,233
Cash and cash equivalents								68,729
Receivables and other assets								35,803
Development in progress								20,921
Unimproved land								19,069
Total Assets							$	1,679,319

	(in thousands)
As of April 30, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,243,909	$	337,920	$	99,642	$	1,681,471
Less accumulated depreciation		(209,156)		(83,558)		(20,175)		(312,889)
Total property owned	$	1,034,753	$	254,362	$	79,467	$	1,368,582
Assets held for sale and assets from discontinued operations								220,537
Cash and cash equivalents								66,698
Other investments								50
Receivables and other assets								26,535
Development in progress								51,681
Unimproved land								20,939
Total Assets							$	1,755,022

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Oct. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 6 • COMMITMENTS AND CONTINGENCIES

Litigation.  We are not a party to any legal proceedings which are expected to have a material effect on our liquidity, financial position, cash flows or results of operations. We are subject to a variety of legal actions for personal injury or property damage arising in the ordinary course of our business, most of which are covered by liability insurance. Various claims of resident discrimination are also periodically brought, most of which also are covered by insurance. While the resolution of these matters cannot be predicted with certainty, management believes that the final outcome of such legal proceedings and claims will not have a material effect on our liquidity, financial position, cash flows or results of operations.

Insurance.  We carry insurance coverage on our properties in amounts and types that we believe are customarily obtained by owners of similar properties and are sufficient to achieve our risk management objectives.

Purchase Options.  We have granted options to purchase certain of our properties to tenants under lease agreements. In general, the options grant the tenant the right to purchase the property at the greater of such property’s appraised value or an annual compounded increase of a specified percentage of our initial cost for the property. As of October 31, 2016, the total investment cost, plus improvements, for the seven properties subject to purchase options was $77.4 million, and the total gross rental revenue from these properties was $3.7 million for the six months ended October 31, 2016.

Environmental Matters.  Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around or under the property. While we currently have no knowledge of any material violation of environmental laws, ordinances or regulations at any of our properties, there can be no assurance that areas of contamination will not be identified at any of our properties, or that changes in environmental laws, regulations or cleanup requirements would not result in material costs to us.

Restrictions on Taxable Dispositions.  Approximately 49 of our properties, consisting of approximately 762,000 square feet of our combined commercial properties and 4,603 apartment units, are subject to restrictions on our ability to resell in taxable transactions. These restrictions are contained in agreements we entered into with some of the sellers or contributors of the properties, and are effective for varying periods. The real estate investment amount of these properties (net of accumulated depreciation) was $435.9 million at October 31, 2016. We do not believe that these restrictions materially affect the conduct of our business or decisions whether to dispose of these properties during the restriction periods because we generally hold properties for investment purposes, rather than for sale.  Historically, where we have deemed it to be in the Company’s and the shareholders’ best interests to dispose of restricted properties, we have done so through tax-deferred transactions under Section 1031 of the Internal Revenue Code.

Exchange Value of Units.  Whenever limited partners of the Operating Partnership exercise their Exchange Rights, we have the right, but not the obligation, to acquire such Units in exchange for either cash or our Common Shares on a one-for-one basis. If Units are exchanged for cash, the amount of cash per Unit is equal to the average of the daily market price of a Common Share for the ten consecutive trading days immediately preceding the date of valuation of the Unit.  As of October 31, 2016 and 2015, the aggregate exchange value of the then-outstanding Units of the Operating Partnership owned by limited partners was approximately $99.1 million and $112.6 million, respectively. All Units receive the same cash distributions as those paid on our Common Shares. 

Joint Venture Buy/Sell Options.  Several of our joint venture agreements contain buy/sell options in which each party under certain circumstances has the option to acquire the interest of the other party, but do not generally require that we buy our partners’ interests. However, from time to time, we have entered into joint venture agreements which contain options compelling us to acquire the interest of the other parties. We currently have one such joint venture, IRET-Minot Apartments, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire the partner’s interest for a price to be determined in accordance with the provisions of the joint venture agreement.  The joint venture partner’s interest is reflected as a redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets. See Note 11 for additional information.

Tenant Improvements. In entering into leases with commercial tenants, we may commit to fund improvements or build-outs of the rented space to suit tenant requirements. These tenant improvements are typically funded at the beginning of the lease term, and we are accordingly exposed to some risk of loss if a tenant defaults prior to the expiration of the lease term and the rental income that was expected to cover the cost of the tenant improvements is not received. As of October 31, 2016, we are committed to fund $6.0 million in tenant improvements within approximately the next 12 months.

Development Project.  As of October 31, 2016, we had a development project underway during the quarter, the costs for which have been capitalized, as follows:

			(in thousands)				(in fiscal years)
		Rentable					Anticipated
		Square Feet	Anticipated		Costs as of		Construction
Project Name and Location	PlannedSegment	or Number of Units	Total Cost		October 31, 2016(1)		Completion
Monticello Crossings - Monticello, MN	Multifamily	202 units		31,784		28,068	4Q 2017
Other	n/a	n/a		n/a		3,283	n/a
			$	31,784	$	31,351

(1) Amount for Monticello Crossings includes costs for to a portion of the development project that was placed into service during the quarter ended October 31, 2016.

This development project is subject to various contingencies, and no assurances can be given that it will be completed within the time frames or on the terms currently expected.

Construction interest capitalized for the three month periods ended October 31, 2016 and 2015, respectively, was approximately $145,000 and $1.1 million for development projects completed and in progress. Construction interest capitalized for the six month periods ended October 31, 2016 and 2015, respectively, was approximately $298,000 and $3.4 million for development projects completed and in progress.

Pending Disposition. We currently have signed sales agreements for the disposition of the following properties. These pending dispositions are subject to various closing conditions and contingencies, and no assurances can be given that the transactions will be completed on the terms currently proposed, or at all:

· 26 senior housing properties, 1 multifamily property and 1 parcel of unimproved land in various states for a total sale price of $236.0 million; and

· a retail property in Grand Forks, North Dakota, for a sale price of $4.0 million.

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DISCONTINUED OPERATIONS

6 Months Ended

Oct. 31, 2016

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

NOTE 7 • DISCONTINUED OPERATIONS

We report in discontinued operations the results of operations and any gain or loss on sale of a property or group of properties that has either been disposed of or is classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. During fiscal year 2016, we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations. Accordingly, 48 office properties, 17 retail properties and 1 healthcare property were classified as held for sale and subsequently sold during fiscal year 2016. Additionally, we determined that our strategic decision to exit senior housing, which was a subset of our healthcare segment, met the criteria for discontinued operations and we consequently classified 34 senior housing properties as held for sale and discontinued operations at April 30, 2016. Eight of those senior housing properties were sold during the second quarter of fiscal year 2017 and the remaining 26 senior housing properties continued to be classified as held for sale and discontinued operations at October 31, 2016.

The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and six months ended October 31, 2016 and 2015:

	(in thousands)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
REVENUE
Real estate rentals	$	4,992	$	9,703	$	10,002	$	28,143
Tenant reimbursement		112		1,486		226		7,751
TRS senior housing revenue		916		965		1,789		2,003
TOTAL REVENUE		6,020		12,154		12,017		37,897
EXPENSES
Property operating expenses, excluding real estate taxes		—		2,668		—		8,768
Real estate taxes		(112)		1,269		—		4,789
Depreciation and amortization		—		2,498		16		9,587
Impairment of real estate investments		—		—		—		440
TRS senior housing expenses		769		812		1,553		1,581
TOTAL EXPENSES		657		7,247		1,569		25,165
Operating income		5,363		4,907		10,448		12,732
Interest expense(1)		(1,395)		(5,021)		(2,769)		(12,168)
Gain/Loss on extinguishment of debt(1)		(72)		(7,120)		(72)		(7,120)
Other income		—		203		—		273
Income from discontinued operations before gain on sale		3,896		(7,031)		7,607		(6,283)
Gain on sale of discontinued operations		6,503		23,910		6,503		23,910
INCOME FROM DISCONTINUED OPERATIONS	$	10,399	$	16,879	$	14,110	$	17,627

(1) Interest expense for the three and six months ended October 31, 2015 includes $1.6 million and $3.1 million, respectively of default interest related to a $122.6 million non-recourse loan by one of our subsidiaries. In the third quarter of fiscal year 2016, ownership of the nine properties serving as collateral on the loan was transferred to the mortgage lender and the debt obligation and accrued interest was removed from our balance sheet.

The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations to assets and liabilities held for sale that are presented separately on the Condensed Consolidated Balance Sheets:

	(in thousands)
	October 31, 2016		April 30, 2016
Carrying amounts of major classes of assets included as part of discontinued operations
Property owned and intangible assets, net of accumulated depreciation and amortization	$	157,050	$	189,900
Receivable arising from straight-lining of rents		8,800		9,805
Accounts receivable		912		1,707
Prepaid and other assets		34		43
Tax, insurance and other escrow		781		670
Property and equipment		471		479
Goodwill		18		18
Total major classes of assets of the discontinued operations		168,066		202,622
Other assets included in the disposal group classified as held for sale		23,167		17,915
Total assets of the disposal group classified as held for sale on the balance sheet	$	191,233	$	220,537
Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable and accrued expenses	$	352	$	810
Mortgages payable		53,829		67,940
Other		7,900		7,900
Total major classes of liabilities of the discontinued operations		62,081		76,650
Other liabilities included in the disposal group classified as held for sale		7,245		838
Total liabilities of the disposal group classified as held for sale on the balance sheet	$	69,326	$	77,488

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ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS

6 Months Ended

Oct. 31, 2016

ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS [Abstract]

ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS

NOTE 8 • ACQUISITIONS, DEVELOPMENTS PLACED IN SERVICE AND DISPOSITIONS

PROPERTY ACQUISITIONS

We added no new real estate properties to our portfolio through property acquisitions during the six months ended October 31, 2016 compared to $71.8 million in the six months ended October 31, 2015. However, during the second quarter of fiscal year 2017, we purchased the remaining 41.41% minority interest in the joint venture entity that owns the Red 20 multifamily property for a purchase price totaling $4.9 million. We expensed approximately $153,000 of transaction costs related to the acquisitions in the six months ended October 31, 2015. Our acquisitions during the six months ended October 31, 2015 are detailed below.

Six Months Ended October 31, 2015

		(in thousands)
		Total		Form of Consideration				Investment Allocation
	Date	Acquisition										Intangible
Acquisitions	Acquired	Cost		Cash		Units(1)		Land		Building		Assets
Multifamily
74 unit - Gardens - Grand Forks, ND	2015-09-10	$	9,250	$	8,850	$	400	$	518	$	8,672	$	60
276 unit - GrandeVille at Cascade Lake - Rochester, MN	2015-10-29		56,000		56,000		—		5,003		50,363		634
			65,250		64,850		400		5,521		59,035		694
Healthcare
27,819 sq ft Lakeside Medical Plaza - Omaha, NE	2015-08-20		6,500		6,500		—		903		5,109		488
Total Property Acquisitions		$	71,750	$	71,350	$	400	$	6,424	$	64,144	$	1,182

(1) Value of Units of the Operating Partnership at the acquisition date.

Acquisitions in the six months ended October 31, 2016 and 2015 are immaterial to our real estate portfolio both individually and in the aggregate, and consequently no proforma information is presented. The results of operations from acquired properties are included in the Condensed Consolidated Statements of Operations as of their acquisition date. The revenue and net income of our acquisitions in the six months ended October 31, 2016 and 2015, respectively, (excluding development projects placed in service) are detailed below.

	(in thousands)
Six Months Ended October 31,	2016		2015
Total revenue	$	—	$	268
Net loss	$	—	$	(219)

DEVELOPMENT PROJECTS PLACED IN SERVICE

The Operating Partnership placed $72.3 million and $137.0 million of development projects in service during the six months ended October 31, 2016 and 2015, respectively, as detailed below.

Six Months Ended October 31, 2016

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service(1)	in Service	Land		Building		Cost
Multifamily
241 unit - 71 France - Edina, MN(2)	2016-05-01	$	4,721	$	67,555	$	72,276
Total Development Projects Placed in Service		$	4,721	$	67,555	$	72,276

(1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 6 for additional information on the Monticello Crossings project, which was partially placed in service during the three months ended October 31, 2016.

(2) Costs paid in prior fiscal years totaled $70.9 million. Additional costs incurred in fiscal year 2017 totaled $1.4 million, for a total project cost at October 31, 2016 of $72.3 million. The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements.

Six Months Ended October 31, 2015

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service	in Service	Land		Building		Cost
Multifamily
72 unit - Chateau II - Minot, ND (1)	2015-06-01	$	240	$	14,401	$	14,641
288 unit - Renaissance Heights - Williston, ND(2)	2015-07-27		3,080		59,440		62,520
			3,320		73,841		77,161
Healthcare
57,624 sq ft Edina 6565 France SMC III - Edina, MN(3)	2015-06-01		—		32,495		32,495
70,756 sq ft PrairieCare Medical - Brooklyn Park, MN(4)	2015-09-08		2,610		22,099		24,709
			2,610		54,594		57,204
Other
7,963 sq ft Minot Southgate Retail - Minot, ND(5)	2015-10-01		889		1,733		2,622
Total Development Projects Placed in Service		$	6,819	$	130,168	$	136,987

(1) Costs paid in prior fiscal years totaled $12.3 million. Additional costs paid in fiscal year 2016 totaled $2.3 million, for a total project cost at October 31, 2015 of $14.6 million.

(2) Costs paid in prior fiscal years totaled $57.7 million. Additional costs paid in fiscal year 2016 totaled $4.8 million, for a total project cost at October 31, 2015 of $62.5 million. The project is owned by a joint venture entity in which we currently have an approximately 71.5% interest. The joint venture is consolidated in our financial statements. An impairment charge of $36.7 million was recorded for this property in the first quarter of fiscal year 2017. See Note 2 for additional information.

(3) Costs paid in prior fiscal years totaled $20.8 million. Additional costs paid in fiscal year 2016 totaled $11.7 million, for a total project cost at October 31, 2015 of $32.5 million.

(4) Costs paid in prior fiscal years totaled $17.3 million. Additional costs paid in fiscal year 2016 totaled $7.4 million, for a total project cost at October 31, 2015 of $24.7 million.

(5) Costs paid in prior fiscal years totaled $2.1 million. Additional costs paid in fiscal year 2016 totaled approximately $500,000, for a total project cost at October 31, 2015 of $2.6 million.

PROPERTY DISPOSITIONS

During the second quarter of fiscal year 2017, we sold eight healthcare properties along with the adjacent unimproved land for a total sales price of $43.9 million. During the second quarter of fiscal year 2016, we sold 39 office properties, 1 healthcare property and 15 retail properties for a total sales price of $371.9 million. The following table details our dispositions during the six months ended October 31, 2016 and 2015:

Six Months Ended October 31, 2016

		(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Healthcare
189,244 sq ft Idaho Spring Creek Senior Housing Portfolio(1)	2016-10-31	$	43,900	$	37,397	$	6,503
Other
195,075 sq ft Stone Container - Fargo, ND	2016-07-25		13,400		4,418		8,982
Unimproved Land
Georgetown Square Unimproved Land - Grand Chute, WI	2016-05-06		250		274		(24)
Total Property Dispositions		$	57,550	$	42,089	$	15,461

(1) The properties included in this portfolio disposition are: Spring Creek American Falls, Spring Creek Boise, Spring Creek Eagle, Spring Creek Fruitland, Spring Creek Fruitland Unimproved, Spring Creek Meridian, Spring Creek Overland, Spring Creek Soda Springs and Spring Creek Ustick.

Six Months Ended October 31, 2015 

			(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Other
117,144 sq ft Thresher Square – Minneapolis, MN	2015-05-18	$	7,000	$	7,175	$	(175)
2,549,222 sq ft Office Sale Portfolio(1)	2015-08-03		250,000		231,537		18,463
420,216 sq ft Mendota Office Center Portfolio – Mendota Heights, MN(2)	2015-08-12		40,000		41,574		(1,574)
1,027,208 sq ft Retail Sale Portfolio(3)	2015-09-30		78,960		71,913		7,047
48,700 sq ft Eden Prairie 6101 Blue Circle Drive – Eden Prairie, MN	2015-10-19		2,900		2,928		(28)
Total Property Dispositions		$	378,860	$	355,127	$	23,733

(1) The properties included in this portfolio disposition are: 610 Business Center, 7800 West Brown Deer Road, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Crosstown Centre, Golden Hills Office Center, Granite Corporate Center, Great Plains, Highlands Ranch I, Highlands Ranch II, Interlachen Corporate Center, Intertech Building, Minnesota National Bank, Northpark Corporate Center, Omaha 10802 Farnam Dr, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900Concourse Drive, Spring Valley IV, Spring Valley V, Spring Valley X, Spring Valley XI, Superior Office Building, TCA Building, Three Paramount Plaza, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park and Westgate.

(2) The properties included in this portfolio disposition are: Mendota Office Center I, Mendota Office Center II, Mendota Office Center III,

Mendota Office Center IV and American Corporate Center.

(3) The properties included in this portfolio disposition are: Champlin South Pond, Chan West Village, Duluth 4615 Grand, Duluth Denfeld

Retail, Forest Lake Auto, Forest Lake Westlake Center, Grand Forks Medpark Mall, Jamestown Buffalo Mall, Jamestown Business Center,

Lakeville Strip Center, Monticello C Store & vacant land, Omaha Barnes & Noble, Pine City Evergreen Square, Rochester Maplewood

Square and St. Cloud Westgate.

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MORTGAGES PAYABLE AND LINE OF CREDIT

6 Months Ended

Oct. 31, 2016

MORTGAGES PAYABLE AND LINE OF CREDIT [Abstract]

MORTGAGES PAYABLE AND LINE OF CREDIT

NOTE 9 • MORTGAGES PAYABLE AND LINE OF CREDIT

Most of the properties we own serve as collateral for separate mortgage loans on single properties or groups of properties. The majority of these mortgages payable are non-recourse to us, other than for standard carve-out obligations such as fraud, waste, failure to insure, environmental conditions and failure to pay real estate taxes.Interest rates on mortgages payable range from 2.49% to 7.94%, and the mortgages have varying maturity dates from the current fiscal year through July 1, 2036. As of October 31, 2016, our management believes there are no material defaults or material compliance issues in regard to any mortgages payable.

Of the mortgages payable, including mortgages on properties held for sale, the balances of fixed rate mortgages totalled $617.7 million at October 31, 2016 and $689.3 million at April 30, 2016. The balances of variable rate mortgages totalled $226.9 million and $196.8 million as of October 31, 2016 and April 30, 2016, respectively. We do not utilize derivative financial instruments to mitigate our exposure to changes in market interest rates. Most of the fixed rate mortgages have substantial pre-payment penalties. As of October 31, 2016, the weighted average rate of interest on our mortgage debt was 4.55%, compared to 4.54% on April 30, 2016. The aggregate amount of required future principal payments on mortgages payable as of October 31, 2016, is as follows:

		(in thousands)
		Mortgages		Mortgages
		on Properties		on Properties
		Held for		Held for
Year Ended April 30,		Investment		Sale
2017 (remainder)	$	73,122	$	45,684
2018		64,747		819
2019		141,952		2,326
2020		94,259		668
2021		154,262		710
Thereafter		255,448		10,588
Total payments	$	783,790	$	60,795

In addition to the individual mortgage loans comprising our $844.6 million of mortgage indebtedness, we also have a revolving, multi-bank line of credit with First International Bank and Trust, Watford City, North Dakota, as lead bank, which had, as of October 31, 2016, lending commitments of $100.0 million. This line of credit is not included in our mortgage indebtedness total. As of October 31, 2016, the line of credit was secured by mortgages on 17 properties. Under the terms of the line of credit, properties may be added and removed from the collateral pool with the agreement of the lenders. Participants in this credit facility as of October 31, 2016 included, in addition to First International Bank, the following financial institutions: The Bank of North Dakota, First Western Bank and Trust, Dacotah Bank, Highland Bank, American State Bank & Trust Company, Town & Country Credit Union, WoodTrust Bank, United Community Bank and United Bankers’ Bank. As of October 31, 2016, the line of credit had an interest rate of 4.75% and a minimum outstanding principal balance requirement of $17.5 million. As of October 31, 2016 and April 30, 2016, we had borrowed $47.5 million and $17.5 million, respectively. The line of credit includes covenants and restrictions requiring us to achieve on a fiscal and calendar quarter basis a debt service coverage ratio on borrowing base collateral of 1.25x in the aggregate and 1.00x on individual assets in the collateral pool. We are also required to maintain minimum depository account(s) totaling $6.0 million with First International Bank, of which $1.5 million is to be held in a non-interest bearing account. As of October 31, 2016, we believe we were in compliance with the line of credit’s covenants.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Oct. 31, 2016

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10 • FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement and Disclosures defines and establishes a framework for measuring fair value.  The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels, as follows: 

Level 1:  Quoted prices in active markets for identical assets

Level 2:  Significant other observable inputs

Level 3:  Significant unobservable inputs

Fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis

We had no assets or liabilities recorded at fair value on a recurring basis at October 31, 2016 and April 30, 2016.

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets and liabilities measured at fair value on a nonrecurring basis at October 31, 2016. Non-financial assets measured at fair value on a nonrecurring basis at April 30, 2016 consisted of real estate held for sale that was written-down to estimated fair value during fiscal year 2016. See Note 2 for additional information on impairment losses recognized during fiscal years 2017 and 2016. The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:

	(in thousands)
	Total		Level 1		Level 2		Level 3
April 30, 2016
Real estate held for sale	$	6,650	$	—	$	—	$	6,650

As of April 30, 2016, we estimated fair value on two properties held for sale based upon receipt of individual market offers and our intent to dispose of the properties. 

Financial Assets and Liabilities Not Measured at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities. The fair values of our financial instruments approximate their carrying amount in the consolidated financial statements except for debt.

Cash and Cash Equivalents. The carrying amount approximates fair value because of the short maturity.

Other Investments. The carrying amount, or cost plus accrued interest, of the certificates of deposit approximates fair value.

Other Debt. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

Line of Credit.  The carrying amount approximates fair value because the variable rate debt re-prices frequently.

Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2).

The estimated fair values of our financial instruments as of October 31, 2016 and April 30, 2016, are as follows:

	(in thousands)
	October 31, 2016				April 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	68,729	$	68,729	$	66,698	$	66,698
FINANCIAL LIABILITIES
Other debt		82,650		82,650		82,026		82,026
Lines of credit		47,500		47,500		17,500		17,500
Mortgages payable		783,790		827,127		817,324		866,649
Mortgages payable related to assets held for sale		68,695		70,286		68,824		78,690

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REDEEMABLE NONCONTROLLING INTERESTS

6 Months Ended

Oct. 31, 2016

REDEEMABLE NONCONTROLLING INTERESTS [Abstract]

REDEEMABLE NONCONTROLLING INTERESTS

NOTE 11 • REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests on the Condensed Consolidated Balance Sheets represent the noncontrolling interest in joint ventures in which our unaffiliated partner, at its election, could require us to buy its interest at a purchase price to be determined by an appraisal conducted in accordance with the terms of the agreement, or at a negotiated price. Redeemable noncontrolling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to Common Shares on the Condensed Consolidated Balance Sheets. We currently have one joint venture, IRET-Minot Apartments, LLC, in which our joint venture partner can, for the four-year period from February 6, 2016 through February 5, 2020, compel us to acquire the partner’s interest for a price to be determined in accordance with the provisions of the joint venture agreement. IRET-Minot Apartments, LLC owns the Commons and Landing at Southgate properties in Minot, ND.

As of October 31, 2016, the estimated redemption value of the redeemable noncontrolling interests was $8.6 million. Below is a table reflecting the activity of the redeemable noncontrolling interests.

	(in thousands)
Balance at April 30, 2016	$	7,522
Contributions		1,209
Net income		(146)
Balance at October 31, 2016	$	8,585

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SHARE BASED COMPENSATION

6 Months Ended

Oct. 31, 2016

SHARE BASED COMPENSATION

SHARE BASED COMPENSATION

NOTE 12 • SHARE BASED COMPENSATION

Share based awards are provided to officers, non-officer employees and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, which allows for awards in the form of cash and unrestricted and restricted Common Shares, up to an aggregate of 4,250,000 shares, over the ten year period in which the plan will be in effect. Through October 31, 2016, awards under the 2015 Incentive Plan consisted of restricted and unrestricted Common Shares.

Prior to the approval of our 2015 Incentive Plan, share based awards were provided to officers, non-officer employees and trustees under the our 2008 Incentive Award Plan, which was approved by shareholders on September 16, 2008, which allowed for awards in the form of cash and unrestricted and restricted Common Shares, up to an aggregate of 2,000,000 shares, over the period in which the plan will be in effect. Through October 31, 2016, awards under the 2008 Incentive Award Plan consisted of cash and restricted and unrestricted Common Shares.

Long-Term Incentive Plan

Under the 2008 Incentive Award Plan, our officers and non-officer employees could earn share awards under the Long-Term Incentive Program (“LTIP”) adopted pursuant to the plan, which was a backward-looking program that measured performance over a one-year performance period beginning on the first day of each fiscal year. Such awards were payable to the extent deemed earned in shares, 50% of which vested on the last day of the performance period and 50% of which vested on the first anniversary of the end of the performance period. Such awards utilized the sole performance metric of the three-year average of the annual absolute total shareholder return (“TSR”).

Under the 2015 Incentive Plan, our officers and non-officer employees may earn share awards under a revised long-term incentive program, a forward-looking program that measures long-term performance over the stated performance period. Such awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year.

Fiscal Year 2017 LTIP Awards

Awards granted on June 22, 2016 consist of time-based restricted share awards and performance restricted share awards for 45,651 and 273,901 shares, respectively, that are classified as equity awards. The time-based restricted share awards vest as to one-third of the shares on each June 22, 2017, May 1, 2018 and May 1, 2019.  We recognize compensation expense associated with the time-based restricted share awards ratably over the requisite service periods.

The performance restricted share awards are earned based on our TSR as compared to the MSCI US REIT Index over a forward looking three-year period. The maximum number of shares that are eligible to be earned are the shares that were granted. Earned awards (if any) will fully vest as of the last day of the measurement period. These awards have market conditions in addition to service conditions that must be met for the awards to vest. We recognize compensation expense ratably based on the grant date fair value, as determined using the Monte Carlo valuation model, and regardless of whether the market conditions are achieved and the performance restricted share awards ultimately vest. Therefore, previously recorded compensation expense is not adjusted in the event that the market conditions are not achieved. We based the expected volatility on the historical volatility of our daily closing share price. We based the risk-free interest rate on the interest rates on U.S. treasury bonds with a maturity equal to the remaining performance period of the award. We based the expected term on the performance period of the performance restricted share award. The assumptions used to value the performance restricted share awards were an expected volatility of 23.8%, a risk-free interest rate of 0.86% and an expected life of 2.85 years. The share price at the grant date, June 22, 2016, was $6.24. 

Awards granted on August 8, 2016 consist of time-based restricted share awards and performance restricted share awards for 43,549 and 77,243 shares, respectively, that ware classified as equity awards. Of the time-based awards, 12,874 vest as to one-third of the shares on each August 8, 2017, May 1, 2018 and May 1, 2019.  The remaining 30,675 time-based awards vest as to one-third of the shares on each August 8, 2017, August 8, 2018 and August 8, 2019.

The assumptions used to value the performance restricted awards granted on August 8, 2016 were an expected volatility of 24.0%, a risk-free interest rate of 0.83% and an expected life of 2.72 years. We based the expected volatility on the historical volatility of our daily closing price. The share price at the grant date, August 8, 2016, was $6.57.  

Trustee Awards

We award share-based compensation to our non-management trustees on an annual basis. Awards for 59,000 shares granted on June 22, 2016 consisted of time-based restricted share awards that vest on May 1, 2017. We recognize compensation expense associated with the time-based restricted share awards ratably over the requisite service periods.

Total Compensation Expense

Share-based compensation expense recognized in the consolidated financial statements for all outstanding share based awards was approximately $603,000 and $539,000 for the three months ended October 31, 2016 and 2015, respectively, and approximately $865,000 and $605,000 for the six months ended October 31, 2016 and 2015, respectively.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Oct. 31, 2016

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 13 • RELATED PARTY TRANSACTIONS

Investment Banking Services

We have an investment banking relationship with BMO Capital Markets Corp. (“BMO”). Mark O. Decker, Jr., our President and Chief Investment Officer since August 5, 2016, has been deemed a related party due to family members serving in various roles with BMO.

On March 28, 2016, we engaged BMO to act as our exclusive financial advisor regarding the sale of our senior housing portfolio. Under the terms of this engagement, BMO will be entitled to compensation based on a percentage of the aggregate value of the transaction(s). As previously announced, on August 26, 2016, IRET Properties and its various subsidiaries entered into six sales agreements regarding 26 senior housing properties and one multifamily property for approximately $236.0 million in cash. It is anticipated that such sales will close in calendar year 2017.

Also, on July 28, 2015, we engaged BMO to provide general financial and investment banking services, which included a right of first refusal to serve as lead financial advisor for large acquisition or disposition transactions for which we engage a financial advisor. The agreement may be terminated by either party for any reason, and remains currently in effect. 

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SUBSEQUENT EVENTS

6 Months Ended

Oct. 31, 2016

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 14 • SUBSEQUENT EVENTS

Common and Preferred Share Distributions. On December 7, 2016, our Board of Trustees declared the following distributions:

	Quarterly Amount
Class of shares/units	per Share or Unit		Record Date	Payment Date
Common shares and limited partnership units	$	0.1300	January 3, 2017	January 17, 2017
Preferred shares:
Series B	$	0.4968	December 23, 2016	January 2, 2017

Redemption of Preferred A.  On September 1, 2016, our Board of Trustees authorized the redemption of some or all of the 8.25% Series A Cumulative Redeemable Preferred Shares (“Preferred A Shares”) from time to time, but no later than by December 31, 2016. On November 1, 2016, we delivered notice to holders of the Preferred A Shares that we intend to redeem all 1,150,000 Preferred A Shares at a redemption price equal to $25.00 per share plus any accrued but unpaid distributions per share up to and including the redemption date of December 2, 2016. On December 2, 2016, we completed the redemption of the Preferred A Shares for an aggregate redemption price of $29.164 million, and such shares are no longer deemed outstanding as of such date.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Oct. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. Our fiscal year ends April 30th.

Our interest in the Operating Partnership was 88.2% of the limited partnership units of the Operating Partnership (“Units”) as of October 31, 2016 and 88.1% as of April 30, 2016. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their Units for cash any time following the first anniversary of the date they acquired such Units (“Exchange Right”). When a limited partner exercises the Exchange Right, we have the right, in our sole discretion, to acquire such Units by either making a cash payment or exchanging the Units for our common shares of beneficial interest (“Common Shares”), on a one-for-one basis. The Exchange Right is subject to certain conditions and limitations, including the limited partner may not exercise the Exchange Right more than two times during a calendar year and the limited partner may not exercise for less than 1,000 Units, or, if such limited partner holds less than 1,000 Units, for less than all of the Units held by such limited partner. The Operating Partnership and some limited partners have contractually agreed to a holding period of greater than one year, a greater number of redemptions during a calendar year or other limitations to their Exchange Right.

The condensed consolidated financial statements also reflect the ownership by the Operating Partnership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our other operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership and income and expenses.

UNAUDITED INTERIM FINANCIAL STATEMENTS

Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the interim periods have been included.

The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2016, as filed with the SEC on June 29, 2016.

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 does not apply to lease contracts accounted for under ASC 840, Leases.The ASU is effective for fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with variable interest entities, and (iv) provide a scope exception for certain entities. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-02 as of May 1, 2016, as more fully described in the Variable Interest Entity section below.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability to which they relate, consistent with debt discounts, as opposed to being presented as assets. The ASU is effective for fiscal years beginning after December 15, 2015. We adopted the guidance in ASU 2015-03 as of May 1, 2016.

In April 2015, the FASB issued ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Under ASU 2015-05, if a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The ASU is effective for fiscal years beginning after December 15, 2015. Our adoption of the guidance in ASU 2015-05 did not have a material impact on our operating results or financial position.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We do not expect adoption of this update to have a material impact on our operating results or financial position.

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 amends existing accounting standards for lease accounting, including by requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, accrual of compensation cost, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice. The cash flow issues include debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The ASU is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact the new standard may have on our consolidated financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS

IMPAIRMENT OF LONG-LIVED ASSETS

We periodically evaluate our long-lived assets, including investments in real estate, for impairment indicators. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

During the six months ended October 31, 2016, we recognized impairments of $40.9 million, $5.8 million,  $4.7 million, and $2.8 million, respectively, on three multifamily properties and one parcel of unimproved land in Williston, North Dakota, due to deterioration of this energy-impacted market, which resulted in poor leasing activity and declining rental rates during the three months ended July 31, 2016, which should generally be a strong leasing period. These properties were written-down to estimated fair value based on an independent appraisal in the case of one property and management cash flow estimates and market data in the case of the remaining assets. The properties impaired for $40.9 million, $4.7 million, and $2.8 million are owned by joint venture entities in which we currently have an approximately 71.5%,  60% and 70% interest, respectively, but which are consolidated in our financial statements.

During the six months ended October 31, 2015, we incurred a loss of approximately $3.6 million due to impairment of one office property and one parcel of land and eight multifamily properties. We recognized impairment of approximately $440,000 on an office property in Eden Prairie, Minnesota, which was written-down to estimated fair value during the first quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. We recognized impairment of $1.3 million on a parcel of land in Grand Chute, Wisconsin based on its sale listing price and our intent to dispose of the property. We recognized impairment of $1.9 million on eight multifamily properties in St. Cloud, Minnesota which were written-down to estimated fair value during the second quarter of fiscal year 2016 based on receipt of a market offer to purchase and our intent to dispose of the property. The impairment loss of the Eden Prairie, Minnesota property for the first quarter of fiscal year 2016 is reported in discontinued operations. See Note 7 for additional information.

HELD FOR SALE

HELD FOR SALE

We classify properties as held for sale when they meet the U.S. GAAP criteria, which include: (a) management commits to and initiates a plan to sell the asset (disposal group), (b) the sale is probable and expected to be completed within one year under terms that are usual and customary for sales of such assets (disposal groups), and (c) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal costs. Depreciation is not recorded on assets classified as held for sale. Liabilities classified as held for sale consist of liabilities to be included in the transaction and liabilities directly associated with assets that will be transferred in the transaction. Twenty-seven healthcare properties, fourteen multifamily properties, two commercial properties, and one parcel of land were classified as held for sale at October 31, 2016. Thirty-five healthcare properties, one multifamily property, one industrial property and three parcels of unimproved land were classified as held for sale at April 30, 2016.

COMPENSATING BALANCES AND OTHER INVESTMENTS; HOLDBACKS

COMPENSATING BALANCES AND OTHER INVESTMENTS; HOLDBACKS

We maintain compensating balances, not restricted as to withdrawal, with several financial institutions in connection with financing received from those institutions and/or to ensure future credit availability. At October 31, 2016, our compensating balances totaled $14.8 million and consisted of the following:

Financial Institution
First International Bank, Watford City, ND	$	7,758,000
Associated Bank, Green Bay, WI		3,000,000
The PrivateBank, Minneapolis, MN		2,000,000
Bremer Bank, Saint Paul, MN		1,285,000
Dacotah Bank, Minot, ND		250,000
Peoples State Bank, Velva, ND		225,000
American National Bank, Omaha, NE		200,000
Commerce Bank a Minnesota Banking Corporation		100,000
Total	$	14,818,000

We have a number of mortgage loans under which the lender retains a portion of the loan proceeds or requires a deposit for the payment of construction costs or tenant improvements. The decrease of $1.9 million in lender holdbacks for improvements reflected in the Condensed Consolidated Statements of Cash Flows for the six months ended October 31, 2016 is due primarily to the release of loan proceeds to us upon completion of construction and tenant improvement projects, while the increase of approximately $614,000 represents additional amounts retained by lenders for new projects.

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES AND GOODWILL

Upon acquisition of real estate, we record the intangible assets and liabilities acquired (for example, if the leases in place for the real estate property acquired carry rents above the market rent, the difference is classified as an intangible asset) at their estimated fair value separate and apart from goodwill. We amortize identified intangible assets and liabilities that are determined to have finite lives based on the period over which the assets and liabilities are expected to affect, directly or indirectly, the future cash flows of the real estate property acquired (generally the life of the lease). In the six months ended October 31, 2016 and 2015, respectively, we added $0 and $1.3 million in new intangible assets and $0 and approximately $101,000 of new intangible liabilities. The weighted average lives of the intangible assets acquired in the six months ended October 31, 2016 and 2015 are 0 and .08 years, respectively. Amortization of intangibles related to above or below-market leases is recorded in real estate rentals in the Condensed Consolidated Statements of Operations. Amortization of other intangibles is recorded in depreciation/amortization related to real estate investments in the Condensed Consolidated Statements of Operations. Intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its estimated fair value.

Our identified intangible assets and intangible liabilities atOctober 31, 2016 and April 30, 2016 were as follows:

	(in thousands)
	October 31, 2016		April 30, 2016
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	6,103	$	8,088
Accumulated amortization		(5,261)		(6,230)
Net carrying amount	$	842	$	1,858
Identified intangible liabilities (included in other liabilities):
Gross carrying amount	$	157	$	159
Accumulated amortization		(65)		(55)
Net carrying amount	$	92	$	104

The amortization of acquired below-market leases and acquired above-market leases reduced rental income by approximately $4,000 for the three months ended October 31, 2016 and 2015, and approximately $9,000 and $11,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	(11)
2019		(20)
2020		(16)
2021		(13)
2022		(6)

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was approximately $321,000 and $331,000 for the three months ended October 31, 2016 and 2015, respectively, and approximately $995,000 and $523,000 for the six months ended October 31, 2016 and 2015, respectively. The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	269
2019		170
2020		104
2021		78
2022		25

The excess of the cost of an acquired property over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Our goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The book value of goodwill as of October 31, 2016 and April 30, 2016 was $1.6 million and $1.7 million, respectively. The annual review at April 30, 2016 indicated no impairment to goodwill and there was no indication of impairment at October 31, 2016.  During the six months ended October 31, 2016, we classified as held for sale of one commercial property to which goodwill had been assigned, and as a result, approximately $17,000 of goodwill was derecognized. Approximately $35,000 and $17,000 of goodwill is included in assets held for sale at October 31, 2016 and April 30, 2016, respectively. During the six months ended October 31, 2015, we disposed of seven commercial properties to which goodwill had been assigned, and as a result, approximately $193,000 of goodwill was derecognized.

USE OF ESTIMATES

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

RECLASSIFICATIONS

Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.  On the Condensed Consolidated Statements of Operations, we combined utilities, maintenance, insurance, property management expenses and other property expenses onto a single line called property operating expenses, excluding real estate taxes. We also combined depreciation/amortization related to real estate investments and amortization related to non-real estate investments onto a single line called depreciation and amortization. Additionally on the Condensed Consolidated Statements of Operations, we reclassed acquisition and project costs from other expenses to acquisition and investment related costs.

We report, in discontinued operations, the results of operations and the related gains or losses of properties that have either been disposed of or classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. As the result of discontinued operations, retroactive reclassifications that change prior period numbers have been made. See Note 7 for additional information. During the fourth quarter of fiscal year 2016, we classified as discontinued operations 34 senior housing properties, of which 8 were sold during the second quarter of fiscal year 2017 and 26 remained held for sale at October 31, 2016.

PROCEEDS FROM FINANCING LIABILITY

PROCEEDS FROM FINANCING LIABILITY

During fiscal year 2014, we sold a non-core assisted living property in exchange for $7.9 million in cash and a $29.0 million contract for deed. The buyer leased the property back to us, and also granted us an option to repurchase the property at a specified price at or prior to July 31, 2018. We accounted for the transaction as a financing liability due to our continuing involvement with the property and recorded the $7.9 million in sales proceeds within other liabilities on the Condensed Consolidated Balance Sheets.  The balance of the liability as of October 31, 2016 was $7.9 million.

VARIABLE INTEREST ENTITY

VARIABLE INTEREST ENTITY

As discussed in the Recent Accounting Pronouncements section, effective May 1, 2016, we adopted the guidance in ASU 2015-02.  As a result, the Operating Partnership and each of our less than wholly-owned real estate partnerships have been deemed to have the characteristics of a variable interest entity (“VIE”).  However, we were not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, there has been no change to the recognized amounts in our condensed consolidated balance sheets and statements of operations or amounts reported in our condensed consolidated statements of cash flows. We determined that an additional six consolidated partnerships, including the Operating Partnership, are VIEs under the new standard because the limited partners are not able to exercise substantive kick-out or participating rights. We are the VIEs primary beneficiary and the partnerships are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs, and have both the power to direct the activities of the VIEs that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because the Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Oct. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Compensating Balances

At October 31, 2016, our compensating balances totaled $14.8 million and consisted of the following:

Financial Institution
First International Bank, Watford City, ND	$	7,758,000
Associated Bank, Green Bay, WI		3,000,000
The PrivateBank, Minneapolis, MN		2,000,000
Bremer Bank, Saint Paul, MN		1,285,000
Dacotah Bank, Minot, ND		250,000
Peoples State Bank, Velva, ND		225,000
American National Bank, Omaha, NE		200,000
Commerce Bank a Minnesota Banking Corporation		100,000
Total	$	14,818,000

Schedule Identified Intangible Assets and Intangible Liabilities

Our identified intangible assets and intangible liabilities atOctober 31, 2016 and April 30, 2016 were as follows:

	(in thousands)
	October 31, 2016		April 30, 2016
Identified intangible assets (included in intangible assets):
Gross carrying amount	$	6,103	$	8,088
Accumulated amortization		(5,261)		(6,230)
Net carrying amount	$	842	$	1,858
Identified intangible liabilities (included in other liabilities):
Gross carrying amount	$	157	$	159
Accumulated amortization		(65)		(55)
Net carrying amount	$	92	$	104

Estimated Annual Amortization of Acquired Below-Market Leases, Net Of Acquired Above-Market Leases

The estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	(11)
2019		(20)
2020		(16)
2021		(13)
2022		(6)

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

The estimated annual amortization of all other identified intangible assets for each of the five succeeding fiscal years is as follows:

Year Ended April 30,	(in thousands)
2018	$	269
2019		170
2020		104
2021		78
2022		25

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EARNINGS PER SHARE (Tables)

6 Months Ended

Oct. 31, 2016

EARNINGS PER SHARE [Abstract]

Reconciliation of Numerator and Denominator Used To Calculate Basic and Diluted Earnings per Share

	(in thousands, except per share data)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
NUMERATOR
Income (loss) from continuing operations – Investors Real Estate Trust	$	2,426	$	1,474	$	(22,488)	$	5,341
Income from discontinued operations – Investors Real Estate Trust		9,174		15,192		12,445		15,865
Net income (loss) attributable to Investors Real Estate Trust		11,600		16,666		(10,043)		21,206
Dividends to preferred shareholders		(2,878)		(2,878)		(5,757)		(5,757)
Numerator for basic earnings per share – net income (loss) available to common shareholders		8,722		13,788		(15,800)		15,449
Noncontrolling interests – Operating Partnership		1,174		1,527		(2,122)		1,713
Numerator for diluted earnings (loss) per share	$	9,896	$	15,315	$	(17,922)	$	17,162
DENOMINATOR
Denominator for basic earnings per share weighted average shares		121,154		124,665		121,135		124,757
Effect of convertible operating partnership units		16,264		13,900		16,276		13,929
Denominator for diluted earnings per share		137,418		138,565		137,411		138,686
(Loss) earnings per common share from continuing operations – Investors Real Estate Trust – basic and diluted	$	—	$	(.01)	$	(.23)	$	—
Earnings per common share from discontinued operations – Investors Real Estate Trust – basic and diluted		.07		.12		.10		.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$	.07	$	.11	$	(.13)	$	.12

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SEGMENT REPORTING (Tables)

6 Months Ended

Oct. 31, 2016

SEGMENT REPORTING [Abstract]

Revenues and Net Operating Income for Reportable Segments

	(in thousands)
Three Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	36,250	$	11,661	$	2,698	$	—	$	50,609
Real estate expenses		15,566		4,151		730		1,126		21,573
Net operating income (loss)	$	20,684	$	7,510	$	1,968	$	(1,126)	$	29,036
Depreciation and amortization										(13,531)
General and administrative expenses										(2,702)
Acquisition and investment related costs										(4)
Other expenses										(816)
Interest expense										(10,626)
Interest and other income										637
Income before loss on sale of real estate and other investments and income from discontinued operations										1,994
Loss on sale of real estate and other investments										(103)
Income from continuing operations										1,891
Income from discontinued operations										10,399
Net income									$	12,290

	(in thousands)
Six Months Ended October 31, 2016	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)		Total
Real estate revenue	$	71,290	$	23,202	$	5,728		—	$	100,220
Real estate expenses		30,445		8,343		1,456		2,963		43,207
Net operating income (loss)	$	40,845	$	14,859	$	4,272		(2,963)		57,013
Depreciation and amortization										(27,798)
Impairment of real estate investments										(54,153)
General and administrative expenses										(5,308)
Acquisition and investment related costs										(47)
Other expenses										(1,668)
Interest expense										(20,990)
Interest and other income										1,682
Loss before gain on sale of real estate and other investments and income from discontinued operations										(51,269)
Gain on sale of real estate and other investments										8,855
Loss from continuing operations										(42,414)
Income from discontinued operations										14,110
Net loss									$	(28,304)

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

	(in thousands)
Three Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	32,176	$	11,351	$	2,819	$	—	$	46,346
Real estate expenses		14,191		3,834		620		1,306		19,951
Net operating income (loss)	$	17,985	$	7,517	$	2,199	$	(1,306)		26,395
Depreciation and amortization										(12,405)
Impairment of real estate investments										(1,873)
General and administrative expenses										(2,933)
Acquisition and investment related costs										(391)
Other expenses										(813)
Interest expense										(8,741)
Loss on debt extinguishment										(106)
Interest and other income										665
Loss from continuing operations										(202)
Income from discontinued operations										16,879
Net income									$	16,677

	(in thousands)
Six Months Ended October 31, 2015	Multifamily		Healthcare		All Other		Amounts Not Allocated To Segments(1)			Total
Real estate revenue	$	63,609	$	22,130	$	5,652	$	—	$	91,391
Real estate expenses		27,631		7,316		1,228		2,080		38,255
Net operating income (loss)	$	35,978	$	14,814	$	4,424	$	(2,080)		53,136
Depreciation and amortization										(23,622)
Impairment of real estate investments										(3,158)
General and administrative expenses										(5,387)
Acquisition and investment related costs										(398)
Other expenses										(1,230)
Interest expense										(16,555)
Loss on debt extinguishment										(106)
Interest and other income										1,272
Income before gain on sale of real estate and other investments										3,952
Loss on sale of real estate and other investments										(175)
Income from continuing operations										3,777
Income from discontinued operations										17,627
Net income									$	21,404

(1) Consists of offsite costs associated with property management and casualty-related amounts, which are excluded in our assessment of segment performance.

Segment Assets and Accumulated Depreciation

Segment assets are summarized as follows as of October 31, 2016, and April 30, 2016, along with reconciliations to the condensed consolidated financial statements:

	(in thousands)
As of October 31, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,226,198	$	342,242	$	96,914	$	1,665,354
Less accumulated depreciation		(212,922)		(88,669)		(20,199)		(321,790)
Total property owned	$	1,013,276	$	253,573	$	76,715	$	1,343,564
Assets held for sale and assets from discontinued operations								191,233
Cash and cash equivalents								68,729
Receivables and other assets								35,803
Development in progress								20,921
Unimproved land								19,069
Total Assets							$	1,679,319

	(in thousands)
As of April 30, 2016	Multifamily		Healthcare		All Other		Total
Segment assets
Property owned	$	1,243,909	$	337,920	$	99,642	$	1,681,471
Less accumulated depreciation		(209,156)		(83,558)		(20,175)		(312,889)
Total property owned	$	1,034,753	$	254,362	$	79,467	$	1,368,582
Assets held for sale and assets from discontinued operations								220,537
Cash and cash equivalents								66,698
Other investments								50
Receivables and other assets								26,535
Development in progress								51,681
Unimproved land								20,939
Total Assets							$	1,755,022

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Oct. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

Development. Expansion and Renovation Projects

As of October 31, 2016, we had a development project underway during the quarter, the costs for which have been capitalized, as follows:

			(in thousands)				(in fiscal years)
		Rentable					Anticipated
		Square Feet	Anticipated		Costs as of		Construction
Project Name and Location	PlannedSegment	or Number of Units	Total Cost		October 31, 2016(1)		Completion
Monticello Crossings - Monticello, MN	Multifamily	202 units		31,784		28,068	4Q 2017
Other	n/a	n/a		n/a		3,283	n/a
			$	31,784	$	31,351

(1) Amount for Monticello Crossings includes costs for to a portion of the development project that was placed into service during the quarter ended October 31, 2016.

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DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Oct. 31, 2016

DISCONTINUED OPERATIONS [Abstract]

Effect on Net Income and Gains or Losses From Sale Of Properties Classified as Discontinued Operations

The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and six months ended October 31, 2016 and 2015:

	(in thousands)
	Three Months Ended				Six Months Ended
	October 31,				October 31,
	2016		2015		2016		2015
REVENUE
Real estate rentals	$	4,992	$	9,703	$	10,002	$	28,143
Tenant reimbursement		112		1,486		226		7,751
TRS senior housing revenue		916		965		1,789		2,003
TOTAL REVENUE		6,020		12,154		12,017		37,897
EXPENSES
Property operating expenses, excluding real estate taxes		—		2,668		—		8,768
Real estate taxes		(112)		1,269		—		4,789
Depreciation and amortization		—		2,498		16		9,587
Impairment of real estate investments		—		—		—		440
TRS senior housing expenses		769		812		1,553		1,581
TOTAL EXPENSES		657		7,247		1,569		25,165
Operating income		5,363		4,907		10,448		12,732
Interest expense(1)		(1,395)		(5,021)		(2,769)		(12,168)
Gain/Loss on extinguishment of debt(1)		(72)		(7,120)		(72)		(7,120)
Other income		—		203		—		273
Income from discontinued operations before gain on sale		3,896		(7,031)		7,607		(6,283)
Gain on sale of discontinued operations		6,503		23,910		6,503		23,910
INCOME FROM DISCONTINUED OPERATIONS	$	10,399	$	16,879	$	14,110	$	17,627

(1) Interest expense for the three and six months ended October 31, 2015 includes $1.6 million and $3.1 million, respectively of default interest related to a $122.6 million non-recourse loan by one of our subsidiaries. In the third quarter of fiscal year 2016, ownership of the nine properties serving as collateral on the loan was transferred to the mortgage lender and the debt obligation and accrued interest was removed from our balance sheet.

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ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS (Tables)

6 Months Ended

Oct. 31, 2016

ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS [Abstract]

Acquisitions

		(in thousands)
		Total		Form of Consideration				Investment Allocation
	Date	Acquisition										Intangible
Acquisitions	Acquired	Cost		Cash		Units(1)		Land		Building		Assets
Multifamily
74 unit - Gardens - Grand Forks, ND	2015-09-10	$	9,250	$	8,850	$	400	$	518	$	8,672	$	60
276 unit - GrandeVille at Cascade Lake - Rochester, MN	2015-10-29		56,000		56,000		—		5,003		50,363		634
			65,250		64,850		400		5,521		59,035		694
Healthcare
27,819 sq ft Lakeside Medical Plaza - Omaha, NE	2015-08-20		6,500		6,500		—		903		5,109		488
Total Property Acquisitions		$	71,750	$	71,350	$	400	$	6,424	$	64,144	$	1,182

(1) Value of Units of the Operating Partnership at the acquisition date.

Results of Operations from Acquired Properties

The revenue and net income of our acquisitions in the six months ended October 31, 2016 and 2015, respectively, (excluding development projects placed in service) are detailed below.

	(in thousands)
Six Months Ended October 31,	2016		2015
Total revenue	$	—	$	268
Net loss	$	—	$	(219)

Development Projects Placed in Service

The Operating Partnership placed $72.3 million and $137.0 million of development projects in service during the six months ended October 31, 2016 and 2015, respectively, as detailed below.

Six Months Ended October 31, 2016

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service(1)	in Service	Land		Building		Cost
Multifamily
241 unit - 71 France - Edina, MN(2)	2016-05-01	$	4,721	$	67,555	$	72,276
Total Development Projects Placed in Service		$	4,721	$	67,555	$	72,276

(1) Development projects that are placed in service in phases are excluded from this table until the entire project has been placed in service. See Note 6 for additional information on the Monticello Crossings project, which was partially placed in service during the three months ended October 31, 2016.

(2) Costs paid in prior fiscal years totaled $70.9 million. Additional costs incurred in fiscal year 2017 totaled $1.4 million, for a total project cost at October 31, 2016 of $72.3 million. The project is owned by a joint venture entity in which we currently have an approximately 52.6% interest. The joint venture is consolidated in our financial statements.

Six Months Ended October 31, 2015

		(in thousands)
	Date Placed					Development
Development Projects Placed in Service	in Service	Land		Building		Cost
Multifamily
72 unit - Chateau II - Minot, ND (1)	2015-06-01	$	240	$	14,401	$	14,641
288 unit - Renaissance Heights - Williston, ND(2)	2015-07-27		3,080		59,440		62,520
			3,320		73,841		77,161
Healthcare
57,624 sq ft Edina 6565 France SMC III - Edina, MN(3)	2015-06-01		—		32,495		32,495
70,756 sq ft PrairieCare Medical - Brooklyn Park, MN(4)	2015-09-08		2,610		22,099		24,709
			2,610		54,594		57,204
Other
7,963 sq ft Minot Southgate Retail - Minot, ND(5)	2015-10-01		889		1,733		2,622
Total Development Projects Placed in Service		$	6,819	$	130,168	$	136,987

(1) Costs paid in prior fiscal years totaled $12.3 million. Additional costs paid in fiscal year 2016 totaled $2.3 million, for a total project cost at October 31, 2015 of $14.6 million.

(2) Costs paid in prior fiscal years totaled $57.7 million. Additional costs paid in fiscal year 2016 totaled $4.8 million, for a total project cost at October 31, 2015 of $62.5 million. The project is owned by a joint venture entity in which we currently have an approximately 71.5% interest. The joint venture is consolidated in our financial statements. An impairment charge of $36.7 million was recorded for this property in the first quarter of fiscal year 2017. See Note 2 for additional information.

(3) Costs paid in prior fiscal years totaled $20.8 million. Additional costs paid in fiscal year 2016 totaled $11.7 million, for a total project cost at October 31, 2015 of $32.5 million.

(4) Costs paid in prior fiscal years totaled $17.3 million. Additional costs paid in fiscal year 2016 totaled $7.4 million, for a total project cost at October 31, 2015 of $24.7 million.

(5) Costs paid in prior fiscal years totaled $2.1 million. Additional costs paid in fiscal year 2016 totaled approximately $500,000, for a total project cost at October 31, 2015 of $2.6 million.

Schedule of Dispositions

Six Months Ended October 31, 2016

		(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Healthcare
189,244 sq ft Idaho Spring Creek Senior Housing Portfolio(1)	2016-10-31	$	43,900	$	37,397	$	6,503
Other
195,075 sq ft Stone Container - Fargo, ND	2016-07-25		13,400		4,418		8,982
Unimproved Land
Georgetown Square Unimproved Land - Grand Chute, WI	2016-05-06		250		274		(24)
Total Property Dispositions		$	57,550	$	42,089	$	15,461

(1) The properties included in this portfolio disposition are: Spring Creek American Falls, Spring Creek Boise, Spring Creek Eagle, Spring Creek Fruitland, Spring Creek Fruitland Unimproved, Spring Creek Meridian, Spring Creek Overland, Spring Creek Soda Springs and Spring Creek Ustick.

Six Months Ended October 31, 2015 

			(in thousands)
	Date			Book Value
Dispositions	Disposed	Sales Price		and Sales Cost		Gain/(Loss)
Other
117,144 sq ft Thresher Square – Minneapolis, MN	2015-05-18	$	7,000	$	7,175	$	(175)
2,549,222 sq ft Office Sale Portfolio(1)	2015-08-03		250,000		231,537		18,463
420,216 sq ft Mendota Office Center Portfolio – Mendota Heights, MN(2)	2015-08-12		40,000		41,574		(1,574)
1,027,208 sq ft Retail Sale Portfolio(3)	2015-09-30		78,960		71,913		7,047
48,700 sq ft Eden Prairie 6101 Blue Circle Drive – Eden Prairie, MN	2015-10-19		2,900		2,928		(28)
Total Property Dispositions		$	378,860	$	355,127	$	23,733

(1) The properties included in this portfolio disposition are: 610 Business Center, 7800 West Brown Deer Road, Ameritrade, Barry Pointe Office Park, Benton Business Park, Brenwood, Brook Valley I, Crosstown Centre, Golden Hills Office Center, Granite Corporate Center, Great Plains, Highlands Ranch I, Highlands Ranch II, Interlachen Corporate Center, Intertech Building, Minnesota National Bank, Northpark Corporate Center, Omaha 10802 Farnam Dr, Plaza VII, Plymouth 5095 Nathan Lane, Prairie Oak Business Center, Rapid City 900Concourse Drive, Spring Valley IV, Spring Valley V, Spring Valley X, Spring Valley XI, Superior Office Building, TCA Building, Three Paramount Plaza, UHC Office, US Bank Financial Center, Wells Fargo Center, West River Business Park and Westgate.

(2) The properties included in this portfolio disposition are: Mendota Office Center I, Mendota Office Center II, Mendota Office Center III,

Mendota Office Center IV and American Corporate Center.

(3) The properties included in this portfolio disposition are: Champlin South Pond, Chan West Village, Duluth 4615 Grand, Duluth Denfeld

Retail, Forest Lake Auto, Forest Lake Westlake Center, Grand Forks Medpark Mall, Jamestown Buffalo Mall, Jamestown Business Center,

Lakeville Strip Center, Monticello C Store & vacant land, Omaha Barnes & Noble, Pine City Evergreen Square, Rochester Maplewood

Square and St. Cloud Westgate.

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MORTGAGES PAYABLE AND LINE OF CREDIT (Tables)

6 Months Ended

Oct. 31, 2016

MORTGAGES PAYABLE AND LINE OF CREDIT [Abstract]

Aggregate Amount of Required Future Principal Payments on Mortgages Payable

The aggregate amount of required future principal payments on mortgages payable as of October 31, 2016, is as follows:

		(in thousands)
		Mortgages		Mortgages
		on Properties		on Properties
		Held for		Held for
Year Ended April 30,		Investment		Sale
2017 (remainder)	$	73,122	$	45,684
2018		64,747		819
2019		141,952		2,326
2020		94,259		668
2021		154,262		710
Thereafter		255,448		10,588
Total payments	$	783,790	$	60,795

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Oct. 31, 2016

FAIR VALUE MEASUREMENTS [Abstract]

Fair Value Measurements on a Nonrecurring Basis

The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:

	(in thousands)
	Total		Level 1		Level 2		Level 3
April 30, 2016
Real estate held for sale	$	6,650	$	—	$	—	$	6,650

Estimated Fair Values of Financial Instruments

The estimated fair values of our financial instruments as of October 31, 2016 and April 30, 2016, are as follows:

	(in thousands)
	October 31, 2016				April 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	68,729	$	68,729	$	66,698	$	66,698
FINANCIAL LIABILITIES
Other debt		82,650		82,650		82,026		82,026
Lines of credit		47,500		47,500		17,500		17,500
Mortgages payable		783,790		827,127		817,324		866,649
Mortgages payable related to assets held for sale		68,695		70,286		68,824		78,690

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REDEEMABLE NONCONTROLLING INTERESTS (Tables)

6 Months Ended

Oct. 31, 2016

REDEEMABLE NONCONTROLLING INTERESTS [Abstract]

Redeemable Noncontrolling Interest

Below is a table reflecting the activity of the redeemable noncontrolling interests.

	(in thousands)
Balance at April 30, 2016	$	7,522
Contributions		1,209
Net income		(146)
Balance at October 31, 2016	$	8,585

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SUBSEQUENT EVENTS (Tables)

6 Months Ended

Oct. 31, 2016

SUBSEQUENT EVENTS [Abstract]

Common and Preferred Share Distributions

Common and Preferred Share Distributions. On December 7, 2016, our Board of Trustees declared the following distributions:

	Quarterly Amount
Class of shares/units	per Share or Unit		Record Date	Payment Date
Common shares and limited partnership units	$	0.1300	January 3, 2017	January 17, 2017
Preferred shares:
Series B	$	0.4968	December 23, 2016	January 2, 2017

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ORGANIZATION (Details) ft² in Millions	Oct. 31, 2016 ft² item property
Real Estate Properties [Line Items]
Percentage of ordinary taxable income that must be distributed to shareholders (in hundredths)	90.00%
Medical Property [Member]
Real Estate Properties [Line Items]
Number of real estate properties	30
Net rentable area (in square feet) | ft²	2.7
Medical Property [Member] | Discontinued Operations, Held-for-sale [Member]
Real Estate Properties [Line Items]
Number of real estate properties	27
Retail [Member] | Discontinued Operations, Held-for-sale [Member]
Real Estate Properties [Line Items]
Number of real estate properties	2
Other Property [Member]
Real Estate Properties [Line Items]
Number of real estate properties	14
Multi-family Residential Properties [Member]
Real Estate Properties [Line Items]
Number of real estate properties	86
Number of apartment units owned | item	12,751
Multi-family Residential Properties [Member] | Discontinued Operations, Held-for-sale [Member]
Real Estate Properties [Line Items]
Number of real estate properties	14
Unimproved Land [Member] | Discontinued Operations, Held-for-sale [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Real Estate Properties (Details)	3 Months Ended	6 Months Ended		12 Months Ended
	Oct. 31, 2015 USD ($) property	Oct. 31, 2016 USD ($) item property shares	Oct. 31, 2015 USD ($) property	Apr. 30, 2016 USD ($) property
BASIS OF PRESENTATION [Abstract]
Interest in operating partnership (in hundredths)		88.20%		88.10%
Redemption basis		one-for-one
Redemptions by limited partner, maximum | item		2
Number of units to redeem, minimum (in units) | shares		1,000
Period to hold the beneficial interest, minimum		1 year
RECENT ACCOUNTING PRONOUNCEMENTS
Deferred Costs, Leasing, Net		$ 5,261,000		$ 4,896,000
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments		54,153,000	$ 3,598,000
Held for Sale [Abstract]
Assets held for sale and assets of discontinued operations		191,233,000		220,537,000
Liabilities held for sale and liabilities of discontinued operations		69,326,000		$ 77,488,000
Office Property [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Number of impaired properties | property			1
Unimproved Land [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Number of impaired properties | property			1
Unimproved Land [Member] | Williston, ND - property [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments		$ 2,800,000
Interest in joint venture (in hundredths)		70.00%
Number of impaired properties | property		1
Unimproved Land [Member] | Grand Chute, Wisconsin, Unimproved Land [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments			$ 1,300,000
Multi-Family Residential [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Number of impaired properties | property			8
Multi-Family Residential [Member] | Williston, ND - property [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Number of impaired properties | property		3
Multi-Family Residential [Member] | Williston, ND - property 1 [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments		$ 40,900,000
Interest in joint venture (in hundredths)		71.50%
Multi-Family Residential [Member] | Williston, ND - property 2 [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments		$ 5,800,000
Multi-Family Residential [Member] | Williston, ND - property 3 [Member]
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments		$ 4,700,000
Interest in joint venture (in hundredths)		60.00%
Multi-Family Residential [Member] | St Cloud Minnesota Member
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments	$ 1,900,000
Number of impaired properties | property	8
Discontinued Operations [Member] | Office Property [Member] | Eden Prairie Minnesota Member
IMPAIRMENT OF LONG-LIVED ASSETS [Abstract]
Impairment of real estate investments			$ 440,000
Assets Held for Sale [Member] | Medical Property [Member]
Held for Sale [Abstract]
Number of real estate properties classified as held for sale | property		27		35
Assets Held for Sale [Member] | Unimproved Land [Member]
Held for Sale [Abstract]
Number of real estate properties classified as held for sale | property		1		3
Assets Held for Sale [Member] | Multi-Family Residential [Member]
Held for Sale [Abstract]
Number of real estate properties classified as held for sale | property		14		1
Assets Held for Sale [Member] | Commercial Properties [Member]
Held for Sale [Abstract]
Number of real estate properties classified as held for sale | property		2		1

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Compensating Balances and Other Investments Lender Holdbacks (Details) - USD ($)	6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Compensating Balances [Line Items]
Compensating balance	$ 14,818,000
Decrease in lender holdbacks	1,925,000	$ 3,258,000
Increase in lender holdbacks for improvements	614,000	$ 578,000
First International Bank, Watford City, North Dakota [Member]
Compensating Balances [Line Items]
Compensating balance	7,758,000
Associated Bank, Green Bay, Wisconsin [Member]
Compensating Balances [Line Items]
Compensating balance	3,000,000
Private Bank [Member]
Compensating Balances [Line Items]
Compensating balance	2,000,000
Bremer Bank [Member]
Compensating Balances [Line Items]
Compensating balance	1,285,000
Dacotah Bank, Minot, North Dakota [Member]
Compensating Balances [Line Items]
Compensating balance	250,000
Peoples State Bank of Velva, North Dakota [Member]
Compensating Balances [Line Items]
Compensating balance	225,000
American National Bank, Omaha, Nebraska [Member]
Compensating Balances [Line Items]
Compensating balance	200,000
Commerce Bank [Member]
Compensating Balances [Line Items]
Compensating balance	$ 100,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Identified Intangible Assets and Liabilities (Details) - USD ($)	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015	Apr. 30, 2016
Identified Intangible Assets and Liabilities and Goodwill [Abstract]
Finite-lived Intangible Assets Acquired			$ 0	$ 1,300,000
Addition to intangible liabilities			$ 0	$ 101,000
Weighted average lives of intangible assets acquired			0 years	29 days
Identified intangible assets (included in intangible assets) [Abstract]
Gross carrying amount	$ 6,103,000		$ 6,103,000		$ 8,088,000
Accumulated amortization	(5,261,000)		(5,261,000)		(6,230,000)
Net carrying amount	842,000		842,000		1,858,000
Identified intangible liabilities (included in other liabilities) [Abstract]
Gross carrying amount	157,000		157,000		159,000
Accumulated amortization	(65,000)		(65,000)		(55,000)
Net carrying amount	92,000		92,000		$ 104,000
Amortization of above and below market leases	4,000	$ 4,000	9,000	$ 11,000
Amortization of all other identified intangible assets	321,000	$ 331,000	995,000	$ 523,000
Estimated annual amortization of acquired below-market leases, net of acquired above-market leases [Abstract]
2018	(11,000)		(11,000)
2019	(20,000)		(20,000)
2020	(16,000)		(16,000)
2021	(13,000)		(13,000)
2022	(6,000)		(6,000)
Estimated annual amortization [Abstract]
2018	269,000		269,000
2019	170,000		170,000
2020	104,000		104,000
2021	78,000		78,000
2022	$ 25,000		$ 25,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Goodwill (Details)	6 Months Ended		12 Months Ended
	Oct. 31, 2016 USD ($) property	Oct. 31, 2015 USD ($) property	Apr. 30, 2016 USD ($)
Goodwill [Line Items]
Goodwill	$ 1,645,000		$ 1,680,000
Goodwill, Impairment Loss	0		0
Assets Held for Sale [Member]
Goodwill [Line Items]
Goodwill	$ 35,000		$ 17,000
Commercial Properties [Member]
Goodwill [Line Items]
Number of real estate properties sold | property		7
Goodwill derecognized		$ 193,000
Commercial Properties [Member] | Assets Held for Sale [Member]
Goodwill [Line Items]
Number of properties | property	1
Goodwill derecognized	$ 17,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Reclassifications, Proceeds from Financing Liability and Variable Interest Entity (Details) $ in Millions	3 Months Ended		6 Months Ended	12 Months Ended
	Oct. 31, 2016 USD ($) property	Apr. 30, 2016 property	Oct. 31, 2016 USD ($) property	Apr. 30, 2014 USD ($)
Proceeds From Financing Liability [Abstract]
Proceeds from sale of property				$ 7.9
Contract for deed				29.0
Sale lease-back recorded in other liabilities				$ 7.9
Financing liability balance	$ 7.9		$ 7.9
Senior Housing properties [Member] | Discontinued Operations, Held-for-sale [Member]
Reclassifications [Abstract]
Number of real estate properties classified as held for sale in discontinued operations | property		34	26
Senior Housing properties [Member] | Discontinued Operations, Disposed of by Sale [Member]
Reclassifications [Abstract]
Number of real estate properties sold | property	8

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
EARNINGS PER SHARE [Abstract]
Ratio of units exchanged for shares			one-for-one
Minimum holding period			1 year
NUMERATOR [Abstract]
(Loss) income from continuing operations – Investors Real Estate Trust	$ 2,426	$ 1,474	$ (22,488)	$ 5,341
Income from discontinued operations - Investors Real Estate Trust	9,174	15,192	12,445	15,865
Net income (loss) attributable to Investors Real Estate Trust	11,600	16,666	(10,043)	21,206
Dividends to preferred shareholders	(2,878)	(2,878)	(5,757)	(5,757)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS	8,722	13,788	(15,800)	15,449
Noncontrolling interests - Operating Partnership	1,174	1,527	(2,122)	1,713
Numerator for diluted (loss) earnings per share	$ 9,896	$ 15,315	$ (17,922)	$ 17,162
DENOMINATOR [Abstract]
Denominator for basic earnings per share weighted average shares (in shares)	121,154	124,665	121,135	124,757
Effect of convertible operating partnership units (in shares)	16,264	13,900	16,276	13,929
Denominator for diluted earnings per share (in shares)	137,418	138,565	137,411	138,686
(Loss) earnings per common share from continuing operations - Investors Real Estate Trust - basic and diluted (in dollars per share)		$ (0.01)	$ (0.23)
Earnings per common share from discontinued operations - Investors Real Estate Trust - basic and diluted (in dollars per share)	$ 0.07	0.12	0.10	$ 0.12
NET INCOME (LOSS) PER COMMON SHARE – BASIC & DILUTED	$ 0.07	$ 0.11	$ (0.13)	$ 0.12

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EQUITY (Details) - USD ($)	3 Months Ended				6 Months Ended
	Oct. 31, 2016	Jul. 31, 2016	Oct. 31, 2015	Jul. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Units converted to common stock (in shares)	56,700		75,500		56,700	154,000
Units converted to common stock	$ 134,000		$ 279,000		$ 134,000	$ 855,000
2015 Incentive Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Equity awards issued (in shares)	120,792	378,000
Shares issued	$ 502,000	$ 1,400,000
2008 Incentive Award Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Equity awards issued (in shares)		59,000		220,000
Shares issued		$ 352,000		$ 1,600,000
Distribution Reinvestment and Share Purchase Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Shares issued (in shares)	0		55,000	55,000	0	821,000
Shares issued			$ 377,000			$ 5,600,000
Average price of shares issued (in dollars per share)			$ 6.87			$ 6.85
Distribution Reinvestment and Share Purchase Plan [Member] | Maximum [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Shares registered (in shares)					10,000

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SEGMENT REPORTING (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2016 USD ($)	Oct. 31, 2015 USD ($)	Oct. 31, 2016 USD ($) segment	Oct. 31, 2015 USD ($)	Apr. 30, 2016 USD ($)	Apr. 30, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			2
Segment revenues and net operating income [Abstract]
Real estate revenue	$ 50,609	$ 46,346	$ 100,220	$ 91,391
Real estate expenses	21,573	19,951	43,207	38,255
Net operating income (loss)	29,036	26,395	57,013	53,136
Depreciation/amortization	(13,531)	(12,405)	(27,798)	(23,622)
Impairment of real estate investments		(1,873)	(54,153)	(3,158)
General and administrative expenses	(2,702)	(2,933)	(5,308)	(5,387)
Acquisition and investment related costs	(4)	(391)	(47)	(398)
Other expenses	(816)	(813)	(1,668)	(1,230)
Interest expense	(10,626)	(8,741)	(20,990)	(16,555)
Loss on extinguishment of debt		(106)		(106)
Interest and other income	637	665	1,682	1,272
Income (loss) before (loss) gain on sale of real estate and other investments, and income from discontinued operations	1,994	(202)	(51,269)	3,952
Gain (loss) on sale of real estate and other investments	(103)		8,855	(175)
Income (loss) from continuing operations	1,891	(202)	(42,414)	3,777
Income (loss) from discontinued operations	10,399	16,879	14,110	17,627
NET INCOME (LOSS)	12,290	16,677	(28,304)	21,404
Segment Assets [Abstract]
Property owned	1,665,354		1,665,354		$ 1,681,471
Less accumulated depreciation	(321,790)		(321,790)		(312,889)
Total property owned	1,343,564		1,343,564		1,368,582
Assets held for sale and assets of discontinued operations	191,233		191,233		220,537
Cash and cash equivalents	68,729	55,133	68,729	55,133	66,698	$ 48,970
Other investments					50
Receivables and other assets	35,803		35,803		26,535
Development in progress	20,921		20,921		51,681
Unimproved land	19,069		19,069		20,939
TOTAL ASSETS	1,679,319		1,679,319		1,755,022
Amounts Not Allocated to Segments [Member]
Segment revenues and net operating income [Abstract]
Real estate expenses	1,126	1,306	2,963	2,080
Net operating income (loss)	(1,126)	(1,306)	(2,963)	(2,080)
Multi-Family Residential [Member] | Operating Segments [Member]
Segment revenues and net operating income [Abstract]
Real estate revenue	36,250	32,176	71,290	63,609
Real estate expenses	15,566	14,191	30,445	27,631
Net operating income (loss)	20,684	17,985	40,845	35,978
Segment Assets [Abstract]
Property owned	1,226,198		1,226,198		1,243,909
Less accumulated depreciation	(212,922)		(212,922)		(209,156)
Total property owned	1,013,276		1,013,276		1,034,753
Healthcare [Member] | Operating Segments [Member]
Segment revenues and net operating income [Abstract]
Real estate revenue	11,661	11,351	23,202	22,130
Real estate expenses	4,151	3,834	8,343	7,316
Net operating income (loss)	7,510	7,517	14,859	14,814
Segment Assets [Abstract]
Property owned	342,242		342,242		337,920
Less accumulated depreciation	(88,669)		(88,669)		(83,558)
Total property owned	253,573		253,573		254,362
All Other [Member] | Operating Segments [Member]
Segment revenues and net operating income [Abstract]
Real estate revenue	2,698	2,819	5,728	5,652
Real estate expenses	730	620	1,456	1,228
Net operating income (loss)	1,968	$ 2,199	4,272	$ 4,424
Segment Assets [Abstract]
Property owned	96,914		96,914		99,642
Less accumulated depreciation	(20,199)		(20,199)		(20,175)
Total property owned	$ 76,715		$ 76,715		$ 79,467

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2016 USD ($) ft² item property	Oct. 31, 2015 USD ($)	Oct. 31, 2016 USD ($) ft² item property	Oct. 31, 2015 USD ($)	Apr. 30, 2016 USD ($)
Real Estate Properties [Line Items]
Property owned	$ 1,665,354		$ 1,665,354		$ 1,681,471
Total gross rental revenue from properties subject to purchase options	45,859	$ 41,868	$ 90,844	$ 82,618
Redemption basis			one-for-one
Number of consecutive trading days for valuation			10 days
Aggregate redemption value of Units of operating partnership owned by limited partners	99,100	$ 112,600	$ 99,100	$ 112,600
Tenant improvements	$ 6,000		$ 6,000
Commitment period for tenant improvements			12 months
Southgate - Minot, ND [Member]
Real Estate Properties [Line Items]
Number of joint ventures with purchase commitment | item	1		1
Commitment period to acquire joint venture interest			4 years
Subject to Purchase Options [Member]
Real Estate Properties [Line Items]
Number of properties | property	7		7
Property owned	$ 77,400		$ 77,400
Total gross rental revenue from properties subject to purchase options			$ 3,700
Subject to Restrictions on Taxable Dispositions [Member]
Real Estate Properties [Line Items]
Number of properties | property	49		49
Area of real estate property | ft²	762,000		762,000
Number of apartment units | item	4,603		4,603
Real estate investment amount of properties (net of accumulated depreciation)	$ 435,900		$ 435,900

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COMMITMENTS AND CONTINGENCIES, Development, Expansion and Renovation Projects (Details)	3 Months Ended		6 Months Ended
	Oct. 31, 2016 USD ($) item	Oct. 31, 2015 USD ($)	Oct. 31, 2016 USD ($) item property	Oct. 31, 2015 USD ($)
Real Estate Properties [Line Items]
Anticipated Total Cost	$ 31,784,000		$ 31,784,000
Project costs incurred to date	31,351,000		31,351,000
Construction interest capitalized	145,000	$ 1,100,000	298,000	$ 3,400,000
Other [Member]
Real Estate Properties [Line Items]
Project costs incurred to date	$ 3,283,000		3,283,000
Idaho, Senior Housing and Unimproved Land [Member]
Real Estate Properties [Line Items]
Sales price of pending disposition			$ 236,000,000
Multi-Family Residential [Member] | Monticello Crossings - Monticello, MN
Real Estate Properties [Line Items]
Number of apartment units | item	202		202
Anticipated Total Cost	$ 31,784,000		$ 31,784,000
Project costs incurred to date	$ 28,068,000		$ 28,068,000
Estimated quarter for completion			4Q
Estimated year for completion			2017
Multi-Family Residential [Member] | Idaho, Senior Housing and Unimproved Land [Member]
Real Estate Properties [Line Items]
Number of real estate properties classified as held for sale | property			1
Senior Housing properties [Member] | Idaho, Senior Housing and Unimproved Land [Member]
Real Estate Properties [Line Items]
Number of real estate properties classified as held for sale | property			26
Unimproved Land [Member] | Idaho, Senior Housing and Unimproved Land [Member]
Real Estate Properties [Line Items]
Number of real estate properties classified as held for sale | property			1
Commercial Retail [Member] | Grand Forks, ND
Real Estate Properties [Line Items]
Sales price of pending disposition			$ 4,000,000

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DISCONTINUED OPERATIONS, Properties Disposed of or Held for Sale (Details) - property	3 Months Ended	6 Months Ended	12 Months Ended
	Oct. 31, 2016	Oct. 31, 2016	Apr. 30, 2016
Discontinued Operations, Disposed of by Sale [Member] | Office [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties classified as held for sale in discontinued operations			48
Discontinued Operations, Disposed of by Sale [Member] | Retail [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties classified as held for sale in discontinued operations			17
Discontinued Operations, Disposed of by Sale [Member] | Commercial Healthcare [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties classified as held for sale in discontinued operations			1
Discontinued Operations, Disposed of by Sale [Member] | Senior Housing properties [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties sold	8
Discontinued Operations, Held-for-sale [Member] | Senior Housing properties [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of real estate properties classified as held for sale in discontinued operations		26	34

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DISCONTINUED OPERATIONS, Effect on Net Income from Properties Classified as Discontinued Operations (Details) (Imported) $ in Thousands	3 Months Ended			6 Months Ended
	Oct. 31, 2016 USD ($)	Jan. 31, 2016 property	Oct. 31, 2015 USD ($)	Oct. 31, 2016 USD ($)	Oct. 31, 2015 USD ($)
REVENUE [Abstract]
Real estate rentals	$ 45,859		$ 41,868	$ 90,844	$ 82,618
Tenant reimbursement	4,750		4,478	9,376	8,773
TOTAL REVENUE	50,609		46,346	100,220	91,391
EXPENSES [Abstract]
Property operating expenses, excluding real estate taxes	15,814		15,052	31,871	28,540
Depreciation and amortization	13,531		12,405	27,798	23,622
Impairment of real estate investments			1,873	54,153	3,158
TOTAL EXPENSES	38,626		38,366	132,181	72,050
Interest expense	(10,626)		(8,741)	(20,990)	(16,555)
Gain on extinguishment of debt			(106)		(106)
Other income	37		100	510	151
Gain on sale of discontinued operations				15,358	23,733
INCOME FROM DISCONTINUED OPERATIONS	10,399		16,879	14,110	17,627
Discontinued Operations, Disposed of by Sale [Member]
REVENUE [Abstract]
Real estate rentals	4,992		9,703	10,002	28,143
Tenant reimbursement	112		1,486	226	7,751
TRS senior housing revenue	916		965	1,789	2,003
TOTAL REVENUE	6,020		12,154	12,017	37,897
EXPENSES [Abstract]
Property operating expenses, excluding real estate taxes			2,668		8,768
Real estate taxes	(112)		1,269		4,789
Depreciation and amortization			2,498	16	9,587
Impairment of real estate investments					440
TRS senior housing expenses	769		812	1,553	1,581
TOTAL EXPENSES	657		7,247	1,569	25,165
Operating income	5,363		4,907	10,448	12,732
Interest expense	(1,395)		(5,021)	(2,769)	(12,168)
Gain on extinguishment of debt	(72)		(7,120)	(72)	(7,120)
Other income			203		273
Income from discontinued operations before gain on sale	3,896		(7,031)	7,607	(6,283)
Gain on sale of discontinued operations	6,503		23,910	6,503	23,910
INCOME FROM DISCONTINUED OPERATIONS	10,399		16,879	14,110	17,627
Default interest	$ 1,600			$ 3,100
Non-recourse loan			$ 122,600		$ 122,600
Number of loan properties | property		9

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DISCONTINUED OPERATIONS Reconciliation of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Thousands	Oct. 31, 2016	Apr. 30, 2016
Carrying amounts of major classes of liabilities included as part of discontinued operations [Abstract]
Total liabilities of the disposal groups classified as held for sale on the balance sheet	$ 69,326	$ 77,488
Discontinued Operations, Held-for-sale [Member]
Carrying amounts of major classes of assets included as part of discontinued operations [Abstract]
Property owned and intangible assets, net of accumulated depreciation and amortization	157,050	189,900
Receivable arising from straight-lining of rents	8,800	9,805
Accounts receivable	912	1,707
Prepaid and other assets	34	43
Tax, insurance and other escrow	781	670
Property and equipment	471	479
Goodwill	18	18
Total major classes of assets of the discontinued operations	168,066	202,622
Other assets included in the disposal group classified as held for sale	23,167	17,915
Total assets of the disposal groups classified as held for sale on the balance sheet	191,233	220,537
Carrying amounts of major classes of liabilities included as part of discontinued operations [Abstract]
Accounts payable and accrued expenses	352	810
Mortgages payable	53,829	67,940
Other	7,900	7,900
Total major classes of liabilities of the discontinued operations	62,081	76,650
Other liabilities included in the disposal group classified as held for sale	7,245	838
Total liabilities of the disposal groups classified as held for sale on the balance sheet	$ 69,326	$ 77,488

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ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS, ACQUISITIONS (Details)	3 Months Ended	6 Months Ended
	Oct. 31, 2016 USD ($)	Oct. 31, 2016 USD ($)	Oct. 31, 2015 USD ($) ft² item
Acquisitions and development projects placed in service [Abstract]
Partnership units issued			$ 400,000
Acquisitions Member
Business Acquisition [Line Items]
Transaction costs expensed during the period			153,000
Acquisitions and development projects placed in service [Abstract]
Total acquisition costs		$ 0	71,750,000
Form of consideration, cash			71,350,000
Form of consideration, units			400,000
Investment allocation, land			6,424,000
Investment allocation, building			64,144,000
Investment allocation, intangible assets			1,182,000
Results of operations from acquired properties [Abstract]
Total revenue			268,000
Net loss			(219,000)
Acquisitions Member | Multi-Family Residential [Member]
Acquisitions and development projects placed in service [Abstract]
Total acquisition costs			65,250,000
Form of consideration, cash			64,850,000
Form of consideration, units			400,000
Investment allocation, land			5,521,000
Investment allocation, building			59,035,000
Investment allocation, intangible assets			$ 694,000
Acquisitions Member | Multi-Family Residential [Member] | 74 unit - Gardens - Grand Forks, ND [Member]
Acquisitions and development projects placed in service [Abstract]
Date acquired			Sep. 10, 2015
Total acquisition costs			$ 9,250,000
Form of consideration, cash			8,850,000
Form of consideration, units			400,000
Investment allocation, land			518,000
Investment allocation, building			8,672,000
Investment allocation, intangible assets			$ 60,000
Number of apartment units | item			74
Acquisitions Member | Multi-Family Residential [Member] | 276 unit - GrandeVille at Cascade Lake - Rochester, MN [Member]
Acquisitions and development projects placed in service [Abstract]
Date acquired			Oct. 29, 2015
Total acquisition costs			$ 56,000,000
Form of consideration, cash			56,000,000
Investment allocation, land			5,003,000
Investment allocation, building			50,363,000
Investment allocation, intangible assets			$ 634,000
Number of apartment units | item			276
Acquisitions Member | Multi-Family Residential [Member] | RED 20 - Minneapolis, MN [Member]
Acquisitions and development projects placed in service [Abstract]
Purchase price of minority interest in joint venture	$ 4,900,000
Interest in joint venture (in hundredths)	41.41%	41.41%
Acquisitions Member | Healthcare [Member] | 27,819 sq ft Lakeside Medical Plaza - Omaha, NE [Member]
Acquisitions and development projects placed in service [Abstract]
Date acquired			Aug. 20, 2015
Total acquisition costs			$ 6,500,000
Form of consideration, cash			6,500,000
Investment allocation, land			903,000
Investment allocation, building			5,109,000
Investment allocation, intangible assets			$ 488,000
Area of real estate property | ft²			27,819

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ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE (Details)	3 Months Ended	6 Months Ended		12 Months Ended
	Jul. 31, 2016 USD ($)	Oct. 31, 2016 USD ($) item	Oct. 31, 2015 USD ($) ft² item	Apr. 30, 2016 USD ($)	Apr. 30, 2015 USD ($)
Business Acquisition [Line Items]
Project costs incurred to date		$ 31,351,000
Impairment of real estate continuing and discontinued operations		54,153,000	$ 3,598,000
Development Projects Placed in Service [Member]
Business Acquisition [Line Items]
Land		4,721,000	6,819,000
Building		67,555,000	130,168,000
Development cost		$ 72,276,000	136,987,000
Development Projects Placed in Service [Member] | Multi-Family Residential [Member]
Business Acquisition [Line Items]
Land			3,320,000
Building			73,841,000
Development cost			$ 77,161,000
Development Projects Placed in Service [Member] | Multi-Family Residential [Member] | 71 France - Edina, MN [Member]
Business Acquisition [Line Items]
Date placed in service		May 01, 2016
Land		$ 4,721,000
Building		67,555,000
Development cost		$ 72,276,000
Number of apartment units | item		241
Development costs paid		$ 1,400,000		$ 70,900,000
Interest in joint venture (in hundredths)		52.60%
Development Projects Placed in Service [Member] | Multi-Family Residential [Member] | 72 unit - Chateau II - Minot, ND [Member]
Business Acquisition [Line Items]
Date placed in service			Jun. 01, 2015
Land			$ 240,000
Building			14,401,000
Development cost			$ 14,641,000
Number of apartment units | item			72
Development costs paid			$ 2,300,000		$ 12,300,000
Development Projects Placed in Service [Member] | Multi-Family Residential [Member] | 288 unit - Renaissance Heights - Williston, ND [Member]
Business Acquisition [Line Items]
Date placed in service			Jul. 27, 2015
Land			$ 3,080,000
Building			59,440,000
Development cost			$ 62,520,000
Number of apartment units | item			288
Development costs paid			$ 4,800,000		57,700,000
Interest in joint venture (in hundredths)			71.50%
Impairment of real estate continuing and discontinued operations	$ 36,700,000
Development Projects Placed in Service [Member] | Healthcare [Member]
Business Acquisition [Line Items]
Land			$ 2,610,000
Building			54,594,000
Development cost			$ 57,204,000
Development Projects Placed in Service [Member] | Healthcare [Member] | 57,624 sq ft Edina 6565 France SMC III - Edina, MN [Member]
Business Acquisition [Line Items]
Date placed in service			Jun. 01, 2015
Building			$ 32,495,000
Development cost			$ 32,495,000
Area of real estate property | ft²			57,624
Development costs paid			$ 11,700,000		20,800,000
Development Projects Placed in Service [Member] | Healthcare [Member] | PrairieCare Medical - Brooklyn Park, MN [Member]
Business Acquisition [Line Items]
Date placed in service			Sep. 08, 2015
Land			$ 2,610,000
Building			22,099,000
Development cost			$ 24,709,000
Area of real estate property | ft²			70,756
Development costs paid			$ 7,400,000		17,300,000
Development Projects Placed in Service [Member] | Other Member | Minot Southgate Retail - Minot, ND [Member]
Business Acquisition [Line Items]
Date placed in service			Oct. 01, 2015
Land			$ 889,000
Building			1,733,000
Development cost			$ 2,622,000
Area of real estate property | ft²			7,963
Development costs paid			$ 500,000		$ 2,100,000

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ACQUISITIONS, DEVELOPMENT PROJECTS PLACED IN SERVICE AND DISPOSITIONS, PROPERTY DISPOSITIONS (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 31, 2016 ft² property	Oct. 31, 2015 ft² property	Oct. 31, 2016 USD ($) ft²	Oct. 31, 2015 USD ($) ft²
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale price			$ 57,550	$ 378,860
Book value and sales cost			42,089	355,127
Gain/(Loss)			$ 15,461	$ 23,733
Healthcare [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold | property	8	1
Healthcare [Member] | Idaho Spring Creek Senior Housing Properties [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed			Oct. 31, 2016
Sale price			$ 43,900
Book value and sales cost			37,397
Gain/(Loss)			$ 6,503
Area of real estate property | ft²	189,244		189,244
Other [Member] | Stone Container - Fargo, ND [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed			Jul. 25, 2016
Sale price			$ 13,400
Book value and sales cost			4,418
Gain/(Loss)			$ 8,982
Area of real estate property | ft²	195,075		195,075
Other [Member] | 117,144 sq ft Thresher Square - Minneapolis, MN [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed				May 18, 2015
Sale price				$ 7,000
Book value and sales cost				7,175
Gain/(Loss)				$ (175)
Area of real estate property | ft²		117,144		117,144
Other [Member] | 2,549,222 sq ft Office Sale Portfolio [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed				Aug. 03, 2015
Sale price				$ 250,000
Book value and sales cost				231,537
Gain/(Loss)				$ 18,463
Area of real estate property | ft²		2,549,222		2,549,222
Other [Member] | 420,216 sq ft Mendota Office Center Portfolio - Mendota Heights, MN [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed				Aug. 12, 2015
Sale price				$ 40,000
Book value and sales cost				41,574
Gain/(Loss)				$ (1,574)
Area of real estate property | ft²		420,216		420,216
Other [Member] | 1,027,208 sq ft Retail Sale Portfolio [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed				Sep. 30, 2015
Sale price				$ 78,960
Book value and sales cost				71,913
Gain/(Loss)				$ 7,047
Area of real estate property | ft²		1,027,208		1,027,208
Other [Member] | 48,700 sq ft Eden Prairie 6101 Blue Circle Drive - Eden Prairie, MN [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed				Oct. 19, 2015
Sale price				$ 2,900
Book value and sales cost				2,928
Gain/(Loss)				$ (28)
Area of real estate property | ft²		48,700		48,700
Office [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold | property		39
Retail [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold | property		15
Unimproved Land [Member] | Georgetown Square - Grand Chute, WI [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Date disposed			May 06, 2016
Sale price			$ 250
Book value and sales cost			274
Gain/(Loss)			$ (24)

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MORTGAGES PAYABLE AND CONSTRUCTION DEBT (Details) $ in Thousands	6 Months Ended
	Oct. 31, 2016 USD ($) loan	Apr. 30, 2016 USD ($)
Aggregate amount of required future principal payments on mortgages payable [Abstract]
Total payments	$ 779,568	$ 812,393
Mortgages Payable [Member]
Debt Instrument [Line Items]
Interest rates on mortgages payable range, minimum (in hundredths)	2.49%
Interest rates on mortgages payable range, maximum (in hundredths)	7.94%
Mortgages maturity date range, end	Jul. 01, 2036
Number of loans in default | loan	0
Fixed rate mortgages	$ 617,700	689,300
Variable rate mortgages	$ 226,900	$ 196,800
Weighted average interest rate (in hundredths)	4.55%	4.54%
Mortgage indebtness	$ 844,600
Aggregate amount of required future principal payments on mortgages payable [Abstract]
2017 (remainder)	73,122
2018	64,747
2019	141,952
2020	94,259
2021	154,262
Thereafter	255,448
Total payments	783,790
Mortgages Payable [Member] | Assets Held for Sale [Member]
Aggregate amount of required future principal payments on mortgages payable [Abstract]
2017 (remainder)	45,684
2018	819
2019	2,326
2020	668
2021	710
Thereafter	10,588
Total payments	$ 60,795

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MORTGAGES PAYABLE AND LINE OF CREDIT, Line of Credit (Details) - Line of Credit [Member] $ in Millions	6 Months Ended
	Oct. 31, 2016 USD ($) property	Apr. 30, 2016 USD ($)
LINE OF CREDIT [Abstract]
Amount available	$ 100.0
Number of properties securing line of credit | property	17
Interest rate (in hundredths)	4.75%
Line of credit, minimum outstanding principal balance	$ 17.5
Amount outstanding	$ 47.5	$ 17.5
Debt Service Coverage On Aggregate Assets	1.25
Debt Service Coverage On Individual Assets	1.00
Minimum depository accounts	$ 6.0
Non-interest bearing account	$ 1.5

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FAIR VALUE MEASUREMENTS (Details) $ in Thousands	Oct. 31, 2016 USD ($)	Apr. 30, 2016 USD ($) property
FINANCIAL LIABILITIES [Abstract]
Mortgages payable	$ 779,568	$ 812,393
Carrying Amount [Member]
FINANCIAL ASSETS [Abstract]
Cash and cash equivalents	68,729	66,698
FINANCIAL LIABILITIES [Abstract]
Other debt	82,650	82,026
Lines of credit	47,500	17,500
Mortgages payable	783,790	817,324
Mortgages payable related to assets held for sale	68,695	68,824
Fair Value [Member]
FINANCIAL ASSETS [Abstract]
Cash and cash equivalents	68,729	66,698
FINANCIAL LIABILITIES [Abstract]
Other debt	82,650	82,026
Lines of credit	47,500	17,500
Mortgages payable	827,127	866,649
Mortgages payable related to assets held for sale	$ 70,286	78,690
Nonrecurring [Member]
Fair Value Measurements on a Nonrecurring Basis [Abstract]
Real estate held for sale		$ 6,650
Nonrecurring [Member] | Discontinued Operations, Held-for-sale [Member]
Fair Value Measurements on a Nonrecurring Basis [Abstract]
Number of real estate properties with fair value measured by individual market offer | property		2
Nonrecurring [Member] | Level 3 [Member]
Fair Value Measurements on a Nonrecurring Basis [Abstract]
Real estate held for sale		$ 6,650

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REDEEMABLE NONCONTROLLING INTERESTS (Details) $ in Thousands	6 Months Ended
	Oct. 31, 2016 USD ($) item
Redeemable Noncontrolling Interest [Line Items]
Balance at beginning of fiscal year	$ 7,522
Contributions	7,150
Balance at close of fiscal year	$ 8,585
Southgate - Minot, ND [Member]
Redeemable Noncontrolling Interest [Line Items]
Number of Joint Ventures with Buy Sell Options | item	1
Commitment Period for Joint Venture Acquisition	4 years
Balance at beginning of fiscal year	$ 7,522
Contributions	1,209
Net income	(146)
Balance at close of fiscal year	$ 8,585

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SHARE BASED COMPENSATION (Details) - USD ($)			3 Months Ended		6 Months Ended
	Aug. 08, 2016	Jun. 22, 2016	Oct. 31, 2016	Oct. 31, 2015	Oct. 31, 2016	Oct. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 603,000	$ 539,000	$ 865,000	$ 605,000
2015 Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares (in shares)			4,250,000		4,250,000
Term of award					10 years
2015 Incentive Plan [Member] | 2017 LTIP Awards [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	43,549	45,651
Restricted shares vesting percentage		33.00%
2015 Incentive Plan [Member] | 2017 LTIP Awards [Member] | Restricted Stock [Member] | Vesting Periods One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	12,874
Restricted shares vesting percentage	33.00%
2015 Incentive Plan [Member] | 2017 LTIP Awards [Member] | Restricted Stock [Member] | Vesting Periods Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	30,675
Restricted shares vesting percentage	33.00%
2015 Incentive Plan [Member] | 2017 LTIP Awards [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	77,243	273,901
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Volatility rate (in hundredths)	24.00%	23.80%
Risk-free interest rate (in hundredths)	0.83%	0.86%
Expected life	2 years 8 months 19 days	2 years 10 months 6 days
Share price (in dollars per share)	$ 6.57	$ 6.24
2008 Incentive Award Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares (in shares)			2,000,000		2,000,000
Performance period (in years)					1 year
Vesting percentage of awards on the last day of the performance period					50.00%
Vesting percentage on the first anniversary of the end of the performance period					50.00%
Awards performance period of annual absolute total shareholder return (TSR)					3 years
Trustee Awards [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		59,000

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RELATED PARTY TRANSACTIONS (Details)		6 Months Ended
	Aug. 26, 2016 USD ($) item property	Oct. 31, 2016 USD ($)	Oct. 31, 2015 USD ($)	Apr. 30, 2016
BANKING SERVICES [Abstract]
Compensating balance		$ 14,818,000
LEASE TRANSACTION [Abstract]
Sale price		$ 57,550,000	$ 378,860,000
Mortgages Payable [Member]
BANKING SERVICES [Abstract]
Variable interest rate (in hundredths)		4.55%		4.54%
Carrying principal balance		$ 844,600,000
BMO [Member]
Sales Agreement [Abstract]
Number of agreements to sell | item	6
Sales price of pending disposition	$ 236,000,000
Senior Housing properties [Member] | BMO [Member]
Sales Agreement [Abstract]
Number of real estate properties classified as held for sale | property	26
Multi-Family Residential [Member] | BMO [Member]
Sales Agreement [Abstract]
Number of real estate properties classified as held for sale | property	1

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SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	6 Months Ended
	Sep. 01, 2016	Dec. 02, 2016	Oct. 31, 2016	Dec. 07, 2016	Apr. 30, 2016
Common Shares and Limited Partnership Units [Member]
Subsequent Event [Line Items]
Dividends Payable, Date Declared			Dec. 07, 2016
Record Date			Jan. 03, 2017
Payment Date			Jan. 17, 2017
Series B Preferred Stock [Member]
Subsequent Event [Line Items]
Dividends Payable, Date Declared			Dec. 07, 2016
Record Date			Dec. 23, 2016
Payment Date			Jan. 02, 2017
Shares outstanding (in shares)			4,600,000		4,600,000
Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Distribution rate percentage (in hundredths)	8.25%
Shares outstanding (in shares)			1,150,000		1,150,000
Subsequent Event [Member] | Common Shares and Limited Partnership Units [Member]
Subsequent Event [Line Items]
Quarterly amount per share or unit (in dollars per share)				$ 0.1300
Subsequent Event [Member] | Series B Preferred Stock [Member]
Subsequent Event [Line Items]
Quarterly amount per share or unit (in dollars per share)				$ 0.4968
Subsequent Event [Member] | Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Shares redeemed		1,150,000
Redemption price (in dollars per share)		$ 25.00
Redemption date		Dec. 02, 2016
Aggregate redemption price		$ 29,164
Shares outstanding (in shares)		0