RISKS RELATED TO THE REAL ESTATE INDUSTRY

An investor's performance and the value of their properties are subject to general economic conditions and risks associated with their real estate assets.

There are significant expenditures associated with an investment in real estate (such as debt service, real estate taxes, and insurance maintenance costs) that generally do not decline when circumstances reduce the income from the property. Income from and the value of the properties acquired may be adversely affected by the following factors:

• downturns in international, national, regional and local economic conditions (particularly increases in unemployment);
• the attractiveness of the properties acquired to potential tenants and competition from other properties;
• increases in the supply of or decreases in the demand for similar or competing properties in our target markets;
• bankruptcies, financial difficulties or lease defaults by tenants;
• changes in interest rates, availability and terms of debt financing;
• changes in operating costs and expenses;
• changes in, or increased costs of compliance with, governmental laws, rules, regulations and fiscal policies, including changes in tax, real estate, environmental and zoning laws, and our potential liability thereunder;
• our ability to provide adequate maintenance;
• changes in the cost or availability of insurance, including coverage for mold or asbestos;
• environmental conditions or retained liabilities for such conditions;
• tenant turnover;
• the illiquidity of real estate investments generally;
• residents' perceptions of the safety, convenience and attractiveness of properties and the neighborhoods where they are acquired;
• the ongoing need for capital improvements, particularly in older properties;
• the ability or unwillingness of residents to pay rent increases;
• civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism;
• rent control or rent stabilization or other housing laws, which could prevent us from raising rents; and
• increases in property-level maintenance and operating expenses.

For these and other reasons, BRIGHT REALTY and all representatives of BRIGHT REALTY cannot and does not make any guarantees to investor performance.