Construction Loan Agreement dated as of January 22, 2015 by and between IRET-71 France, LLC as borrower, and PNC Bank National Association, as Administrative Agent

THIS CONSTRUCTION LOAN AGREEMENT (the "Agreement") is made to be effective January 22, 2015, by and among IRET-71 FRANCE, LLC, a North Dakota limited liability company ("Borrower"), each Lender which may from time to time become a party to this Agreement and PNC BANK, NATIONAL ASSOCIATION, as administrative agent and as a Lender.

Borrower has requested that Lenders provide a construction loan to Borrower in an aggregate principal amount not to exceed $50,750,000.

The purpose of the Loan is to finance a portion of the costs of acquiring the Land and constructing and equipping the Improvements.

Lenders are willing to provide the Loan upon the terms and conditions hereinafter set forth.

Borrower, Lenders and Agent therefore agree as follows.

"Additional Equity Contribution" means any amount required to be deposited by Borrower with Agent (and to be advanced to pay costs of the Project) in order to balance the Loan pursuant to Section 4.27.

"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by Agent.

"Affiliate" as to any Person means any other Person which (a) directly or indirectly Controls, is Controlled by, or is under common Control with such Person, (b) beneficially owns or holds 5% or more of any class of the voting or other equity interests of such Person, or (c) owns or holds 5% or more of the voting stock or other equity interests beneficially owned or held, directly or indirectly, by such Person.

"Agent" means PNC Bank, National Association and its successors and assigns, acting as administrative agent for the Lenders.

"Agent's Fee" means as defined in Section 9.12.

"Agent's Letter" means as defined in Section 9.12.

"Agreement" means as defined in the preamble to this Agreement.

 

"Annual Budgets and Business Plan" means the annual operating and capital budget for any Post-Foreclosure Entity, which budget must contain and set forth, among other items, budgeted minimum additional capital contributions of the members of such Post-Foreclosure Entity, a detailed business plan which sets forth the permissible activities of the Post-Foreclosure Entity, a schedule of projected operating cash flow (including itemized operating revenues, costs and expenses and a schedule of projected operating deficits, if any) and a description of any proposed capital expenditures, including projected sources of funds, dates for commencement and completion of the same.

"Annual Statements" means as defined in Section 8.8.

"Anti-Terrorism Laws" means any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, all as amended, supplemented or replaced from time to time.

"Appraisal" means a written appraisal subject to Agent's customary appraisal requirements and prepared by an independent appraiser engaged by Agent at Borrower's sole cost and expense, in compliance with all applicable regulatory requirements.

"Appraised Value" means, as of any date of determination, the "as-is" or "as/stabilized" dollar value of the Project, as applicable, as determined by an Appraisal of the Project, which Appraisal was prepared not more than ninety (90) days prior to such date of determination.

"Approved Fund" means any Fund administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

"Architect" means Pope Architects, Inc. or such other architect as may be expressly consented to or approved by Agent in writing prior to Borrower's engagement of such other architect.

"Architect's Agreement" means, individually and collectively (i) that certain Standard Form of Agreement Between Owner and Architect dated June 1, 2013, entered into between Borrower and the Architect, together with all exhibits and attachments thereto, with respect to the architectural design services for Building A, (ii) that certain Standard Form of Agreement Between Owner and Architect dated June 6, 2014, entered into between Borrower and the Architect, together with all exhibits and attachments thereto, with respect to the architectural design services for Building B and (iii) that certain Standard Form of Agreement Between Owner and Architect dated August 1, 2014, entered into between Borrower and the Architect, together with all exhibits and attachments thereto, with respect to the architectural design services for Building C.

"Assignment and Assumption" means an assignment and assumption entered into by a Lender and an Eligible Assignee with the consent of any party whose consent is required by Section 11.9 and accepted by Agent, substantially in the form of Exhibit 11.9.

"Assignment of Management Agreements" means collectively, one or more collateral assignments of the Management Agreements, dated as of the date hereof, by and between the Borrower and Agent, and the consent thereto of the Property Managers, as the same may be amended, replaced or supplemented from time to time.

"Assignment of Construction and Development Documents" means that certain Assignment of Construction and Development Documents dated of even date herewith from Borrower to Agent, as the same may be amended, replaced or supplemented from time to time.

"Assignment of Leases and Rents" means that certain Assignment of Leases and Rents of even date herewith from Borrower to Agent, as the same may be amended, replaced or supplemented from time to time.

"Authorized Officer" means those Persons authorized to execute notices, reports and other documents for the benefit of Borrower.  Such Persons will be designated by written notice to Agent from Borrower, and Borrower may amend such list from time to time by written notice to Agent.

"Auto Renewal Letter of Credit" means as defined in Section 2.10(b)(iii).

"Base Rate" means, the greatest of (a) the interest rate per annum announced from time to time by Agent at its Principal Office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by Agent, (b) the Federal Funds Open Rate plus 0.5% per annum or (c) the Daily LIBOR Rate plus 1.0%, so long as a Daily LIBOR Rate is offered, ascertainable and not unlawful.  Any change in the Base Rate (or any component thereof) will take effect as of the opening of business on the day such change occurs.

"Base Rate Margin" means (i) one and twenty-five hundredths of one percent (1.25%) prior to the date the Project achieves a Debt Service Coverage Ratio equal to or greater than 1.10 to 1.00 and (ii) one and ten hundredths of one percent (1.10%) from and after the date the Project achieves a Debt Service Coverage Ratio equal to or greater than 1.10 to 1.00.

 "Base Rate Option" means as defined in Section 3.1(a).

"Basel" means the Basel Committee on Banking Supervision and any successor or similar authority.

"Basel III" means collectively the global regulatory standards issued on January 13, 2011 by Basel and any requests, rules, regulations, guidelines, interpretations or directions promulgated by any Official Body in connection therewith.

"Borrower" means as defined in the preamble of this Agreement.

"Borrowing Date" means the date of the making of an advance of the Loan or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which date (a) must be a Business Day and (b) in the case of the making of an advance of the Loan, must be the date on which each Lender is required to wire transfer to Agent its ratable share of such advance pursuant to Section 6.1(b).

"Borrowing Tranche" means specified portions of the Loan outstanding as follows:  (a) all portions of the Loan to which a LIBOR Option applies which become subject to the same Interest Rate Option by reason of the selection, conversion to or renewal thereof by Borrower and which have the same LIBOR Interest Period constitute one Borrowing Tranche, (b) all portions of the Loan to which the Base Rate Option applies constitute one Borrowing Tranche, and (c) all portions of the Loan to which the Daily LIBOR Option applies constitute one Borrowing Tranche.

"Building" or "Buildings" means, individually, each of the three (3) multi-story buildings to be constructed on the Land and containing an aggregate of 241 market rate apartment units and approximately 22,064 rentable square feet of retail space and, collectively, all such buildings.  "Building A" will be located at 7161 France Avenue, Edina, Minnesota and will contain approximately 109 residential apartment units, below-grade parking, a lobby, fitness studio, community room and related amenities.  "Building B" will be located at 7141 France Avenue, Edina, Minnesota and will contain approximately 72 residential apartment units, below-grade parking and approximately 10,902 square feet of retail space.  "Building C" will be located at 7121 France Avenue, Edina, Minnesota and will contain approximately 60 residential apartment units, below-grade parking and approximately 11,162 square feet of retail space.

"Business Day" means any day other than a Saturday or Sunday or a legal holiday on which commercial lenders are authorized or required to be closed for business in Pittsburgh, Pennsylvania and, if the applicable Business Day relates to any Borrowing Tranche to which the LIBOR Option applies, such day must also be a day on which dealings are carried on in the London interbank market.

"Category" means as defined in Section 4.15.

"CEA" means the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

"Certificate of Occupancy" means a final and unconditional (or temporary with conditions acceptable to Agent) certificate of occupancy, together with any and all other Governmental Approvals required for use and occupancy of all Improvements.

"CFTC" means the Commodity Futures Trading Commission.

"Change in GAAP" means a change in GAAP occurring after the Closing Date.

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that, regardless of the date enacted, any of the foregoing issued in connection with Dodd-Frank or Basel III will in each case be deemed a "Change in Law."

"CIP Regulations" means as defined in Section 9.13.

"City Development Agreement" means that certain Development Agreement (LB 71 France Addition) dated August 5, 2013, by and between the City of Edina, Minnesota and LB Edina, LLC, as amended by that certain Amendment to Development Contract (LB 71 France Addition) dated June 3, 2014, by and between the City of Edina, Minnesota and LB Edina, LLC.

"Closing Date" means the Effective Date.

"Closing Fee" means as defined in Agent's Letter.

"Collateral" means the real estate encumbered by the Mortgage and all other security pledged pursuant to this Agreement and the Collateral Documents including, without limitation, any personal or real property.

"Collateral Documents" means the Mortgage, the Assignment of Leases and Rents, the Assignment of Construction and Development Documents, the Assignment of Management Agreements, the Financing Statements and any other documents securing the Loan.

"Commitment" means the amount set forth opposite each Lender's name on Schedule 1.1, or if any assignment or transfer of a Commitment occurs in accordance with the terms hereof, the amount set forth in the Register.

"Commitment Adjustment" means as defined in Section 2.5(b).

"Commitment Percentage" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment.  If the Commitments have terminated or expired, the Commitment Percentages are determined based upon the Commitments most recently in effect, giving effect to any assignments.

"Commitments" means the aggregate of every Commitment.  At the commencement of the Extension Period, the Commitments will automatically be reduced to the outstanding principal balance of the Loan as of the first day of the Extension Period, and the Commitment of each Lender will reduce proportionately so as to retain the same Commitment Percentage.

"Completion Date" means the date on which Completion of Construction occurs, which date must in no event be later than the Required Completion Date.

"Completion Guaranty" means that certain Completion Guaranty, dated of even date herewith, given by Guarantors to Agent.

"Completion of Construction" means that the conditions specified in Section 6.6(b) have been satisfied.

"Conditions for Extension" means as defined in Section 2.4.

"Connection Income Taxes" means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

"Construction and Development Documents" means the Construction Contracts, the Architect's Agreement, the Development Agreement, the Plans, the Governmental Approvals, and all other instruments, documents and rights relating to the design, construction and development of the Improvements, together with all exhibits and attachments thereto.

"Construction Contracts" means the General Construction Contract and the Major Subcontracts.

"Contractor" means Kraus-Anderson Construction Company or such other contractor as may be approved in writing by Agent prior to Borrower's engagement of such other contractor.

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.

"Corresponding Amount" means as defined in Section 2.5(a).

"Covered Entity" means (a) each Borrower, each of Borrower's Subsidiaries, all Guarantors and all pledgors of Collateral and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above.  For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.

"Cure Advance" means funds delivered by a Defaulting Lender to Agent to cure such Defaulting Lender's default, in an amount equal to the applicable Delinquent Advance plus interest accrued at the Delinquent Rate from the date Agent funded the Required Advance to the earlier of (a) the date Borrower refunds a Delinquent Advance, or (b) the date of the Cure Advance.

"Daily LIBOR Rate" means, for any day, the rate per annum determined by Agent by dividing the Published Rate by a number equal to 1.00 minus the LIBOR Reserve Percentage.

"Daily LIBOR Option" means as defined in Section 3.1(c).

"Date Down Endorsement" means a date down or other endorsement to the Title Insurance Policy in the form attached hereto as Exhibit 6.5(B), or other evidence satisfactory to Agent, and in each case confirming (a) a continuing title insured first mortgage lien on the Project containing no exception other than Permitted Encumbrances, and (b) that the Title Policy insures the priority of the Lien of the Mortgage in the amount of all disbursements made pursuant to this Agreement.

"Debt Service" means, for any period of determination, an amount equal to the greater of (a) all scheduled payments of principal and interest to be made by the Borrower on the Loan during the three (3) month period preceding the date of determination or (b) an amount equal to all payments of principal and interest which would be due in the three (3) month period

preceding the date of determination in respect of an indebtedness in an original principal amount equal to the Outstanding Amount as of the initial day of such period, bearing interest and being payable in level monthly installments of principal and interest over a thirty (30) year mortgage amortization schedule commencing on such day with such installments computed using the Treasury Rate as of a date thirty (30) days prior to the date of determination (if not a Business Day, on the immediately preceding Business Day), for a ten-year U.S. Treasury Note having a maturity approximately 10 years from the date of determination plus 2.25% with an interest rate floor of 5.75%, whichever results in the larger installment payment, in either case, with such payments annualized.

"Debt Service Coverage Ratio" for any period means (x) Net Operating Income of the Project for such period, divided by (y) Debt Service of the Project for such period.

"Debtor Relief Law" means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

"Default Rate" means the lesser of (a) the interest at a rate per annum that is four percent (4%) in excess of the rate or rates otherwise in effect under this Agreement or (b) the Maximum Legal Rate.

"Defaulting Lender" means, subject to Section 2.7, (a) any Lender that (i) has failed to fund all or any portion of its portion of the Loan when required to be funded hereunder unless such Lender notifies Agent and Borrower in writing that such failure is the result of such Lender's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, must be specifically identified in such writing) has not been satisfied, (ii) has failed to pay to Agent or any Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due; (iii) has notified Borrower or Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund its portion of the Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, must be specifically identified in such writing or public statement) cannot be satisfied); (iv) has failed, within three (3) Business Days after written request by Agent or Borrower, to confirm in writing to Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender will cease to be a Defaulting Lender pursuant to this clause (iv) upon receipt of such written confirmation by Agent and Borrower); (v) has, or has a direct or indirect parent company that has, (A) become the subject of a proceeding under any Debtor Relief Law, or (B) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender will not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in such Lender or any direct or indirect parent company thereof by an Official Body so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United

States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Official Body) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender; or (vi) has sold, assigned, transferred, pledged or participated all or any portion of its Commitment, except in accordance with the terms and conditions set forth in Section 11.9; or (b) any entity that has purchased or otherwise acquired all or any portion of a Lender's Commitment, excluding any purchase or acquisition in accordance with the terms and conditions set forth in Section 11.9.

"Delinquency Amount" means a Defaulting Lender's undisbursed Commitment, including any Delinquent Advance.

"Delinquency Notice" means as defined in Section 2.5(b).

"Delinquent Advance" means a Required Advance not made available to Agent by 3:00 p.m., Pittsburgh, Pennsylvania time on any Borrowing Date.

"Delinquent Rate" means (a) the Federal Funds Open Rate for the first three (3) Business Days after the date such interest begins to accrue, and (b) the applicable interest rate with respect to such portion of the Loan after the end of such three (3) Business Day period.

"Developer" means SR Development, LLC.

"Development Agreement" means that certain Development Agreement, dated June 13, 2014 between Borrower and the Developer relating to the furnishing of development services with respect to the Project, as amended by that certain First Amendment to Development Agreement dated November 4, 2014 and by that certain Second Amendment to Development Agreement dated January 22, 2015.

"Development Budget" means the development budget attached hereto as Schedule 8.17, as the same may be amended or supplemented from time to time with the approval of Agent.

"Development Fee" means a development fee in an amount not to exceed three percent (3%) of the total costs of the Project as set forth on the Development Budget approved by Agent, to be paid by Borrower to Developer as set forth in this Agreement and the Development Fee Subordination Agreement.

"Disbursement" means a disbursement of Loan proceeds pursuant to the terms and conditions of this Agreement and the other Loan Documents.

"Disbursement Request" means any request for proceeds of the Loan in accordance with Article 6.

"Disbursing Agent" means Commercial Partners Title, LLC, a Minnesota limited liability company.

"Disbursing Agreement" means that certain Disbursing Agreement, dated as of the date hereof, among the Borrower, the Agent and the Disbursing Agent governing the disbursement of

the proceeds of the Loan, as the same may be amended, replaced or supplemented from time to time.

"Dodd-Frank" means collectively the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any requests, rules, regulations, guidelines, interpretations or directions promulgated by any Official Body in connection therewith.

"Dollar", "Dollars", "U.S. Dollar" and the symbol "$" means lawful money of the United States of America.

"Effective Date" means the date indicated in a document or agreement to be the date on which such document or agreement becomes effective, or, if there is no such indication, the date of execution of such document or agreement.

"Elected Share" means, with respect to each Electing Lender, an amount equal to the Delinquency Amount multiplied by such Electing Lender's Elected Share Ratio.

"Elected Share Ratio" means the ratio an Electing Lender's existing Commitment bears to the aggregate of the existing Commitments of all Electing Lenders.

"Electing Lender" means a Non-Defaulting Lender who delivers an Election Notice.

"Election Notice" means an irrevocable notice in writing from a Non-Defaulting Lender to Agent, Lenders and Borrower that such Lender commits to fund a Delinquent Advance and assume the applicable Defaulting Lender's obligations with respect to advancing the remaining undistributed portion of such Defaulting Lender's Commitment pursuant to Section 2.5(b).

"Election Period" means the 20 day period commencing on the date of any Delinquency Notice.

"Electronic Format" means any document delivered by electronic mail or by setting forth such Notice on a site on the World Wide Web if notice of such website posting (including the information necessary to access such website) has previously been delivered to the applicable parties hereto by another means set forth in this Agreement, in any format Agent is capable of receiving and opening or reading (in all cases in Agent's sole determination).

"Eligibility Date" means, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date is the Effective Date of such Swap if this Agreement or any other Loan Document is then in effect with respect to such Loan Party, and otherwise it is the Effective Date of this Agreement and/or such other Loan Document(s) to which such Loan Party is a party).

"Eligible Assignee" means (a) Agent, any Lender or any of their direct or indirect Affiliates; (b) a federal or state chartered bank, a United States branch of a foreign bank, an insurance company, or any finance company generally engaged in the business of making commercial loans; (c) an Approved Fund; (d) any Person to whom Agent or any Lender assigns

its rights and obligations under this Agreement as part of a merger or sale of substantially all the assets of such Agent or Lender or sale of a portfolio of loans which include the Loan.

"Eligible Contract Participant" means an "eligible contract participant" as defined in the CEA and regulations thereunder.

"Emergency Fundings" means as defined in Section 9.14.

"Employee Benefit Plan" means any employee benefit plan as defined in Section 3(3) of ERISA.

"Environmental Indemnity Agreement" means that certain Environmental Indemnity Agreement of even date herewith from Loan Parties to Agent, as the same may be amended, replaced or supplemented from time to time.

"Environmental Laws" means as defined in the Environmental Indemnity Agreement.

"Equity Contribution" means Borrower's contribution of equity in the amount equal to the greater of (A) the sum of (i) $16,423,367 and (ii) the fair market value of the Land (which is agreed to be $6,119,000) and (B) an amount equal to twenty-five percent (25%) of the total costs of the Project (as such costs are set forth on the Development Budget), in either case toward the total costs of the Project based on the information set forth on the Development Budget.

"ERISA" means the Employee Retirement Income Security Act of 1974, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

"ERISA Group" means, at any time, all corporations, trades, or businesses (whether or not incorporated) under common control with Borrower and/or any Guarantor as determined under Section 414(b), (c), (m), or (o) of the Internal Revenue Code.

"Event of Default" means as defined in Section 10.1.

"Excluded Hedge Liability" means, with respect to each Loan Party, each of its Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any other Loan Document that relates to such Swap Obligation is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by virtue of such Loan Party's failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap.  Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any other Loan Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap, this definition applies only to the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal under the CEA, or any rule, regulations or order of the CFTC, solely as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap; (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation will constitute an Excluded Hedge Liability for purposes of the guaranty but not for

purposes of the grant of the security interest; and (c) if there is more than one Loan Party executing this Agreement or the other Loan Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person will only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.

"Excluded Taxes" means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes; and (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to its interest in a Loan or Commitment pursuant to a Law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by Borrower under Section 3.15(b) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.14, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office; and (c) any U.S. federal withholding Taxes imposed under FATCA.

"Exhibit" means any one or more of those schedules and exhibits attached hereto and made a part hereof.

"Expiration Date" means the earlier of:  (a) July 1, 2018, as the same may be extended pursuant to Section 2.4; or (b) the date upon which the Loan is accelerated pursuant to this Agreement.

"Extension DSCR Requirement" means that the Debt Service Coverage Ratio is not less than 1.25 to 1.00 as measured for each of (a) the prior calendar quarter which is reported or required to be reported on or prior to the Extension Option Exercise Date and (b) the prior calendar quarter which is reported or required to be reported on or prior to the Extension Period Commencement Date.

"Extension Fee" means a fee equal to two tenths of one percent (0.2%) of the Outstanding Amount as of the Extension Option Exercise Date, which fee is payable by Borrower to Agent, for the ratable benefit of the Lenders, on or before the original Expiration Date.

"Extension LTV Requirement" means that the aggregate of the outstanding principal amount of the Loan and the L/C Obligations does not exceed seventy percent (70%) of the "as-is" Appraised Value of the Project.

"Extension Option" means as defined in Section 2.4

"Extension Option Exercise Date" means the date on which Borrower exercises the applicable Extension Option by providing Agent with written notice of its election to extend the Expiration Date in accordance with Section 2.4.

"Extension Period" means any period for which the Expiration Date has been extended pursuant to Section 2.4.

"Extension Period Commencement Date" means the date of the commencement of any Extension Period.

"FATCA" means as of the date of this Agreement Sections 1471 through 1474 of the Internal Revenue Code, and any requests, rules, regulations, guidelines, interpretations or directions promulgated by any Official Body in connection therewith.

"Federal Funds Open Rate" means, for any day, the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption "OPEN" (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by Agent (an "Alternate Source") (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if at any time, for any reason, a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source does not exist, a comparable replacement rate determined by Agent at such time (which determination is conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day will be the "open" rate on the immediately preceding Business Day.  The rate of interest charged will be adjusted as of each Business Day based on changes in the Federal Funds Open Rate without notice to Borrower.

"Financing Statements" means the financing statements which Agent may from time to time require in order to perfect the security interest granted to Agent in and to the Collateral described in the Mortgage, the other Collateral Documents and this Agreement pursuant to the applicable Uniform Commercial Code.

"Flood Laws" means all applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994.

"Force Majeure Event" means an act of God, strike, lockout, explosion, act of sabotage, riot, civil commotion, act of war, fire, other casualty or any other cause beyond the reasonable control of the Borrower which delays the progress of construction of the Improvements, provided that Borrower must use commercially reasonable efforts to notify the Agent promptly following the commencement of the Force Majeure Event, and provided further that the Agent will determine in its reasonable discretion that a Force Majeure Event has occurred.  For the purposes of this definition, the following are expressly excluded as a Force Majeure Event:  (i) a shortage of materials in connection with the completion of the Project and (ii) a shortage of funds by the Borrower or any party to the Construction and Development Documents.

"Foreign Lender" means (a) if Borrower is a U.S. Person, a Lender that is not a U.S. Person, or (b) if Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.

"Fund" means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

"GAAP" means generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3, and applied on a consistent basis both as to classification of items and amounts.

"General Construction Contract" means individually and collectively (i) that certain Standard Form of Agreement Between Owner and Contractor, dated March 7, 2014, between Borrower and the Contractor, with respect to the construction of Building A, (ii) that certain Standard Form of Agreement Between Owner and Contractor, dated October 15, 2014, between Borrower and the Contractor, with respect to the construction of Building B and (iii) the Standard Form of Agreement Between Owner and Contractor, to be executed by Borrower and the Contractor, with respect to the construction of Building C, and a copy of thereof delivered to Agent prior to the request for the first Disbursement to pay construction costs associated with  Building C.

"General Contractor's Consent" means a consent in form and substance acceptable to Agent, fully executed by the Contractor and delivered to Agent pursuant to Section 6.5.

"Governmental Approvals" means all consents, licenses, permits and all other authorizations or approvals required by any Official Body, including all agreements entered into with any Official Body, with respect to the development, construction, completion, use and occupancy of the Land and Improvements.

"Guaranties" means one or more of (a) the Completion Guaranty and (b) the Payment Guaranty.

"Guarantor[s]" means, jointly and severally, the IRET Guarantors and the SR Guarantors.

"Guaranty" means any obligation of any Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.

"Historical Statements" means as defined in Section 8.8.

"Honor Date" means as defined in Section 2.10(c)(i).

"Impositions" means all (a) real estate and personal property taxes and other taxes and assessments, water and sewer rates and charges and all other governmental charges and any interest or costs or penalties with respect thereto, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which at any time may be assessed, levied or imposed upon the Land or the Improvements, or the rent or income received therefrom, or any use or occupancy thereof; (b) charges for any easement or agreement maintained for the benefit of the Land and Improvements, and (c) other taxes, assessments, fees and governmental charges levied, imposed or assessed upon or against Borrower or any of its properties.

"Improvements" means all buildings, structures and improvements of every kind and description now or hereafter constructed or placed on the Land in accordance with the Plans, to include the Buildings and all site, highway, access, parking, utility, drainage and other improvements required in accordance with the Governmental Approvals.

"Indebtedness" means, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of:  (a) borrowed money; (b) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility; (c) reimbursement obligations (contingent or otherwise) under any letter of credit agreement, banker's acceptance agreement or similar arrangement; (d) obligations under any Interest Rate Hedge or other interest rate management device, foreign currency exchange agreement, currency swap agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement; (e) any other transaction (including without limitation forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than thirty (30) days past due); or (f) any Guaranty of Indebtedness for borrowed money.

"Indemnified Taxes" means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document, and (b) Other Taxes.

"Indemnitee" means as defined in Section 11.3(b).

"Information" means all information designated confidential and received from the Loan Parties or any of their Related Parties relating to such Person or any of such Person's businesses, other than any such information that becomes publicly available other than as a result of a breach of Section 11.10 of this Agreement or becomes available to Agent, and Lender or any of their respective Affiliates on a non-confidential basis; provided that, in the case of information received from Borrower or any Related Party after the date hereof, such information is clearly identified at the time of delivery as confidential.

"Initial Construction Disbursement" means the Disbursement to be made upon the fulfillment of the conditions set forth in Section 6.5.

"Insolvency Proceeding" means, with respect to any Person, (a) a case, an action or proceeding with respect to such Person (x) before any court or any other Official Body under any Debtor Relief Law now or hereafter in effect, or (y) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any such Person or otherwise relating to the liquidation, dissolution, winding up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets of creditors, or other similar arrangement in respect of such Person's creditors generally or any substantial portion of its creditors undertaken under any Law.

"Inspecting Architect" means Capital Consultants, Inc., or such other Person or entity as Agent may designate from time to time (a) to inspect the construction of the Improvements; (b) to review the Plans, drawings, sketches, specifications, reports, modifications, change orders and the like; (c) to certify that the construction of the Improvements has been completed in accordance with the Plans; and (d) to perform other related services with respect thereto.

"Insurance Policy" means as defined in Section 4.5(a).

"Interest Rate Hedge" means an interest rate exchange, collar, cap, swap, floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or similar agreements entered into by any Loan Party in order to provide protection to, or minimize the impact upon, such Loan Party of increasing floating rates of interest applicable to Indebtedness.

"Interest Rate Option" means any LIBOR Option, the Base Rate Option or the Daily LIBOR Option.

"Interest Rate Request" means as defined in Section 3.2.

"Interim Statements" means as defined in Section 8.8.

"Internal Revenue Code" means the Internal Revenue Code of 1986.

"IRET" means Investors Real Estate Trust.

"IRET Guarantors" means, jointly and severally, IRET Properties and IRET, Inc.

"IRET Properties" means IRET Properties, A North Dakota Limited Partnership.

"IRS" means the Internal Revenue Services.

"Land" means the real property upon which the Project is to be constructed and which is owned in fee simple by Borrower consisting of approximately 9.4 acres and identified in Exhibit A to the Mortgage, together with all rights, title and interests of Borrower in and to all easements, rights and privileges benefiting the Land and all other real property interests described in the Mortgage.

"Law" means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any

settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic.

"L/C Advance" means, with respect to each Lender, the funding of its participation in any L/C Borrowing in accordance with its Commitment Percentage.

"L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made.

"L/C Credit Extension" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.

"L/C Issuer" means PNC Bank in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

"L/C Obligations" means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

"Leases" means as defined in the Mortgage.

"Lender" means each Person listed on Schedule 1.1 and their respective successors and assigns as permitted hereunder.  For any Loan Document that provides for the granting of a security interest or other Lien to the Lenders or to the Agent as security for the Obligations, "Lender" includes any Affiliate of a Lender to which such Obligation is owed.

"Letter of Credit" means any letter of credit issued hereunder.

"Letter of Credit Application" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

"Letter of Credit Expiration Date" means the day that is seven days prior to the Expiration Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

"Letter of Credit Sublimit" means an amount equal to the lesser of $2,000,000 or the available Commitments.  The Letter of Credit Sublimit is part of the available Commitments.  The Letter of Credit Sublimit will be reduced by the Commitment Percentage of any Defaulting Lender.

"LIBOR" means with respect to any amount to which the LIBOR Option applies for any LIBOR Interest Period, the interest rate per annum determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an "Alternate Source"), at

approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such LIBOR Interest Period as the London interbank offered rate for U.S. Dollars for a comparable amount having a borrowing date and a maturity comparable to such LIBOR Interest Period (or if at any time, for any reason, a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source no longer exists, a comparable replacement rate determined by Agent at such time (which determination is conclusive absent manifest error)), by (b) a number equal to 1.00 minus the LIBOR Reserve Percentage.  LIBOR will be adjusted with respect to any portion of the Loan to which the LIBOR Option applies that is outstanding on the effective date of any change in the LIBOR Reserve Percentage as of such effective date.  Agent will give prompt notice to Borrower of LIBOR as determined or adjusted in accordance herewith, which determination is conclusive absent manifest error.  In the event that LIBOR at any time is a negative number, LIBOR shall be deemed to be zero.

"LIBOR Interest Period" means the period of time selected by Borrower in connection with (and to apply to) any election permitted hereunder by Borrower to have the Loan bear interest at the LIBOR Option.  Subject to the last sentence of this definition, such period will be for a period of one (1) Month (or such shorter period as Agent in its discretion may allow Borrower to elect if available from all Lenders).  Such LIBOR Interest Period commences on (x) the date of disbursement of an advance of the Loan or (y) the date of renewal of or conversion to the LIBOR Option, as applicable.  Notwithstanding the second sentence hereof:  (A) any LIBOR Interest Period which would otherwise end on a date which is not a Business Day will be extended to the immediately succeeding Business Day unless such Business Day falls in the next calendar month, in which case such LIBOR Interest Period will end on the next preceding Business Day, and (B) Borrower may not select, convert to or renew a LIBOR Interest Period for any portion of the Loan that would end after the Expiration Date.

"LIBOR Options" means as defined in Section 3.1(b).

"LIBOR Option Reset Date" means as defined in Section 3.2.

"LIBOR Rate Margin" means (i) two and twenty-five hundredths of one percent (2.25%) prior to the date the Project achieves a Debt Service Coverage Ratio equal to or greater than 1.10 to 1.00 and (ii) two and ten hundredths of one percent (2.10%) from and after the date the Project achieves a Debt Service Coverage Ratio equal to or greater than 1.10 to 1.00.

 "LIBOR Reserve Percentage" means as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities").

"Lien" means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).

"Loan" means collectively the loans made by Lenders to Borrowers pursuant to this Agreement, in the maximum aggregate principal amount not to exceed Fifty Million Seven Hundred Fifty Thousand and No/100ths Dollars ($50,750,000.00), as said Loan may from time to time be amended or refinanced in accordance herewith.

"Loan Documents" means, collectively, this Agreement, the Notes, the Guaranties, the Collateral Documents, any PNC Provided Interest Rate Hedge, the Environmental Indemnity Agreement, any Assignment and Assumption, the Letter of Credit Applications, the Letters of Credit, the Disbursing Agreement, the Subordination Agreement, and all other documents, instruments, certificates and agreements made in connection with the Loan by any Loan Party in favor of Agent or any Lender or by and between any Loan Party and Agent or any Lender.

"Loan Parties" means Borrower and Guarantors.

"Major Subcontractors" means all subcontractors under Major Subcontracts.

"Major Subcontracts" means any subcontracts under the Construction Contracts which provide for aggregate payments in excess of $500,000.

"Management Agreement" means, individually and collectively (i) that certain Property Management Agreement (Multi-Family Residential) by and between Borrower and Steven Scott Management, Inc., as property manager with respect to the apartment units in the Project, (ii) that certain Lease Up and Marketing Agreement dated effective as of August 1, 2013, by and between Borrower and Steven Scott Management, Inc., with respect to the marketing and leasing of the apartment units in the Project, (iii) that certain Management and Leasing Agreement dated as of June 13, 2014, by and between Borrower and Schafer Richardson, Inc., as property manager and leasing agent for the retail portions of the Project and (iv) that certain Property Management Agreement (Multi-Family Residential and Retail) by and between Borrower and IRET Properties, with respect to the management of the Project from and after the date that is two (2) years after Completion of Construction of Building C.

"Material Adverse Effect" means (a) any change in Borrower's business, assets, operations, financial condition or results of operations that has or could reasonably be expected to have any material adverse affect on Borrower; or (b) any change in any Guarantor's business, assets, operations, financial condition or results of operations that has or could reasonably be expected to have any material adverse affect on such person or entity's ability to perform his or its obligations under the Loan Documents.

"Maximum Legal Rate" means the highest rate of interest that lenders may charge borrowers under applicable Law.

"Minor Change Orders" means changes in the Improvements, the Plans or the other Construction and Development Documents which do not modify the scope or overall quality of the Project or involve extensions of time of the Required Completion Date under the General Construction Contract and the performance of which costs less than $250,000 each and less than $500,000 in the aggregate.

"Month" means, with respect to a LIBOR Interest Period, the interval between the days in consecutive calendar months numerically corresponding to the first (1st) day of such LIBOR Interest Period.  If any LIBOR Interest Period begins on a day for which there is no numerically corresponding day in the month in which such LIBOR Interest Period is to end, the final day of such LIBOR Interest Period will be deemed to end on the last Business Day of the final month thereof.

"Mortgage" means that certain Mortgage, Security Agreement and Fixture Financing Statement, dated of even date herewith, from Borrower to Agent.

"Net Cash Flow" means, as of the applicable calculation date, all gross cash, revenues and other funds received by Borrower in connection with the Project, less all expenses then due in connection with the ownership, operation, maintenance and financing of the Project, including but not limited to taxes, assessments and other similar charges, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, debt service and management fees.

"Net Operating Income" means, as of the date of determination, the difference between (x) the revenues (including, without limitation, tenant reimbursements of items included in expenses) received by the Borrower from the ownership and operation of the Project for the three (3) months preceding the date of determination, consisting of rental income from tenants under leases then in full force and effect with no default thereunder and approved by (or deemed to be approved by) Agent, including, without limitation, the expected effective minimum rent payable by tenants in occupancy under executed leases approved by Agent, but not yet paying rent, so long as such tenants will be paying minimum rent within thirty (30) days from the date of determination, and all other revenues of a recurring nature based upon operating statements for the Project for the three (3) months preceding the date of determination and approved by Agent in its reasonable discretion, with such revenues annualized by multiplying such amount by four (4), but excluding security and other deposits, other revenues which are non-recurring (in the Agent's reasonable determination) and lease termination fees and (y) the sum of (A) the greater of (i) the sum of actual operating expenses incurred by the Borrower in connection with its ownership and operation of the Project for the six (6) months preceding the date of determination (excluding all real estate taxes and insurance premiums paid during such period) with such expenses annualized plus, all real estate taxes and insurance premium obligations for the calendar year which includes the date of calculation, and (ii) $1,700,000, (B) management fees equal to the greater of the actual management fees paid by the Borrower with respect to the Project for such period or 3% of gross revenues for such period, with such fees annualized, and (C) capital expenditure reserves equal to $250 per apartment in the Project per calendar year and $0.20 per rentable square foot of retail/commercial space in the Project per calendar year.

"Non-Consenting Lender" means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all affected Lenders in accordance with the terms of Section 11.1, and (b) has been approved by the Required Lenders.

"Non-Defaulting Lender" means, at any time, each Lender that is not a Defaulting Lender.

"Non-Qualifying Party" means any Loan Party that fails for any reason to qualify on the applicable Eligibility Date as an Eligible Contract Participant.

"Nonrenewal Notice Date" means as defined in Section 2.10(b)(iii).

"Note" means a promissory note made by Borrower in favor of any Lender evidencing the Loan.

"Obligations" means all obligations, Indebtedness and liabilities of any Loan Party to Agent or any Lender or their respective Affiliates, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, secured or unsecured, whether as guarantor or surety, now or hereafter existing, or due or to become due, under or in connection with this Agreement, the Notes, the Agent's Letter or any other Loan Document, including, without limitation, all L/C Obligations, any post-petition interest and/or advances any PNC Provided Interest Rate Hedge Liabilities, provided, however, notwithstanding anything in the foregoing to the contrary, the Obligations do not and will not include any Excluded Hedge Liabilities.

"Official Body" means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or Basel or any successor or similar authority to any of the foregoing).

"Organizational Documents" means a Loan Party's partnership agreement, partnership certificate, articles of incorporation, bylaws, certificate of incorporation, articles of organization, operating agreement, declaration of trust or other formation documents.

"Other Connection Taxes" means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax, excluding connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document.

"Other Taxes" means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made (a) pursuant to any Loan Document; (b) from the execution, delivery, performance, enforcement or registration of, any Loan Document; or (c) from the receipt or perfection of a security interest or otherwise with respect to any Loan Document, including Other Connection Taxes related to an assignment made pursuant to Section  3.15 but excluding Other Connection Taxes imposed with respect to any other assignment.

"Outstanding Amount" means (i) with respect to the Loan on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of the Loan occurring on such date; and (ii) with respect to any L/C Obligations on

any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

"Participant" means as defined in Section 11.9(d).

"Participant Register" means as defined in Section 11.9(d).

"Payment Guaranty" means that certain Agreement of Guaranty and Suretyship (Payment), dated of even date herewith, given by the Guarantors to Agent.

"Permitted Encumbrances" means:

"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Official Body or other entity.

"Plans" means the final plans and specifications for the construction and equipping of the Improvements, including all schematic and working drawings and designations of all manufacturers and model numbers of all equipment, and any Improvements to be constructed off of the Land, as approved by all necessary parties in accordance with this Agreement.

"Platform" means as defined in Section 11.5(d).

"PNC Bank" means PNC Bank, National Association, its successors and assigns.

"PNC Provided Interest Rate Hedge" means an Interest Rate Hedge which is provided by PNC Bank that is (a) documented in a standard International Swap Dealer Association Agreement; (b) provides for the method of calculating the reimbursable amount of the provider's credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes.

"PNC Provided Interest Rate Hedge Liabilities" means the liabilities owing to PNC Bank by any Loan Party that is party to a PNC Provided Interest Rate Hedge.  PNC Provided Interest Rate Hedge Liabilities, for purposes of this Agreement and all other Loan Documents are "Obligations" of such Person and of each other Loan Party, are guaranteed obligations under

any Guaranties and secured obligations under any other Loan Document, as applicable, and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person.  The Liens securing the PNC Provided Interest Rate Hedge Liabilities will be pari passu with the Liens securing all other Obligations under this Agreement and the other Loan Documents, subject to the express provisions of Section 10.2.

"Post-Foreclosure Entity" means as defined in Section 9.14.

"Post-Foreclosure Plan" means as defined in Section 9.14.

"Potential Default" means an event or condition which, with the passage of time, the giving of notice, a determination by Agent or the Required Lenders, or any combination of the foregoing, could reasonably be expected to constitute an Event of Default.

"Principal Office" means the main banking office of Agent in Pittsburgh, Pennsylvania, or such other office designated by Agent.

"Prior Security Interest" means a valid and enforceable perfected first-priority security interest under the Uniform Commercial Code in the Collateral which is subject only to Liens for taxes not yet due and payable to the extent such prospective tax payments are given priority by statute.

"Project" means the Land and Improvements.

"Project Account" means the account of Borrower maintained with Agent for the purpose of disbursement of funds with respect to the Loan.

"Project Covenant Documents" means the City Development Agreement.

"Property Managers" means, individually and collectively, Steven Scott Management, Inc., Schafer Richardson, Inc. and IRET Properties.

"Published Rate" means the rate of interest published each Business Day in The Wall Street Journal "Money Rates" listing under the caption "London Interbank Offered Rates" for a one month period (or, if no such rate is published therein for any reason, then the Published Rate will be the Eurodollar rate for a one month period as published in another publication selected by Agent).  In the event that the Published Rate at any time is a negative number, the Published Rate shall be deemed to be zero.

"Qualified ECP Loan Party" means each Loan Party that on the Eligibility Date is (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a "commodity pool" as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding $10,000,000, or (b) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a "letter of credit or keepwell, support, or other agreement" for purposes of Section 1a(18)(A)(v)(II) of the CEA.

"Recipient" means (a) Agent and (b) any Lender, as applicable.

"Register" means as defined in Section 11.9(c)

"Regulated Substances" means as defined in the Environmental Indemnity Agreement.

"Related Parties" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person's Affiliates.

"Reportable Compliance Event" means that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Terrorism Law.

"Required Advance" means the share of a Disbursement to be funded by each Lender in accordance with the provisions of Section 6.1.

"Required Completion Date" means the earlier to occur of (a) July 1, 2017 or (b) the date required for completion of the Improvements pursuant to the terms of the Project Covenant Documents, as such date may be extended pursuant to the terms of such Project Covenant Documents.

"Required Lenders" means (a) if there are one or two Lenders, all Non-Defaulting Lenders; and (b) if there are three or more Lenders, the Non-Defaulting Lenders who have in the aggregate at least sixty six and two thirds percent (66.67%) of either (i) the total Commitments of all Non-Defaulting Lenders, or (ii) in the event the Commitments have been terminated, the aggregate outstanding Loans of all Non-Defaulting Lenders.

"Resignation Effective Date" means as defined in Section 9.6(a).

"Retainage" means the retainage with respect to certain construction costs of the Improvements as provided in Section 6.6.

"Sanctioned Country" means a country subject to a sanctions program maintained under any Anti-Terrorism Law.

"Sanctioned Person" means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.

"Solvent" means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair market value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such

Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent liabilities and other commitments as they mature or as they otherwise are due and payable in the normal course of business, and (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature.

"SR Guarantors" means, jointly and severally, Bradley J. Schafer, N. Christopher Richardson and Steven G. Norcutt.

"Subordination Agreement" means that certain Subordination Agreement of even date herewith between Agent and IRET Properties, pursuant to which all member loans made by IRET Properties to Borrower are subordinated to the Loan, as the same may be amended, replaced or supplemented from time to time.

"Subsequent Disbursement" means as defined in Section 6.5.

"Subsidiary" of any Person at any time means any corporation, trust, partnership, limited liability company or other business entity (a) of which more than 50% of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person's Subsidiaries, or (b)  which is controlled or capable of being controlled by such Person or one or more of such Person's Subsidiaries.

"Substitute Note" means as defined in Section 2.5(e).

"Swap" means any "swap" as defined in Section 1a(47) of the CEA and regulations thereunder other than (a) a swap entered into on, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or  (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).

"Swap Obligation" means any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a PNC Provided Interest Rate Hedge.

"Syndications Period" means the 120 day period commencing on the Closing Date.

"Taxes" means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.

"Title Insurance Company" means a title insurer acceptable to Agent.

"Title Insurance Policy" means a title insurance policy purchased for Agent by Borrower at Borrower's sole cost and expense, insuring the lien of the Mortgage as a first lien on fee simple title to the Land and Improvements, together with all appurtenances thereto in the principal sum secured by the Mortgage and the portions of the Loan advanced from time to time, which policy must, to the extent available in the applicable jurisdiction, include such

endorsements as Agent may require, and coverage against mechanics' lien claims for all Disbursements through the latest disbursement, subject only to exceptions as may be approved in writing by Agent from time to time, if any, and issued by the Title Insurance Company on the ALTA Loan Title Insurance Policy 6/17/06 form or such other form designated by Agent.

"Total Outstandings" means the aggregate Outstanding Amount of the Loan and all L/C Obligations.

"Uniform Commercial Code" means the Uniform Commercial Code as in effect in each applicable jurisdiction.

"Unreimbursed Amount" means as defined in Section 2.10(c)(i).

"USA Patriot Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107 56.

"U.S." means the United States of America.

"U.S. Borrower" means any Borrower that is a U.S. Person.

"U.S. Person" means any Person that is a "United States Person" as defined in Section 7701(a)(30) of the Internal Revenue Code.

"Voluntary Prepayment" means any payment made in compliance with the terms and conditions set forth in Section 3.9.

"Withholding Agent" means any Loan Party and Agent.

Borrower will provide Agent with written notice of its election to extend the Expiration Date in the form attached hereto as Exhibit 2.4, together with payment of the Extension Fee, not later than sixty (60) days and not sooner than one hundred twenty (120) days prior to the then applicable Expiration Date.  In the event that, for any reason, the Borrower fails to satisfy any of the Conditions for Extension, the Loan shall mature and be due and payable in full on the original Expiration Date.

"This Note is a substitute note as contemplated by Section 2.5(e) of the Construction Loan Agreement, and it replaces and is in lieu of that certain note made by Borrower, dated _______________________ to the order of ________________ in the principal sum of $________________."

In connection with Borrower's execution of Substitute Notes, Borrower will deliver to Agent evidence of the due authorization, execution and delivery of the Substitute Notes and any related documents as Agent may reasonably request.  The execution and delivery of Substitute Notes is a condition precedent to any further Disbursements.  Upon receipt of its Substitute Note, each of the Electing Lender(s) and the Defaulting Lender will return to Borrower any Note replaced by a Substitute Note, provided that the delivery of a Substitute Note to any Lender pursuant to this Section 2.5 will operate to void and replace the Note previously held by such Lender.  Borrower, Agent and Lenders agree to execute any other modifications to the Loan Documents that Agent reasonably deems necessary or desirable in connection with any Commitment Adjustment.

Borrower will promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower's instructions or other irregularity, Borrower will immediately notify L/C Issuer.  Borrower will be conclusively deemed to have waived any such claim against L/C Issuer and its correspondents unless it Borrower delivers such notice.

(c)            Daily LIBOR Option:  A fluctuating rate per annum (computed on the basis of a year of three hundred sixty (360) days and actual days elapsed) equal to the sum of the Daily LIBOR Rate plus the LIBOR Rate Margin (the "Daily LIBOR Option"), but in each case, such interest rate to change automatically without notice to Borrower from time to time effective as of the effective date of each change in the Daily LIBOR Rate.

then Agent will promptly notify Lenders and Borrower thereof.  On the date specified in any such notice, the obligation of Lenders to allow Borrower to select, continue, renew, or convert to a LIBOR Option or a Daily LIBOR Option, as applicable, is suspended until Agent notifies Borrower that the circumstances giving rise to the previous determination no longer exist.  If, at any time, Agent makes a determination under subsection (a) or (b) above, and Borrower has previously notified Agent of its conversion to or selection or renewal of a LIBOR Option and such Interest Rate Option has not yet gone into effect, such notification is deemed to provide for selection of, conversion to or renewal of the Base Rate Option.

If, on any date on which LIBOR would otherwise be determined, any Lender determines (which determination will be conclusive absent manifest error) that:

then the affected Lender must promptly notify Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and Agent will promptly send copies of such notice and certificate to the other Lenders and Borrower.  On the date specified in any such notice, the applicable portion of the Loan automatically converts to the Base Rate Option.

Whenever Borrower desires to prepay the Loan, it must provide a prepayment notice to Agent by 1:00 p.m. (Pittsburgh, Pennsylvania time) setting forth (x) the Business Day on which the proposed prepayment is to be made, which must be no less than three (3) Business Days after the date of such prepayment notice; (y) a statement indicating the application of the prepayment between the portions of the Loan to which the Base Rate Option applies, to which the Daily LIBOR Option and to which the LIBOR Option applies, including, with respect to the LIBOR Option, the applicable Borrowing Tranche to which such prepayment applies; and (z) the total principal amount of such prepayment, which may not be less than $100,000.  All prepayment notices are irrevocable.  The principal amount of the portion of the Loan for which a prepayment notice is given, together with interest on such principal amount, is due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made.  Any prepayment hereunder is subject to Borrower's obligation to indemnify Lenders under Section 3.13 and is not subject to reborrowing.

and the result of any of the foregoing is to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any portion of the Loan or of maintaining its obligation to make any portion of the Loan, or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or other Recipient, Borrower will pay to such Lender or other Recipient, such additional amount or amounts as will compensate such Lender or other Recipient, for such additional costs incurred or reduction suffered.

If any Lender sustains or incurs any such loss or expense, it will from time to time notify Borrower and Agent of the amount determined in good faith by such Lender (which determination will be conclusive absent manifest error) to be necessary to indemnify Lender for such loss or expense, and such amount will be due and payable by Borrower to Lender within ten (10) days after the notice is given.  Lender's notice will set forth in reasonable detail the basis for its determination.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it will update such form or certification or promptly notify Borrower and Agent in writing of its legal inability to do so.

No Lender is required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.  Notwithstanding the foregoing, Agent may only be replaced subject to the requirements of Section 9.6.

Loan Parties hereby covenant and agree that until the Obligations have been indefeasibly paid in full and all other obligations hereunder have been performed and discharged and all Commitments have terminated or expired, they will comply at all times with the following affirmative covenants:

Borrower will obtain, at its sole cost and expense, all approvals or consents from other Persons of any changes in the Plans or other Construction and Development Documents (including change orders) that are required by Law or under any other agreement with respect to the Land or Improvements (including the Project Covenant Documents and the Governmental Approvals).  Borrower will deliver to Agent and the Inspecting Architect any documentation required by Agent pertaining to any such change.  Agent will respond within ten (10) Business Days after receipt by Agent and the Inspecting Architect of all documentation necessary to evaluate a requested change, and Agent will not approve any changes until Borrower has obtained all other approvals that Agent determines are required from other parties.  If Agent determines that any change may increase the cost of completion of the Improvements in excess of the amount of any category as shown on the Development Budget ("Category"), Borrower shall either reallocate funds from the "Contingency Reserve" Category to the extent permitted pursuant to the terms of this Agreement or deposit additional funds sufficient to cover the increased costs as a condition to giving its approval, such funds to be held by Agent and disbursed in accordance with Article 6.

At any time that Agent's or Lenders' consent or approval is required with respect to the Plans, any of the other Construction and Development Documents, construction of the Improvements and the cost thereof, or changes to any of the foregoing, Agent or Lenders may, without obligation, rely conclusively on the opinion of the Inspecting Architect.

Loan Parties hereby covenant and agree that until the Obligations have been indefeasibly paid in full and all other Obligations have been performed and discharged and all Commitments have terminated or expired, they must comply at all times with the following covenants:

Each Loan Party hereby represents and warrants to Agent and each Lender as follows, and with each Disbursement Request such warranties and representations must be recertified to Agent and the Lenders as true and correct:

Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent and, in the event that Agent consents to the making of such payments directly to Lenders, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under any of the Loan Documents.

Borrower will pay to Agent the Agent's fee and other amounts payable from Borrower to Agent (collectively, the "Agent's Fee") under the terms of an engagement letter (the "Agent's Letter") between Borrower and Agent, as amended from time to time.

Notwithstanding anything to the contrary herein, no Swap Obligations of any Non-Qualifying Party are to be paid with amounts received from such Non-Qualifying Party under any of its Guaranties (including sums received as a result of the exercise of remedies with respect to such Guaranties) or from the proceeds of such Non-Qualifying Party's Collateral if such Swap Obligations would constitute Excluded Hedge Liabilities; provided, however, to the extent

possible, appropriate adjustments are to be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to Obligations otherwise set forth herein.

Subject to acceptance and recording by Agent pursuant to Section 11.9(c), from and after the effective date specified in each Assignment and Assumption, the assignee thereunder is a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, has the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder is, to the extent of the interest assigned by such Assignment and Assumption, released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender ceases to be a party hereto) but will continue to be entitled to the benefits of all covenants and agreements of Borrower contained in any Loan Document relating to the payment of increased costs, additional compensation, expenses or indemnification with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement under seal as of the day and year first above written.

By:            IRET Properties, a North Dakota Limited  Partnership

Its:            Managing Member

By:            IRET, Inc.

Its:            General Partner

By:              /s/Michael A. Bosh

Michael A. Bosh

Its Executive Vice President

and General Counsel

By:              /s/James A. Harmann

James A. Harmann

Its Senior Vice President

By: /s/ Benjamin Arroyo                                                                       

Name:  Benjamin Arroyo                                                                                        

Title:   Vice President                                                                               

Each of the undersigned guarantors hereby joins in this Construction Loan Agreement solely for the purpose of making the representations and warranties with respect to it contained in this Construction Loan Agreement and for the purpose of covenanting and agreeing to be bound by the covenants and agreements with respect to it contained in this Construction Loan Agreement.