The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and the notes thereto.

Executive Overview


We were formed primarily to acquire and operate commercial real estate and real
estate-related assets on an opportunistic and value-add basis. In particular, we
have focused generally on acquiring commercial properties with significant
possibilities for capital appreciation, such as those requiring development,
redevelopment or repositioning, those located in markets and submarkets with
high growth potential, and those available from sellers who were distressed or
faced time-sensitive deadlines. In addition, our opportunistic and value-add
investment strategy has included investments in real estate-related assets that
present opportunities for higher current income. Since inception, we have
acquired a wide variety of commercial properties, including office, industrial,
retail, hospitality, and multifamily. We have purchased existing,
income-producing properties and newly constructed properties. We have also
invested in mortgage and mezzanine loans. We have made our investments in or in
respect of real estate assets located in the United States and other countries
based on our view of existing market conditions. As of December 31, 2021, our
investments included multi-family apartment complexes and a note receivable. All
of our current investments are located in the United States. We currently intend
to hold our various real properties until such time as our board of directors
determines that a sale or other disposition appears to be advantageous to
achieve our investment objectives or until it appears that the objectives will
not be met.

Current Environment

Our operating results are substantially impacted by the overall health of local,
U.S. national and global economies and may be influenced by market and other
challenges. Additionally, our business and financial performance may be
adversely affected by current and future economic and other conditions;
including, but not limited to, availability or terms of financings, financial
markets volatility, political upheaval or uncertainty, natural and man-made
disasters, terrorism and acts of war, unfavorable changes in laws and
regulations, outbreaks of contagious diseases, cybercrime, loss of key
relationships, and recession.

COVID-19 Pandemic


The World Health Organization declared COVID-19 a global pandemic on March 11,
2020 and since that time many of the previously imposed restrictions and other
measures which were instituted in response have been subsequently reduced or
lifted. However, the continuing COVID-19 pandemic remains highly unpredictable
and dynamic and its ultimate duration and extent continue to be dependent on
various developments, such as the emergence of variants to the virus that may
cause additional strains of COVID-19, the ongoing administration and ultimate
effectiveness of vaccines, including booster shots, and the eventual timeline to
achieve a sufficient level of herd immunity among the general population.
Accordingly, the ongoing COVID-19 pandemic may have negative effects on the
health of the U.S. economy for the foreseeable future.

As of December 31, 2021, our consolidated portfolio of properties consisted of
eight wholly owned multi-family apartment complexes. Our multi-family properties
have not been significantly impacted by the COVID-19 pandemic and their
occupancy levels, rental rates and rental collection have remained stable.
Additionally, our note receivable is collateralized by a condominium development
project located in New Yok City (the "Condominium Project"), which has been
subject to similar restrictions and risks. To date, both the Condominium Project
and our note receivable have not been significantly impacted by the COVID-19
pandemic.

We continue to closely monitor the overall extent as to which our business may
be affected by the ongoing COVID-19 pandemic which will largely depend on both
current and future developments, all of which are highly uncertain and cannot be
reasonably predicted.

If our properties and real estate-related investments are negatively impacted in
future periods for an extended period because (i) tenants are unable to pay
their rent, (ii) leasing demand falls causing declines in occupancy levels
and/or rental rates, and (iii) our borrower is unable to pay scheduled debt
service on the outstanding note receivable; our business and financial results
could be materially and adversely impacted.


                                       15

Liquidity and Capital Resources



We had cash and cash equivalents of $24.4 million, marketable securities,
available for sale of $3.6 million and restricted cash of $20.9 million as of
December 31, 2021. Our principal demands for funds going forward are expected to
be for the payment of (a) operating expenses, including capital expenditures,
and (b) scheduled debt service on our outstanding indebtedness. We also may, at
our discretion, use funds for (a) tender offers and/or redemptions of shares of
our common stock, (b) distributions, if any, to our shareholders, and (c)
selective acquisitions and/or real estate-related investments. Generally, we
expect to meet our cash needs with our cash and cash equivalents on hand along
with our cash flow from operations, the release of certain funds held in
restricted cash, the remaining availability on certain of our mortgage loans and
the repayment of our outstanding note receivable. However, to the extent that
these sources are not sufficient to cover our cash needs, we may also use
proceeds from additional borrowings and/or selective asset sales to fund such
needs.

We have borrowed money to acquire properties and make other investments. Under
our charter, the maximum amount of our indebtedness is limited to 300% of our
"net assets" (as defined by our charter) as of the date of any borrowing;
however, we may exceed that limit if approved by a majority of our independent
directors. In addition to our charter limitation, our board of directors has
adopted a policy to generally limit our aggregate borrowings to 75% of the
aggregate value of our assets unless substantial justification exists that
borrowing a greater amount is in our best interests. Our policy limitation,
however, does not apply to individual real estate assets.

Acquisition and Disposition Activities

Year Ended December 31, 2021

Disposition of the Lakes of Margate



On March 17, 2021, we completed the disposition of a 280-unit multifamily
property located in Margate, Florida (the "Lakes of Margate") for a contractual
sales price of $50.8 million to an unrelated third party (the "Lakes of Margate
Buyer"). At closing, the Lakes of Margate Buyer paid $15.1 million and assumed
the existing mortgage loan secured by the Lakes of Margate with an outstanding
principal balance of $35.7 million (see "Debt Financings - Lakes of Margate
Loan"). Additionally, on March 17, 2021, we paid approximately $1.1 million for
the 7.5% membership interest held in the Lakes of Margate by a minority owner
and as a result, at the time of the completion of the sale of the Lakes of
Margate it was wholly owned by us. In connection with the disposition of the
Lakes of Margate, we recognized a gain on the sale of investment property of
$27.8 million during the first quarter of 2021.

Acquisition of the BayVue Apartments



On July 7, 2021, we completed the acquisition of a 368-unit multifamily property
located in Tampa, Florida (the "BayVue Apartments") from an unrelated third
party, for a contractual purchase price of $59.5 million, excluding closing and
other related transaction costs. The acquisition was funded with $44.3 million
of initial proceeds from a mortgage financing (see "Debt Financings - BayVue
Apartments Mortgage") and $15.2 million of cash on hand, including escrowed
funds released by a qualified intermediary. In connection with the acquisition,
we paid the Advisor an aggregate of $1.0 million in acquisition fees and
acquisition expense reimbursements.

Acquisition of the Citadel Apartments


On October 6, 2021, we acquired a 293-unit multifamily property located in
Houston, Texas (the "Citadel Apartments"), from an unrelated third party, for a
contractual purchase price of $66.0 million, excluding closing and other
acquisition related costs. The acquisition was funded with $38.0 million of
initial proceeds from mortgage financings (see "Debt Financings - Citadel
Apartments Mortgages") and $28.0 million of cash on hand. In connection with the
acquisition, we paid the Advisor an aggregate of $1.2 million in acquisition
fees and acquisition expense reimbursements.

Disposition of the River Club Properties



On December 22, 2021, we completed the disposition of the River Club Apartments
and the Townhomes at River Club, two student housing complexes with a total of
1,134 beds (collectively, the "River Club Properties") located in Athens,
Georgia, for a contractual sales price of $77.3 million to an unrelated third
party. In connection with the transaction, we repaid in full the existing
outstanding mortgage indebtedness of $30.4 million secured by the River Club
Properties. Additionally, on December 20, 2021, we paid approximately $10.2
million for the 15.0% membership interest held in the River Club Properties by a
minority owner and as a result, at the time of the completion of the sale of the
River Club Properties it was wholly owned by us. In connection with the
disposition of the River Club Properties, we recognized a gain on the sale of
investment property of $55.0 million during the fourth quarter of 2021.

Acquisition of Noncontrolling Interest in Parkside

On December 30, 2021, we acquired the noncontrolling member's 10.0% ownership interest in Parkside for $3.6 million and as a result, now own 100% of Parkside.




                                       16

Year Ended December 31, 2020

Acquisition of Autumn Breeze Apartments



On March 17, 2020, we completed the acquisition of a 280-unit multifamily
property located in Noblesville, Indiana (the "Autumn Breeze Apartments") from
an unrelated third party for a contractual purchase price of $43.0 million,
excluding closing and other related transaction costs. The acquisition was
initially funded with cash on hand and we subsequently obtained mortgage
financing (see "Debt Financings. - Autumn Breeze Apartments Loan"). In
connection with the acquisition, we paid the Advisor $0.8 million in acquisition
fees and acquisition expense reimbursements.

Disposition of Gardens Medical Pavilion



On January 15, 2020, we and our noncontrolling member completed the disposition
of the Gardens Medical Pavilion located in Palm Beach Gardens, Florida for a
contractual sales price of $24.3 million to an unrelated third-party. In
connection with the transaction, we repaid in full the existing mortgage
indebtedness of $12.6 million and $1.8 million of the proceeds were distributed
to the noncontrolling member. In connection with the disposition of the Gardens
Medical Pavilion, we recognized a gain on the sale of investment property of
$5.5 million during the first quarter of 2020.

Debt Financings



From time to time, we have obtained mortgage, bridge, or mezzanine loans for
acquisitions and investments, as well as property development, redevelopment and
renovations. In the future, we may obtain new financings for such activities or
to refinance our existing real estate assets, depending on multiple factors.

Our aggregate notes payable balance was $277.5 million, net of deferred
financing fees of $4.8 million, and had a weighted average interest rate of
3.79% as of December 31, 2021. Excluding the Lakes of Margate Loan (which was
included in liabilities held for sale on the consolidated balance sheet as of
December 31, 2020 and subsequently assumed by the Lakes of Margate Buyer on
March 17, 2021), our aggregate notes payable balance was $213.0 million, net of
deferred financing fees of $3.4 million, and had a weighted average interest
rate of 3.71% as of December 31, 2020.

Year Ended December 31, 2021

BayVue Apartments Mortgage


On July 7, 2021, we entered into a non-recourse mortgage loan facility for up to
$52.2 million (the "BayVue Apartments Mortgage") scheduled to initially mature
on July 9, 2024, with two, one-year extension options, subject to the
satisfaction of certain conditions. At closing $44.3 million was initially
funded under the BayVue Apartments Mortgage. The BayVue Apartments Mortgage
requires monthly interest-only payments through its maturity date and bears
interest at London Interbank Offered Rate ("LIBOR")+3.10% subject to a 3.10%
floor. The BayVue Apartments Mortgage is collateralized by the BayVue
Apartments. In connection with the BayVue Apartments Mortgage, we paid the
Advisor $0.3 million in debt financing fees. As of December 31, 2021, the
outstanding principal balance and remaining availability under the BayVue
Apartments Mortgage was $44.4 million and $7.8 million, respectively. The
remaining availability may be drawn for certain capital improvements to the
property pursuant to the terms of the loan agreement

Flats at Fisher Supplemental Mortgage



On August 16, 2021, we entered into a non-recourse subordinated mortgage loan
for $9.2 million (the "Flats at Fisher Supplemental Mortgage") scheduled to
mature on July 1, 2026. The Flats at Fisher Supplemental Mortgage requires
monthly payments of interest and principal of $43,083 through its maturity date
and bears interest at 3.85%. The Flats at Fisher Supplemental Mortgage is
collateralized with a subordinated mortgage interest in the Flats at Fisher. In
connection with the Flats at Fisher Supplemental Mortgage, we paid the Advisor
$0.1 million in debt financing fees.


                                       17

Arbors Harbor Town Supplemental Mortgage


On September 30, 2021, we entered into a non-recourse subordinated mortgage loan
for $5.9 million (the "Arbors Harbor Town Supplemental Mortgage") scheduled to
mature on January 1, 2026. The Arbors Harbor Town Supplemental Mortgage requires
monthly payments of interest and principal of $26,379 through its maturity date
and bears interest at 3.52%. The Arbors Harbor Town Supplemental Mortgage is
collateralized with a subordinated mortgage interest in the Arbors Harbor Town.
In connection with the Arbors Harbor Town Supplemental Mortgage, we paid the
Advisor $0.1 million in debt financing fees.

Citadel Apartments Mortgages



On October 6, 2021, we entered into a non-recourse mortgage loan facility for up
to $39.2 million (the "Citadel Apartments Senior Mortgage"). At closing, $30.4
million of proceeds were initially advanced under the Citadel Apartments Senior
Mortgage. The Citadel Apartments Senior Mortgage requires monthly interest-only
payments through its maturity date and bears interest at LIBOR+1.50% subject to
a 1.60% floor. Simultaneously, on October 6, 2021, we also entered into a
non-recourse mortgage loan facility for $9.8 million (the "Citadel Apartments
Junior Mortgage" and together with the Citadel Apartments Senior Mortgage, the
"Citadel Apartments Mortgages"). At closing, $7.6 million of proceeds were
initially advanced under the Citadel Apartments Junior Mortgage. The Citadel
Apartments Junior Mortgage requires monthly interest-only payments through its
maturity date and bears interest at LIBOR+8.75%, subject to a 8.85% floor.

The Citadel Apartments Mortgages initially mature on October 11, 2024, with two
one-year extension options, subject to the satisfaction of certain conditions,
and are collateralized by the Citadel Apartments while the Citadel Apartments
Junior Mortgage is subordinate to the Citadel Apartments Senior Mortgage. In
connection with the acquisition of the Citadel Apartments, an aggregate $38.0
million was initially funded under the Citadel Apartments Mortgages and we paid
the balance of the purchase price of $28.0 million with cash. In connection with
the Citadel Apartments Mortgages, we paid the Advisor an aggregate of $0.5
million in debt financing fees. As of December 31, 2021, the aggregate
outstanding principal balance and remaining availability under the Citadel
Apartment Mortgages were $38.0 million and $11.0 million, respectively. All of
the remaining availability of $11.0 million under the Citadel Apartment
Mortgages was subsequently advanced to us in January 2022.

Year Ended December 31, 2020

Autumn Breeze Apartments Loan



On March 31, 2020, we entered into a 10-year $29.9 million non-recourse mortgage
loan (the "Autumn Breeze Apartments Loan") scheduled to mature on April 1, 2030.
The Autumn Breeze Apartments Loan bears interest at 3.39% and requires monthly
interest-only payments through June 30, 2023 and monthly principal and interest
payments of approximately $0.1 million thereafter, through its stated maturity.
The Autumn Breeze Apartments Loan is collateralized by the Autumn Breeze
Apartments. In connection with the Autumn Breeze Apartments Loan, we paid the
Advisor $0.3 million in debt financing fees.

Lakes of Margate Loan


On June 26, 2020, we and the noncontrolling member entered into a 10-year, $35.7
million non-recourse mortgage loan (the "Lakes of Margate Loan") scheduled to
mature on July 1, 2030. The Lakes of Margate Loan bears interest at LIBOR+2.98%
and requires monthly interest-only payments through the first four years of the
term and thereafter, monthly payments of principal and interest based upon a
30-year amortization. The Lakes of Margate Loan is collateralized by the Lakes
of Margate. In connection with the Lakes of Margate Loan, we paid the Advisor
$0.4 million in debt financing fees. Additionally, approximately $1.4 million of
the financing proceeds were distributed to the noncontrolling member. On March
15, 2021, the Lakes of Margate Loan was assumed by the Lakes of Margate Buyer in
connection with the disposition of the property.

LIBOR



The Citadel Apartments Mortgages and the BayVue Apartments Mortgage are indexed
to LIBOR. In late 2021, it was announced LIBOR interest rates will cease
publication altogether by June 30, 2023. We have and intend continue to
incorporate relatively standardized replacement rate provisions into our
LIBOR-indexed debt documents, including a spread adjustment mechanism designed
to equate to the current LIBOR "all in" rate. There is significant uncertainty
with respect to the implementation of the phase out and what alternative indexes
will be adopted which will ultimately be determined by the market as a whole. It
therefore remains uncertain how such changes will be implemented and the effects
such changes would have on us and the financial markets generally.


                                       18




Contractual Obligations

One of our principal short-term and long-term liquidity requirements includes
the repayment of maturing debt. The following table provides information with
respect to the contractual maturities and scheduled debt service payments of our
indebtedness as of December 31, 2021 (dollars in thousands):

Contractual Obligations           2022         2023         2024         2025         2026         Thereafter        Total
Mortgage Payable                $  1,740     $  2,191     $ 84,844     $ 18,138     $ 147,729     $     27,733     $ 282,375
Interest Payments(1)              10,499       10,782        9,915        7,617         2,842            3,245        44,900
Total Contractual Obligations   $ 12,239     $ 12,973     $ 94,759     $ 25,755     $ 150,571     $     30,978     $ 327,275

(1) These amounts represent future interest payments related to mortgage payable

obligations based on the fixed and variable interest rates specified in the

associated debt agreement. All variable rate debt agreements are based on the

one-month LIBOR rate. For purposes of calculating future interest amounts on

variable interest rate debt the one-month LIBOR rate as of December 31, 2021


     was used.



Results of Operations

As of December 31, 2021, we had eight wholly owned real estate investments (multi-family apartment complexes) and one real estate-related investment (mezzanine loan).


On July 7, 2021 we acquired the BayVue Apartments and on October 6, 2021 we
acquired the Citadel Apartments (collectively, the "2021 Acquisitions") and on
March 17, 2020, we acquired the Autumn Breeze Apartments (the "2020 Acquisition"
and together with the 2021 Acquisitions, the "Acquisitions").

On March 17, 2021 we disposed of the Lakes of Margate and on December 22, 2021
we disposed of the River Club Properties (collectively, the "2021 Dispositions")
and on March 15, 2020 we disposed of the Gardens Medical Pavilion (the "2020
Disposition" and together with the 2021 Dispositions, the "Dispositions").

The Dispositions did not qualify to be reported as discontinued operations since
they did not represent a strategic shift that had a major effect on our
operations and financial results. Accordingly, the operating results of the
Dispositions are reflected in our results from continuing operations for all
periods presented through their dates of disposition.

Year ended December 31, 2021 as compared to the year ended December 31, 2020


Our results of operations for the year ended December 31, 2021 compared to the
same period in 2020 reflect our acquisition and disposition activities during
such periods. Properties which were owned by us during the entire periods
presented are referred to as our "Same Store" properties.

The following table provides summary information about our results of operations for the years ended December 31, 2021 and 2020 (dollars in thousands):



                                       Year Ended                                                 Change                Change              Change
                                      December 31,            Increase/      Percentage           due to                due to            due to Same
                                   2021          2020        (Decrease)        Change         Acquisitions(1)       Dispositions(2)        Store(3)
Rental revenues                  $  43,134     $  39,978     $     3,156             8.0 %   $           5,085     $          (3,820 )   $       1,891
Property operating expenses         14,498        13,049           1,449            11.0 %               1,971                (1,151 )             629
Real estate taxes                    5,865         5,454             411             8.0 %                 706                  (633 )             338
General and administrative           6,982         6,493             489             8.0 %                  53                  (100 )             536
Depreciation and amortization       14,858        12,227           2,631            22.0 %               3,688                (1,025 )             (32 )
Interest expense, net               10,640         9,644             996            10.0 %               1,558                  (509 )             (53 )

(1) Represents the effect on our operating results for the periods indicated

resulting from our 2020 acquisition of the Autumn Breeze Apartments and our

2021 acquisitions of the BayVue Apartments and the Citadel Apartments.

(2) Represents the effect on our results for the periods indicated resulting from

our 2020 disposition of the Gardens Medical Pavilion and our 2021

dispositions of the Lakes of Margate and River Club Properties.

(3) Represents the change for the year ended December 31, 2021 compared to the

same period in 2020 for real estate and real estate-related investments owned

by us during the entire periods presented ("Same Store"). Same Store

properties for the periods ended December 31, 2021 and 2020 include Arbors

Harbor Town, Parkside, Flats at Fishers, Axis at Westmont and Valley Ranch


     Apartments.




                                       19




The following table reflects total rental revenues and total property operating
expenses for the years ended December 31, 2021 and 2020 for our (i) Same Store
properties, (ii) acquisitions and (iii) dispositions (dollars in thousands):

                                         Year Ended
                                        December 31,
Description                           2021         2020        Change
Rental Revenues:
Same Store                          $ 27,700     $ 25,809     $  1,891
Acquisitions                           7,980        2,895        5,085
Disposition                            7,454       11,274       (3,820 )
Total rental revenues               $ 43,134     $ 39,978     $  3,156

Property operating expenses:
Same Store                          $  8,532     $  7,903     $    629
Acquisitions                           2,949          978        1,971
Disposition                            3,017        4,168       (1,151 )

Total property operating expenses $ 14,498 $ 13,049 $ 1,449





The tables below reflect occupancy and effective monthly rental rates for our
Same Store properties:

                                                   Effective Monthly
                               Occupancy            Rent per Unit(1)
                                 As of                   As of
                             December 31,             December 31,
Property                    2021       2020         2021         2020
Arbors Harbor Town             94 %       96 %   $    1,523     $ 1,348
Parkside                       98 %       95 %   $    1,282     $ 1,170
Flats at Fishers               96 %       96 %   $    1,377     $ 1,182
Axis at Westmont               93 %       93 %   $    1,310     $ 1,178
Valley Ranch Apartments        90 %       94 %   $    1,603     $ 1,449
Autumn Breeze Apartments       91 %       95 %   $    1,232     $ 1,057
BayVue Apartments (2)          95 %      N/A     $    1,155        N/A
Citadel Apartments (3)         96 %      N/A     $    1,563        N/A

(1) Effective monthly rent is calculated as in-place contracted monthly rental

revenue, including any premiums due for short-term or month-to-month leases,

less any concessions or discounts.

(2) The BayVue Apartments were acquired on July 7, 2021.

(3) The Citadel Apartments were acquired on October 6, 2021.





Revenues. Rental revenues for the year ended December 31, 2021 were
$43.1 million, an increase of $3.1 million, compared to $40.0 million for the
same period 2020. Excluding the effect of our acquisition and disposition
activities, our rental revenues increased by $1.9 million for our Same Store
properties primarily as a result of higher average monthly rent per unit.

Property Operating Expenses. Property operating expenses for the year ended
December 31, 2021 were $14.5 million, an increase of $1.5 million, compared to
$13.0 million for the same period in 2020. Excluding the effect of our
acquisition and disposition activities, our property operating expenses
increased by $0.6 million for our Same Store properties primarily as a result of
higher utilities and repair and maintenance costs.

Real Estate Taxes. Real estate taxes for the year ended December 31, 2021 were
$5.9 million, an increase of $0.4 million, compared to $5.5 million for the same
period in 2020. Excluding the effect of our acquisition and disposition
activities, our real estate taxes increased by $0.3 million for our Same Store
properties.


                                       20




General and Administrative Expenses. General and administrative expenses for the
years ended December 31, 2021 and 2020 were $7.0 million and $6.5 million,
respectively. The increase is principally attributable to higher asset
management fees during the 2021 period resulting from our acquisition and
investment activities. General and administrative expenses primarily consist of
audit fees, legal fees, board of directors' fees, and other administrative
expenses, including certain costs paid to our advisor.

Depreciation and Amortization. Depreciation and amortization for the years ended
December 31, 2021 and 2020 were $14.9 million and $12.2 million, respectively.
Excluding the effect of our acquisition and disposition activities, depreciation
and amortization for our Same Store properties was flat.

Interest Expense, Net. Interest expense, net for the year ended December 31,
2021 was $10.6 million, an increase of $1.0 million, compared to $9.6 million
for the same period in 2020. Excluding the effect of our acquisition and
disposition activities, interest expense decreased slightly by $0.1 million

for
our Same Store properties.

Interest Income. Interest income for the year ended December 31, 2021 was $2.0 million, a slight increase of $0.1 million, compared to $1.9 million for the same period in 2020. Our interest income is primarily attributable to interest earned on our note receivable.



Gain on Sale of Investment Property. Our gain on the sale of investment property
for the year ended December 31, 2021 of $82.8 million consists of a gain on the
sale of Lakes of Margate of $27.8 million recognized during the first quarter of
2021 and a gain on the sale of the River Club Properties of $55.0 million
recognized during the fourth quarter of 2021. Our gain on the sale of investment
property for the year ended December 31, 2020 was attributable to a gain on the
sale of the Gardens Medical Pavilion of $5.5 million recognized during the

first
quarter of 2020.




Gain on Sale of Unconsolidated Joint Venture. During the second quarter of 2021
we recognized a gain of $1.5 million in connection with our receipt of the final
settlement of our prior participation in the residual interests of Prospect
Park. See Note 8 of the Notes to Consolidated Financial Statements for
additional information.

Summary of Cash Flows

Operating activities


The net cash provided by operating activities of $10.2 million for the year
ended December 31, 2021 consisted primarily of our net income of $77.5 million,
depreciation and amortization and amortization of deferred financing costs
aggregating $15.8 million and the net change in assets and liabilities of $2.3
million offset by the aggregate gains on the sale of investment property of
$82.8 million, the gain on the disposition of unconsolidated joint venture from
the settlement of our participation in the residual interests of Prospect Park
of $1.5 million and non-cash interest income of $1.2 million.

Investing activities

The net cash used in investing activities of $58.2 million for the year ended December 31, 2021 consisted primarily of the following:

? net proceeds from the sale of Lakes of Margate of $14.4 million;

? proceeds received for the final settlement of our prior participation in the

residual interests of Prospect Park of $1.5 million;

? net proceeds from the sale of the River Club Properties of $75.9 million;

? the acquisition of the BayVue Apartments for $60.5 million;

? the acquisition of the Citadel Apartments for $68.0 million;

? payment of $1.1 million to acquire the noncontrolling member's 7.5% ownership

interest in the Lakes of Margate;






                                       21

? payment of $10.2 million to acquire the noncontrolling member's 15.0% ownership

interest in the River Club Properties;

? payment of $3.6 million to acquire the noncontrolling member's 10.0% ownership

interest in Parkside; and

? capital expenditures of $6.4 million.

Financing activities

The net cash provided by financing activities of $61.8 million for the year ended December 31, 2021 consisted primarily of the following:

? net proceeds from notes payable of $94.4 million;

? debt principal payments of $31.4 million;

? distributions paid to noncontrolling interests of $0.6 million; and

? redemptions and cancellation of shares of common stock of $0.6 million.

Funds from Operations and Modified Funds from Operations



The historical accounting convention used for real estate assets requires
straight-line depreciation of buildings, improvements, and straight-line
amortization of intangibles, which implies that the value of a real estate asset
diminishes predictably over time. We believe that, because real estate values
historically rise and fall with market conditions, including, but not limited
to, inflation, interest rates, the business cycle, unemployment and consumer
spending, presentations of operating results for a REIT using the historical
accounting convention for depreciation and certain other items may be less
informative.

Because of these factors, the National Association of Real Estate Investment
Trusts ("NAREIT"), an industry trade group, has published a standardized measure
of performance known as funds from operations ("FFO"), which is used in the REIT
industry as a supplemental performance measure. We believe FFO, which excludes
certain items such as real estate-related depreciation and amortization, is an
appropriate supplemental measure of a REIT's operating performance. FFO is not
equivalent to our net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established
over time by the Board of Governors of NAREIT, as restated in a White Paper
approved by the Board of Governors of NAREIT effective in December 2018 (the
"White Paper"). The White Paper defines FFO as net income or loss computed in
accordance with GAAP, excluding depreciation and amortization related to real
estate, gains and losses from the sale of certain real estate assets, gains and
losses from change in control and impairment write-downs of certain real estate
assets and investments in entities when the impairment is directly attributable
to decreases in the value of depreciable real estate held by the entity. Our FFO
calculation complies with NAREIT's definition.

We believe that the use of FFO provides a more complete understanding of our performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.


Changes in the accounting and reporting promulgations under GAAP that were put
into effect in 2009 subsequent to the establishment of NAREIT's definition of
FFO, such as the change to expense as incurred rather than capitalize and
depreciate acquisition fees and expenses incurred for business combinations,
have prompted an increase in cash-settled expenses, specifically acquisition
fees and expenses, as items that are expensed under GAAP across all industries.
These changes had a particularly significant impact on publicly registered,
non-listed REITs, which typically have a significant amount of acquisition
activity in the early part of their existence, particularly during the period
when they are raising capital through ongoing initial public offerings.


                                       22




Because of these factors, the Investment Program Association (the "IPA"), an
industry trade group, published a standardized measure of performance known as
modified funds from operations ("MFFO"), which the IPA has recommended as a
supplemental measure for publicly registered, non-listed REITs. MFFO is designed
to be reflective of the ongoing operating performance of publicly registered,
non-listed REITs by adjusting for those costs that are more reflective of
acquisitions and investment activity, along with other items the IPA believes
are not indicative of the ongoing operating performance of a publicly
registered, non-listed REIT, such as straight-lining of rents as required by
GAAP. We believe it is appropriate to use MFFO as a supplemental measure of
operating performance because we believe that both before and after we have
deployed all of our offering proceeds and are no longer incurring a significant
amount of acquisition fees or other related costs, it reflects the impact on our
operations from trends in occupancy rates, rental rates, operating costs,
general and administrative expenses, and interest costs, which may not be
immediately apparent from net income. MFFO is not equivalent to our net income
or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01,
Supplemental Performance Measure for Publicly Registered, Non-Listed REITs:
Modified Funds from Operations (the "Practice Guideline") issued by the IPA in
November 2010. The Practice Guideline defines MFFO as FFO further adjusted for
acquisition and transaction-related fees and expenses and other items. In
calculating MFFO, we follow the Practice Guideline and exclude acquisition and
transaction-related fees and expenses (which includes costs incurred in
connection with strategic alternatives), amounts relating to deferred rent
receivables and amortization of market lease and other intangibles, net (which
are adjusted in order to reflect such payments from a GAAP accrual basis to a
cash basis of disclosing the rent and lease payments), accretion of discounts
and amortization of premiums on debt investments and borrowings, mark-to-market
adjustments included in net income (including gains or losses incurred on assets
held for sale), gains or losses included in net income from the extinguishment
or sale of debt, hedges, foreign exchange, derivatives or securities holdings
where trading of such holdings is not a fundamental attribute of the business
plan, unrealized gains or losses resulting from consolidation from, or
deconsolidation to, equity accounting, and after adjustments for consolidated
and unconsolidated partnerships and joint ventures, with such adjustments
calculated to reflect MFFO on the same basis. Certain of the above adjustments
are also made to reconcile net income (loss) to net cash provided by (used in)
operating activities, such as for the amortization of a premium and accretion of
a discount on debt and securities investments, amortization of fees, any
unrealized gains (losses) on derivatives, securities or other investments, as
well as other adjustments.

MFFO excludes non-recurring impairment of real estate-related investments. We
assess the credit quality of our investments and adequacy of reserves on a
quarterly basis, or more frequently as necessary. Significant judgment is
required in this analysis. We consider the estimated net recoverable value of a
loan as well as other factors, including but not limited to the fair value of
any collateral, the amount and the status of any senior debt, the prospects for
the borrower and the competitive situation of the region where the borrower does
business.

We believe that, because MFFO excludes costs that we consider more reflective of
acquisition activities and other non-operating items, MFFO can provide, on a
going-forward basis, an indication of the sustainability (that is, the capacity
to continue to be maintained) of our operating performance after the period in
which we are acquiring properties and once our portfolio is stabilized. We also
believe that MFFO is a recognized measure of sustainable operating performance
by the non-listed REIT industry and allows for an evaluation of our performance
against other publicly registered, non-listed REITs.

Not all REITs, including publicly registered, non-listed REITs, calculate FFO
and MFFO the same way. Accordingly, comparisons with other REITs, including
publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO
and MFFO are not indicative of cash flow available to fund cash needs and should
not be considered as an alternative to net income (loss) or income (loss) from
continuing operations as determined under GAAP as an indication of our
performance, as an alternative to cash flows from operations as an indication of
our liquidity, or indicative of funds available to fund our cash needs including
our ability to make distributions to our stockholders. FFO and MFFO should be
reviewed in conjunction with other GAAP measurements as an indication of our
performance. FFO and MFFO should not be construed to be more relevant or
accurate than the current GAAP methodology in calculating net income or in its
applicability in evaluating our operating performance. The methods utilized to
evaluate the performance of a publicly registered, non-listed REIT under GAAP
should be construed as more relevant measures of operational performance and
considered more prominently than the non-GAAP measures, FFO and MFFO, and the
adjustments to GAAP in calculating FFO and MFFO.

Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade
group has passed judgment on the acceptability of the adjustments that we use to
calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade
group may publish updates to the White Paper or the Practice Guidelines or the
SEC or another regulatory body could standardize the allowable adjustments
across the publicly registered, non-listed REIT industry, and we would have to
adjust our calculation and characterization of FFO or MFFO accordingly.


                                       23

Our calculations of FFO and MFFO are presented below (dollars and shares in thousands, except per share amounts):



                                                                       For the

                                                                     Year Ended

                                                                    December 31,
Description                                                      2021          2020
Net income                                                     $  77,494     $   1,183
FFO adjustments:

Depreciation and amortization of real estate assets               14,858

12,227


Gain on disposition of unconsolidated joint venture               (1,457 )

-


Gain on sale of investment property                              (82,819 ) 

    (5,474 )
FFO                                                                8,076         7,936
MFFO adjustments:
Other adjustments:

Acquisition and other transaction related costs expensed(1)            -

-


Noncash adjustments:
Gain on forgiveness of debt(3)                                      (128 )

-


Mark-to-market adjustments(2)                                        (26 )

2


Gain on sale of marketable securities(3)                             (14 )         (63 )
MFFO before straight-line rent                                     7,908

7,875


Straight-line rent(4)                                                  -           (32 )
MFFO - IPA recommended format                                  $   7,908

$ 7,843


Net income                                                     $  77,494     $   1,183
Less: income attributable to noncontrolling interests               (199 )      (1,298 )
Net income/(loss) applicable to Company's common shares        $  77,295     $    (115 )
Net income/(loss) per common share, basic and diluted          $    3.83

$ (0.01 )


FFO                                                            $   8,076     $   7,936
Less: FFO attributable to noncontrolling interests                  (509 )        (526 )
FFO attributable to Company's common shares                    $   7,567     $   7,410
FFO per common share, basic and diluted                        $    0.38

$ 0.36


MFFO - IPA recommended format                                  $   7,908     $   7,843
Less: MFFO attributable to noncontrolling interests                 (509 )        (520 )
MFFO attributable to Company's common shares                   $   7,399

$ 7,323



Weighted average number of common shares outstanding, basic
and diluted                                                       20,169        20,741




                                       24

(1) The purchase of properties, and the corresponding expenses associated with

that process, is a key operational feature of our business plan to generate

operational income and cash flows in order to make distributions to

investors. In evaluating investments in real estate, management

differentiates the costs to acquire the investment from the operations

derived from the investment. Such information would be comparable only for

non-listed REITs that have completed their acquisition activity and have

other similar operating characteristics. By excluding expensed acquisition

costs, management believes MFFO provides useful supplemental information that

is comparable for each type of real estate investment and is consistent with

management's analysis of the investing and operating performance of our

properties. Acquisition fees and expenses include payments to our Advisor or

third parties. Acquisition fees and expenses under GAAP are considered

operating expenses and as expenses included in the determination of net

income and income from continuing operations, both of which are performance

measures under GAAP. Such fees and expenses are paid in cash, and therefore


     such funds will not be available to distribute to investors. Such fees and
     expenses negatively impact our operating performance during the period in

which properties are being acquired. Therefore, MFFO may not be an accurate

indicator of our operating performance, especially during periods in which

properties are being acquired. All paid and accrued acquisition fees and

expenses will have negative effects on returns to investors, the potential

for future distributions, and cash flows generated by us, unless earnings

from operations or net sales proceeds from the disposition of properties are

generated to cover the purchase price of the property, these fees and

expenses and other costs related to the property. Acquisition fees and

expenses will not be paid or reimbursed, as applicable, to our Advisor even

if there are no further proceeds from the sale of shares in our offering, and

therefore such fees and expenses would need to be paid from either additional


     debt, operational earnings or cash flows, net proceeds from the sale of
     properties or from ancillary cash flows.

(2) Management believes that adjusting for mark-to-market adjustments is

appropriate because they are nonrecurring items that may not be reflective of

ongoing operations and reflects unrealized impacts on value based only on

then current market conditions, although they may be based upon current

operational issues related to an individual property or industry or general

market conditions. Mark-to-market adjustments are made for items such as

ineffective derivative instruments, certain marketable equity securities and

any other items that GAAP requires we make a mark-to-market adjustment for.

The need to reflect mark-to-market adjustments is a continuous process and is

analyzed on a quarterly and/or annual basis in accordance with GAAP.

(3) Management believes that adjusting for gains or losses related to

extinguishment/sale of debt, derivatives or securities holdings is

appropriate because they are items that may not be reflective of ongoing

operations. By excluding these items, management believes that MFFO provides

supplemental information related to sustainable operations that will be more

comparable between other reporting periods.

(4) Under GAAP, rental receipts are allocated to periods using various

methodologies. This may result in income recognition that is significantly

different than underlying contract terms. By adjusting for these items (to

reflect such payments from a GAAP accrual basis to a cash basis of disclosing

the rent and lease payments), MFFO provides useful supplemental information

on the realized economic impact of lease terms and debt investments,

providing insight on the contractual cash flows of such lease terms and debt

investments, and aligns results with management's analysis of operating


     performance.



Distributions

We made an election to qualify as a REIT for federal income tax purposes
commencing with our taxable year ended December 31, 2008. U.S. federal tax law
requires a REIT to distribute at least 90% of its annual REIT taxable income
(which does not equal net income, as calculated in accordance with generally
accepted accounting principles, or GAAP) determined without regard to the
deduction for dividends paid and excluding any net capital gain. In order to
continue to qualify for REIT status, we may be required to make distributions in
excess of cash available. Distributions, if any, are authorized at the
discretion of our board of directors based on their analysis of our performance
over the previous periods and expectations of performance for future periods.
Such analyses may include actual and anticipated operating cash flow, capital
expenditure needs, general financial and market conditions, proceeds from asset
sales and other factors that our board of directors deems relevant. Our board of
directors' decisions will be substantially influenced by their obligation to
ensure that we maintain our federal tax status as a REIT. We cannot provide
assurance that we will pay distributions at any particular level, or at all.

Prior to 2012, our board of directors declared distributions on a regular quarterly basis based on daily record dates, portions of which were paid on a monthly basis. During the first quarter of 2012, our board of directors determined to cease regular distributions.



During 2014 and 2015, our board of directors declared a total of $77.1 million,
or $3.00 per share of common stock, in special cash distributions, all of which
were paid to stockholders during 2014, 2015, and 2016. These special cash
distributions were paid with a portion of proceeds from asset sales. No further
distributions have been declared or paid since 2016.


                                       25

Off-Balance Sheet Arrangements



We have no off-balance sheet arrangements that are reasonably likely to have a
current or future material effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures, or capital resources.

Critical Accounting Policies and Estimates



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. These estimates include such items as
purchase price allocation for real estate acquisitions, impairment of long-lived
assets, depreciation and amortization, and allowance for doubtful accounts.
Actual results could differ from those estimates.

Below is a discussion of the accounting policies that we consider to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.




                                       26

Principles of Consolidation and Basis of Presentation


Our consolidated financial statements include our accounts and the accounts of
other subsidiaries over which we have control. All inter-company transactions,
balances, and profits have been eliminated in consolidation. In addition,
interests in entities acquired are evaluated based on applicable GAAP, and
deemed to be variable interest entities ("VIE") in which we are the primary
beneficiary are also consolidated. If the interest in the entity is determined
not to be a VIE, then the entity is evaluated for consolidation based on legal
form, economic substance, and the extent to which we have control, substantive
participating rights or both under the respective ownership agreement. For
entities in which we have less than a controlling interest or entities which we
are not deemed to be the primary beneficiary, we account for the investment
using the equity method of accounting.

There are judgments and estimates involved in determining if an entity in which
we have made an investment is a VIE and, if so, whether we are the primary
beneficiary. The entity is evaluated to determine if it is a VIE by, among other
things, calculating the percentage of equity being risked compared to the total
equity of the entity. Determining expected future losses involves assumptions of
various possibilities of the results of future operations of the entity,
assigning a probability to each possibility and using a discount rate to
determine the net present value of those future losses. A change in the
judgments, assumptions, and estimates outlined above could result in
consolidating an entity that should not be consolidated or accounting for an
investment using the equity method that should in fact be consolidated, the
effects of which could be material to our financial statements.

Accounting for Acquisitions of Investment Property



The cost of the real estate assets acquired in an asset acquisition is allocated
to the acquired tangible assets, consisting of land, building and tenant
improvements, and identified intangible assets and liabilities, consisting of
the value of above-market and below-market leases for acquired in-place leases
and the value of tenant relationships, based in each case on their relative fair
values. Fees incurred related to asset acquisitions are capitalized as part of
the cost of the investment.

Upon the acquisition of real estate properties that qualify as a business, we
recognize the assets acquired, the liabilities assumed, and any noncontrolling
interest as of the acquisition date, measured at their fair values. The
acquisition date is the date on which we obtain control of the real estate
property. The assets acquired and liabilities assumed may consist of land,
inclusive of associated rights, buildings, assumed debt, identified intangible
assets and liabilities, and asset retirement obligations. Identified intangible
assets generally consist of above-market leases, in-place leases, in-place
tenant improvements, in-place leasing commissions, and tenant relationships.
Identified intangible liabilities generally consist of below-market leases.
Goodwill is recognized as of the acquisition date and measured as the aggregate
fair value of consideration transferred and any noncontrolling interests in the
acquiree over the fair value of the identifiable net assets acquired. Likewise,
a bargain purchase gain is recognized in current earnings when the aggregate
fair value of consideration transferred and any noncontrolling interests in the
acquiree is less than the fair value of the identifiable net assets acquired.
Acquisition-related costs are expensed in the period incurred. Initial
valuations are subject to change until our information is finalized, which is no
later than twelve months from the acquisition date.

The fair value of the tangible assets acquired, consisting of land and
buildings, is determined by valuing the property as if it were vacant, and the
"as-if-vacant" value is then allocated to land and buildings. Land values are
derived from appraisals, and building values are calculated as replacement cost
less depreciation or management's estimates of the fair value of these assets
using discounted cash flow analyses or similar methods believed to be used by
market participants. The value of hotels and all other buildings is depreciated
over the estimated useful lives of 39 years and 25 years, respectively, using
the straight-line method.

We determine the fair value of assumed debt by calculating the net present value
of the scheduled mortgage payments using interest rates for debt with similar
terms and remaining maturities that management believes we could obtain at the
date of the debt assumption. Any difference between the fair value and stated
value of the assumed debt is recorded as a discount or premium and amortized
over the remaining life of the loan using the effective interest method.

We record assets and groups of assets and liabilities which comprise disposal
groups as "held for sale" when all of the following criteria are met: a decision
has been made to sell, the assets are available for sale immediately, the assets
are being actively marketed at a reasonable price in relation to the current
fair value, a sale has been or is expected to be concluded within twelve months
of the balance sheet date, and significant changes to the plan to sell are not
expected. The assets and disposal groups held for sale are valued at the lower
of book value or fair value less disposal costs. For sales of real estate or
assets classified as held for sale, we evaluate whether a disposal transaction
meets the criteria of a strategic shift and will have a major effect on our
operations and financial results to determine if the results of operations and
gains on sale of real estate will be presented as part of our continuing
operations or as discontinued operations in our consolidated statements of
operations. If the disposal represents a strategic shift, it will be classified
as discontinued operations for all periods presented; if not, it will be
presented in continuing operations.


                                       27




Investment Impairment


For all of our real estate and real estate-related investments, we monitor
events and changes in circumstances indicating that the carrying amounts of the
real estate assets may not be recoverable. Examples of the types of events and
circumstances that would cause management to assess our assets for potential
impairment include, but are not limited to: a significant decrease in the market
price of an asset; a significant adverse change in the manner in which the asset
is being used; an accumulation of costs in excess of the acquisition basis plus
construction of the property; major vacancies and the resulting loss of
revenues; natural disasters; a change in the projected holding period;
legitimate purchase offers; and changes in the global and local markets or
economic conditions. To the extent that our portfolio is concentrated in limited
geographic locations, downturns specifically related to such regions may result
in tenants defaulting on their lease obligations at those properties within a
short time period, which may result in asset impairments. When such events or
changes in circumstances are present, we assess potential impairment by
comparing estimated future undiscounted operating cash flows expected to be
generated over the life of the asset and from its eventual disposition to the
carrying amount of the asset. These projected cash flows are prepared internally
by the Advisor and reflect in-place and projected leasing activity, market
revenue and expense growth rates, market capitalization rates, discount rates,
and changes in economic and other relevant conditions. Our management reviews
these projected cash flows to assure that the valuation is prepared using
reasonable inputs and assumptions that are consistent with market data or with
assumptions that would be used by a third-party market participant and assume
the highest and best use of the investment. We consider trends, strategic
decisions regarding future development plans, and other factors in our
assessment of whether impairment conditions exist. In the event that the
carrying amount exceeds the estimated future undiscounted operating cash flows,
we recognize an impairment loss to adjust the carrying amount of the asset to
estimated fair value. While we believe our estimates of future cash flows are
reasonable, different assumptions regarding factors such as market rents,
economic conditions, and occupancy rates could significantly affect these
estimates.

In evaluating our investments for impairment, management may use appraisals and
make estimates and assumptions, including, but not limited to, the projected
date of disposition of the properties, the estimated future cash flows of the
properties during our ownership, and the projected sales price of each of the
properties. A future change in these estimates and assumptions could result in
understating or overstating the carrying value of our investments, which could
be material to our financial statements. In addition, we may incur impairment
charges on assets classified as held for sale in the future if the carrying
amount of the asset upon classification as held for sale exceeds the estimated
fair value, less costs to sell.

New Accounting Pronouncements

See Note 3 of the Notes to Consolidated Financial Statements for further information.

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