Environmental Indemnity Agreement

El Dorado)
(99-1069656)

THIS INSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS AND
PROVISIONS LIMITING LENDER' S LIABILITY FOR NEGLIGENCE

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (" Agreement" ) is made as of the 1st day of November, 2007 by APARTMENT REIT VILLAS OF EL DORADO, LLC, a Delaware limited liability company (" Borrower" ), and NNN APARTMENT REIT, INC., a Maryland corporation (individually, " Principal" , Borrower and Principal hereinafter individually and collectively referred to as " Indemnitor" ), for the benefit of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF MORGAN STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-IQ14, having an address at c/o Capmark Finance Inc., 116 Welsh Road, Horsham, Pennsylvania 19044 (" Indemnitee" ) and other Indemnified Parties (as hereinafter defined).

RECITALS

A. Borrower is the current fee owner of that certain real property located in the City of McKinney, County of Collin and State of Texas, known as Villas of El Dorado and more particularly described in Exhibit A attached hereto (said real property, together with any real property hereafter encumbered by the lien of the Security Instrument (as defined in the Note), being herein collectively referred to as the " Land" , the Land, together with all structures, buildings and improvements now or hereafter located on the Land, being collectively referred to as the " Property" ).

B. Indemnitee is the current holder of a loan (" Loan" ) assumed by Borrower in the original principal amount of $13,600,000.00, evidenced by a certain promissory note dated November 29, 2006 in the principal amount of $13,600,000.00 made by El Dorado, LLC, a Texas limited liability company (" Original Borrower" ) to the order of Royal Bank of Canada, a Canadian chartered bank (" Note" ) and secured by, among other things, the Security Instrument which will encumber the Property.

C. Pursuant to that certain Agreement of Assumption and Modification of Security Instrument and Other Loan Documents dated as of the date hereof (the " Assumption Agreement" ), Indemnitee consented to the transfer of the Loan from Original Borrower to Borrower (the " Transfer" )

D. Indemnitee is unwilling to consent to the Transfer unless Indemnitor agrees to provide the indemnification, representations, warranties, and covenants and other matters described in this Agreement for the benefit of the Indemnified Parties.

E. Principal will derive substantial benefit from the Loan. Indemnitor enters into this Agreement to induce Indemnitee to consent to the Transfer.

CERTAIN DEFINED TERMS

As used in this Agreement, the following terms shall have the following meanings:

" Business Day" means a day on which commercial banks are not authorized or required by law to close in New York, New York.

" Environmental Law" means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. The term " Environmental Law" includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide, and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term " Environmental Law" also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the Property.

" Hazardous Substances" includes but is not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, mold, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives.

" Indemnified Parties" includes Indemnitee, any person or entity who is or will have been involved in the origination of the Loan, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by the Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties.

" Legal Action" means any claim, suit or proceeding, whether administrative or judicial in nature.

" Losses" includes any liabilities, obligations, claims, demands, damages, penalties, causes of action, losses, fines, costs and expenses (including without limitation reasonable attorneys' fees and expenses).

" Release" includes but is not limited to any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.

" Remediation" includes but is not limited to any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any, Release of any Hazardous Substance; any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to herein.

AGREEMENT

NOW THEREFORE , in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby represents, warrants, covenants and agrees for the benefit of Indemnified Parties as follows:

1. Environmental Representations and Warranties . To the best of Indemnitor' s knowledge, (a) there are no Hazardous Substances or underground storage tanks at, in, on or under the Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing pursuant to the written report(s) resulting from the environmental assessment(s) of the Property delivered to Indemnitee (such report(s) are identified in Exhibit B attached hereto and are referred to below collectively as the " Environmental Report" ); (b) there are no past, present or threatened Releases of Hazardous Substances at, in, on, under or from the Property except as described in the Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property, except as described in the Environmental Report; (e) Indemnitor does not know of and has not received any written notice or other communication from any person or entity (including but not limited to a governmental entity) relating to Hazardous Substances or Remediation thereof, of possible liability of any person or entity pursuant to any Environmental Law, of other environmental conditions in connection with the Property, or regarding any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Indemnitor has truthfully and fully provided to Indemnitee in writing any and all information relating ...