PROPERTY RESERVES AGREEMENT

Exhibit 10.18

PROPERTY RESERVES AGREEMENT

755504

THIS PROPERTY RESERVES AGREEMENT (as the same may from time to time hereafter be modified, supplemented or amended, this "Agreement") is made as of January 19, 2007 by VMS NATIONAL PROPERTIES, an Illinois general partnership ("Borrower"), and PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation ("Lender").

RECITALS

Lender has agreed to make a loan (the "Loan") in the original principal amount of Thirteen Million Eight Hundred Thousand and 00/100 Dollars ($13,800,000.00) (the "Loan Amount") to Borrower as set forth in the Loan Documents, executed by and between Lender and Borrower; and

The Loan is evidenced by Borrower's Secured Promissory Note made payable and delivered to Lender (as may be modified, amended, supplemented, extended or consolidated in writing, and any note(s) issued in exchange therefor or in replacement thereof, the "Note") and further evidenced and secured by, among other things, a "Mortgage" (it being agreed that Mortgage as hereinafter used shall be construed to mean "mortgage" or "deed of trust" or "trust deed" or "deed to secure debt" as the context so requires) on certain real estate, together with all existing improvements constructed thereon, said Premises being more particularly described in said Mortgage.

NOW THEREFORE, in consideration of the making of the Loan, the mutual promises and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower, intending to be legally bound, agree as follows:

1.

Property Reserves.

Borrower has agreed to deposit with Lender a letter of credit(s) (if more than one, collectively if the context so requires the "Letter of Credit") as detailed below to be held by Lender to reimburse Borrower for the costs of certain capital improvements to the Premises as described in Schedule 1 hereto and such other capital improvements to the Premises that Lender determines, in its sole discretion, provide a material benefit/improvement to the Premises upon completion thereof  (i.e. roof replacement/repair, new decks, rehabilitation of individual units) ("Capital Improvements").  The Letter of Credit and any renewal or replacement thereof and any proceeds therefrom shall be held by Lender as additional security for the Loan and are hereafter referred to as the "Property Reserves".  The term "Escrow Release" as used herein shall refer to a disbursement of funds and/or a reduction of a Letter of Credit as applicable.

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a.

On the Closing Date, Borrower shall deliver an acceptable Letter of Credit in the amount of $292,954.00 to cover the cost of Capital Improvements.

2.

Borrower shall deliver to Lender not later than 30 days prior to the expiration date of any Letter of Credit and any renewal or replacement Letter of Credit, a renewal or replacement unconditional, irrevocable bank Letter of Credit identical in terms and amount and issued by a United States bank acceptable to Lender.  If Borrower shall fail to deliver any renewal or replacement Letter of Credit in accordance with the foregoing requirements, Lender may, in its discretion, draw upon any Letter of Credit then in its possession and hold such proceeds in accordance with the terms hereof.

Lender reserves the right to periodically review the financial condition of the issuing bank for any Letter of Credit and any renewal or replacement Letter of Credit and if Lender determines that the issuing bank no longer satisfies the criteria set forth above, Lender may require a replacement Letter of Credit in form and substance and from a United States bank acceptable to Lender.

3.

Standard Disbursement Requirements.  The following shall be defined as "Standard Disbursement Requirements":

(i)

copies of unconditional lien waivers for work completed which is the subject of the Escrow Release request;

(ii)

a title search in form and substance reasonably acceptable to Lender and if such search discloses conditions unacceptable to Lender or Lender deems it reasonably necessary, then such endorsements or other assurances reasonably satisfactory to Lender from the title insurance company insuring the continued first lien priority of the Mortgage;

(iii)

to the extent Lender deems reasonably necessary and to the extent that same are available and appropriate for the work which is the subject of the Escrow Release request, any or all of the following at Lender's discretion:  (A) all permits, bonds, licenses and approvals, whether necessary for commencement, performance, completion, occupancy, use or otherwise required by any applicable laws for the stage of work so completed; (B) a copy of the construction contract and any change orders and addenda thereto; (C) a statement from an architect, contractor or engineering consultant, in Lender's reasonable discretion, as to the extent and cost of the work so completed; and/or (D) other evidence as reasonably determined by Lender showing that Borrower has completed and performed the portion of the work which is the subject of the Escrow Release request; and

(iv)

Lender having inspected, or having expressly waived in writing such inspection, and approved the completed portion of the work which is the subject of the

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Escrow Release request.  Lender shall not require said inspection more than once per calendar year.

4.

Capital Improvements.

a.

Except as hereinafter provided and so long as no Event of Default has occurred and is continuing under the Loan Documents, Lender shall allow Escrow Release(s) in the amounts hereinafter specified in accordance with the following terms and conditions:

(i)

Escrow Release(s) shall be for an amount equal to the actual costs and expenses incurred by Borrower in completing any Capital Improvements;

(ii)

Borrower shall submit written Escrow Release requests to Lender for Capital Improvements no more than once per calendar month and each such request shall be for an aggregate amount of not less than $25,000 (excluding the final disbursement); and

(iii)

Escrow Release(s) shall be conditioned upon Borrower furnishing to Lender with its written request, at Lender's discretion, the Standard Disbursement Requirements.