UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2015~~2016



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 0-53962

Resource Real Estate Investors 7, L.P.

(Exact name of registrant as specified in its charter)



Delaware		26-2726308
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112

(Address of principal executive offices) (Zip code)

(215) 231-7050

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

INDEX TO ANNUAL REPORT

ON FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets - September 30, 2015 (unaudited) and December 31, 2014	3
	Consolidated Balance Sheets - March 31, 2016 (unaudited) and December 31, 2015	3
	Consolidated Statements of Operations -Three and Nine Months Ended September 30, 2015 and 2014 (unaudited)	4
	Consolidated Statements of Operations -Three Months Ended March 31, 2016 and 2015 (unaudited)	4
	Consolidated Statement of Changes in Partners’ CapitalNine Months Ended September 30, 2015 (unaudited)	5
	Consolidated Statement of Changes in Partners’ CapitalThree Months Ended March 31, 2016 (unaudited)	5
	Consolidated Statements of Cash Flows Nine Months Ended September 30, 2015 and 2014 (unaudited)	6
	Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 and 2015 (unaudited)	6
	Notes to Consolidated Financial Statements - September 30, 2015 (unaudited)	7
	Notes to Consolidated Financial Statements - March 31, 2016 (unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	20
ITEM 4.	Controls and Procedures	20
PART II	OTHER INFORMATION
ITEM 6.	Exhibits	2120
SIGNATURES		22

(Back to Index)



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2015			December 31, 2014
	March 31, 2016			December 31, 2015
	(unaudited)
ASSETS
Rental properties, at cost:
Land	$	4,201		$	84,~~715~~201
Buildings and improvements	3132,~~795~~020			5831,~~624~~920
Personal property	1,~~533~~588			21,~~127~~551
Identifiable intangible assets	1,~~496~~497			21,~~378~~497
Assets held for sale - Tamarlane, net	10,041			—
Total rental properties, at cost	39,306			39,169
	49,066			71,844
Accumulated depreciation and amortization	(10,010		)	(9,634		)
Accumulated depreciation and amortization	(9,278		)	(16,255		)
Total rental properties, net	29,296			29,535
	39,788			55,589
Cash	6,449			6,702
Cash	5,400			4,483
Restricted cash	801			1,600
Restricted cash	1,402			1,989
Tenant receivables, net	10			70
Tenant receivables, net	18			20
Accounts receivable due from related parties	86			171
Accounts receivable due from related parties	131			99
Prepaid expenses and other assets	46			71
Prepaid expenses and other assets	168			140
Total assets	$	36,688		$	38,149
Deferred financing costs, net	285			430
Total assets	$	47,192		$	62,750
LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage notes payable	$	35,827		$	48,692
Mortgage notes payable, net	$	25,539		$	25,630
Accounts payable and accrued expenses	~~498~~524			~~548~~574
Real estate tax payable	~~822~~307			~~988~~1,132
Accrued interest	~~135~~115			~~196~~116
Payables to related parties	~~329~~146			~~2,010~~138
Prepaid rent	75114			~~122~~114
Security deposits	~~223~~169			~~273~~170
Total liabilities	3726,~~909~~914			5227,~~829~~874
Partners’ capital	9,~~283~~774			910,~~921~~275
Total liabilities and partners’ capital	$	4736,~~192~~688		$	6238,~~750~~149

The accompanying notes are an integral part of these consolidated financial statements.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(unaudited)

	Three Months Ended						~~Nine Months Ended~~
	September 30,						September 30,
	March 31,
	2015			2014			2015			2014
	2016			2015
Revenues:
Rental income	$	2,~~540~~039		$	32,~~114~~993		$	~~7,995~~		$	~~9,180~~
Expenses:
Rental operating	1,~~364~~217			1,~~579~~442			~~4,053~~			~~4,689~~
Management fees – related parties	~~184~~148			~~235~~228			~~595~~			~~697~~
General and administrative	~~100~~208			~~109~~200			~~438~~			~~444~~
Depreciation and amortization	~~499~~377			~~670~~498			~~1,495~~			~~2,048~~
Total expenses	21,~~147~~950			2,~~593~~368			~~6,581~~			~~7,878~~
Income before other income (expense)	~~393~~89			~~521~~625			~~1,414~~			~~1,302~~
Other income (expense):
Interest expense, net	(~~433~~359		)	(~~634~~651		)	~~(1,546~~		)	~~(1,896~~		)
Gain on sale of rental property	—10			—9,603			~~9,603~~			—
Loss on disposal of fixed assets	(71		)	(2—		)	(7		)	~~(27~~		)
Net income (loss)	$	(47	)	$	(115	)	$	9,464		$	(621	)
Total other income (expenses)	$	(350	)	$	8,952
Weighted average number of limited partner units outstanding	3,270			3,270			3,270			3,270
Net (loss) income	$	(261	)	$	9,577
Net income (loss) per weighted average limited partner unit	$	(0.01	)	$	(0.04	)	$	2.89		$	(0.19	)
Weighted average number of limited partner units outstanding	3,270			3,270
Net (loss) income per weighted average limited partner unit, basic and diluted	$	(0.08	)	$	2.93

The accompanying notes are an integral part of these consolidated financial statements.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30~~MARCH 31, ~~2015~~2016

(in thousands, except units)

(unaudited)

	General		Limited Partners
	Partner		Units	Amount			Total
Balance at January 1, 2015	$	1	3,269,655	$	9,920		$	9,921
Balance at January 1, 2016	$	1	3,269,655	$	10,274		$	10,275
Distributions	—		—	(~~10,102~~240		)	(~~10,102~~240		)
Net income	—		—	9,464			9,464
Net loss	—		—	(261		)	(261		)
Balance at September 30, 2015	$	1	3,269,655	$	9,282		$	9,283
Balance at March 31, 2016	$	1	3,269,655	$	9,773		$	9,774

The accompanying notes are an integral part of this consolidated financial statement.

(Back to Index)

~~0RESOURCE~~RESOURCE REAL ESTATE INVESTORS 7, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	Three Months Ended
	September 30,
	March 31,
	2015			2014
	2016			2015
Cash flows from operating activities:
Net income (loss)	$	9,464		$	(621	)
Net (loss) income	$	(261	)	$	9,577
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Gain on sale of rental property	(9,603		)	—
Gain on sale of rental properties	(10		)	(9,603		)
Depreciation and amortization	~~1,495~~377			~~2,048~~498
Amortization of deferred financing costs	~~103~~21			~~152~~47
Loss on disposal of fixed assets	71			27—
Changes in operating assets and liabilities, excluding the effects ofacquisition:
Changes in operating assets and liabilities:
Restricted cash	~~587~~799			~~(75~~603		)
Tenant receivables, net	660			102
Prepaid expense and other assets	~~(46~~25		)	~~(75~~21		)
Accounts receivable - related parties	(32		)	85
Accounts receivable due from related parties	85			34
Accounts payable and accrued expenses	~~160~~(50		)	56272
Real estate tax payable	(~~165~~825		)	(5719		)
Accrued interest	(281		)	(73		)
Payables to related parties	~~(1,682~~8		)	~~324~~(1,919		)
Prepaid rent	~~(34~~—		)	14(31		)
Security deposits	(1		)	5(4		)
Net cash provided by operating activities	233			1,938
Net cash provided by (used in) operating activities	228			(1,225		)
Cash flows from investing activities:
Capital expenditures	(~~485~~139		)	(~~523~~72		)
Proceeds from sale of rental property	~~24,136~~10			—11,683
Net cash provided by (used in) investing activities	23,651			(523		)
Net cash (used in) provided by investing activities	(129		)	11,611
Cash flows from financing activities:
Distributions to limited partners	(~~10,102~~240		)	(19,~~230~~341		)
Principal payments on mortgage notes payable	(~~12,865~~112		)	(~~475~~190		)
Net cash used in financing activities	(~~22,967~~352		)	(19,~~705~~531		)
Net increase (decrease) in cash	917			(290		)
Net (decrease) increase in cash	(253		)	855
Cash at beginning of period	46,~~483~~702			4,~~957~~483
Cash at end of period	$	56,~~400~~449		$	45,~~667~~338
Non-cash Investing and Financing Activities
Settlement of mortgage notes payable with proceeds from sale of rental property	$	—		$	(12,452	)

The accompanying notes are an integral part of these consolidated financial statements.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30~~MARCH 31, ~~2015~~2016

(unaudited)

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Real Estate Investors 7, L.P. (“R-7” or the “Partnership”) is a Delaware limited partnership which ~~through its wholly-owned subsidiaries~~ owns and operates multifamily residential rental properties located in ~~Maine,~~ Texas and South Carolina (the “Properties”). The Partnership also may invest in interests in real estate mortgages and other debt instruments that are secured, directly or indirectly, by multifamily residential rental properties, although the Partnership held no such investments as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015. The Partnership was formed on March 28, 2008 and commenced operations on June 16, 2008. The General Partner, Resource Capital Partners, Inc. (“RCP”, the “General Partner”, or the “GP”), is in the business of sponsoring and managing real estate investment limited partnerships and tenant in common programs. RCP contributed $1,000 in cash as its minimum capital contribution to the Partnership. In addition, RCP held a 5.62% limited partnership interest in the Partnership at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015. RCP is an indirect wholly owned subsidiary of Resource America, Inc. (“RAI”), a publicly traded company (NASDAQ: REXI) operating in the real estate, financial fund management and commercial finance sectors.

~~The~~In ~~Partnership will continue until March 28, 2016, unless terminated earlier in~~ accordance with the First Amended and Restated Agreement of Limited Partnership (the “Agreement”)~~. The~~, the GP has the right to extend the Partnership term for a maximum of two years in the aggregate following the initial termination date. AtIn ~~this~~February ~~time~~2016, itthe isGP ~~expected~~extended the Partnership ~~will exercise the right to extend the~~ term offor ~~the~~one ~~Partnership~~year ~~for~~until ~~the~~March ~~two~~28, ~~one-year extensions~~2017.

The Agreement provides that income is allocated as follows: first, to the Limited Partners (“LPs”) and the GP (collectively, the “Partners”) in proportion to and to the extent of the deficit balances, if any, in their respective capital accounts; second, to the Partners in proportion to the allocations of Distributable Cash (as defined in the Agreement); and third, 100% to the LPs. All losses are allocated as follows: first, 100% to the LPs until the LPs have been allocated losses equal to the excess, if any, of their aggregate capital account balances over the aggregate Adjusted Capital Contributions (as defined in the Agreement); second, to the Partners in proportion to and to the extent of their respective remaining positive capital account balances, if any; and third, 100% to the LPs.

Distributable cash from operations, payable monthly, as determined by the GP, is first allocated 100% to the LPs until the LP’s have received their Preferred Return (as defined in the Agreement); and thereafter, 80% to the LPs and 20% to the GP.

Distributable cash from capital transactions, as determined by the GP, is first allocated 100% to the LPs until the LPs have received their Preferred Return; second, 100% to the LPs until their Adjusted Capital Contributions have been reduced to zero; and thereafter, 80% to the LPs and 20% to the GP.

The consolidated financial statements and the information and tables contained in the notes thereto as of ~~September~~March 3031, ~~2015~~2016 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015. The results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 may not necessarily be indicative of the results of operations for the full year ending December 31, ~~2015~~2016.

(Back to Index)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries, as follows:

Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”)	115	Portland, ME
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)	146	Austin, TX
RRE Cape Cod Holdings, LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)	108	Austin, TX
RRE Woodland Hills Holdings, LLC (“Hills”)	(1)	(1)
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)	308	Columbia, SC
	889

(Back to Index)

~~(1) The Hills was sold on March 19, 2015 (see Note 4).~~7

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

MARCH 31, 2016

(unaudited)



Subsidiaries	Number of Units	Location
RRE Tamarlane Holdings, LLC, or Tamarlane Apartments (“Tamarlane”) ⁽²⁾	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks Apartments (“Bent Oaks”)	146	Austin, TX
RRE Cape Cod Holdings, LLC, or Cape Cod Apartments (“Cape Cod”)	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow Apartments (“Woodhollow”)	108	Austin, TX
RRE Woodland Hills Holdings, LLC (“Hills”) ⁽¹⁾	—	—
RRE Woodland Village Holdings, LLC, or Woodland Village Apartments (“Village”)	308	Columbia, SC
	774

(1) The Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015. During the three months ended March 31, 2015, Revenues and Net income attributable to Hills were $601,000 and $143,000, respectively. The Partnership recognized a $9.6 million gain on sale.

(2) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015. During the three months ended March 31, 2015, Revenues and Net loss attributable to Tamarlane were $469,000 and $(4,000), respectively.

All intercompany transactions and balances have been eliminated in consolidation.

Geographic Concentration Risk

As of March 31, 2016, the Partnership's net investments in real estate in Texas and South Carolina represented 66% and 34%, respectively, of the Partnership’s total assets. As a result, the geographic concentration of the Partnership’s portfolio makes it particularly susceptible to adverse economic developments in the Texas and South Carolina real estate markets. Any adverse economic or real estate developments in these markets could adversely affect the Partnership’s operating results.

Use of Estimates

The preparation of the consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Partnership estimates the allowance for uncollectible receivables and loan losses and adjusts the balance quarterly. The Partnership also estimates the liability for real estate taxes on the properties and adjusts the balance quarterly if necessary. Actual results could differ from those estimates.

Assets Held for Sale

The Company presents the assets and liabilities of any rental properties which have been sold, or otherwise qualify as held for sale, separately in the Consolidated Balance Sheets. Real estate assets held for sale are measured at the lower of carrying

amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the Consolidated

Balance Sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded. The Company had one rental property included in assets held for sale as of September 30, 2015.

Supplemental Disclosure of Cash Flow Information

During the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, the Partnership paid $~~1.5~~340,000 ~~million~~ and $~~1.8 million~~641,000, respectively, in cash for interest.

Advertising

The Partnership expenses advertising costs as they are incurred. Advertising costs, which are included in rental operating expenses, totaled $3626,000 and $9622,000 for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~$37~~2015,~~000~~ ~~and $101,000 for the three and nine months ended September 30, 2014,~~ respectively.

Deferred Financing Costs

Costs incurred to obtain financing have been capitalized and are being amortized over the term of the related debt using the effective yield method. In accordance with adoption of Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2015-03 "Simplifying the Presentation of Debt Issuance Costs", the Partnership has disclosed deferred financing costs as a direct reduction of the related mortgage notes payable.

Sale of the Rental Property

The Partnership recognized the gains on sales of rental properties separately in the Consolidated Statement of Operations. In March 2015, the Partnership sold its interest in the Hills and recognized a gain of $9.6 million on the sale.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

Income Taxes

Income taxes or credits resulting from earnings or losses are payable by, or accrue to the benefit of, the partners; accordingly, no provision has been made for income taxes in these consolidated financial statements.

The Partnership evaluates the benefits of tax positions taken or expected to be taken in its tax returns under a two-step recognition and measurement process. Only the largest amount of benefits from the tax positions that will more likely than not be sustainable upon examination are recognized by the Partnership. The Partnership does not have any unrecognized tax benefits, nor interest and penalties, recorded in the Consolidated Balance Sheets or Consolidated Statements of Operations and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.

The Partnership is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in those states in which the Partnership has significant business operations. The Partnership is not currently undergoing any examinations by taxing authorities. The Partnership may be subject to U.S. federal income tax and state/local income tax examinations for years 2012 through ~~2014~~2015.

Revenue Recognition

Revenue is primarily derived from the rental of residential housing units with lease agreement terms of generally one year or less. The Partnership recognizes revenue in the period that rent is earned, which is on a monthly basis. The Partnership recognizes rent as income on a straight-line basis over the term of the related lease. Additionally, any incentives included in the lease are amortized on a straight-line basis over the term of the related lease.

Included within rental income are other income amounts such as utility reimbursements, late fees, parking fees, pet fees and lease application fees which are recognized when earned or received. During the three months ended March 31, 2016 and 2015 other income totaled $223,000 and $202,000, respectively.

The future minimum rental payments to be received from leases currently in place is approximately $53.7 million and $1866,000 for the twelve months ending ~~September~~March 3031, ~~2016~~2017 and ~~2017~~2018, respectively, and none thereafter.

Long-Lived Assets

The Partnership reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value. The Partnership has estimated that the future cash flows from its properties will be sufficient to recover their

carrying amounts and, as a result, the Partnership did not recognize any impairment losses with respect to its Properties for the

three months ended March 31, 2016 and 2015.

Rental Properties

Rental properties are carried at cost, net of accumulated depreciation. Buildings and improvements and personal property are depreciated for financial reporting purposes on the straight-line method over their estimated useful lives. The value of in-place leases is amortized over the average remaining term of the respective leases on a straight-line basis. Useful lives used for calculating depreciation for financial reporting purposes are as follows:



	Buildings and improvements	5 - 27.5 years
	Personal property	3 - 15 years

Tenant Receivables

Tenant receivables are stated at amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Partnership determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Partnership’s previous loss history, the tenants’ current ability to pay their obligations to the Partnership, the general condition of the economy and the condition of the industry as a whole. The Partnership writes off receivables when they become uncollectible. At ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, there were ~~$75~~no ~~and $44, respectively, in~~ allowances for uncollectible receivables.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

Redemptions

The LPs may request redemption of their units at any time. The Partnership has no obligation to redeem any units and will do so only at the GP’s discretion. If the Partnership redeems units, the redemption price is generally the amount of the initial investment less all distributions from the Partnership to the LP, and less all organization and offering expenses charged to the LP.

~~Recent~~Adoption of New Accounting Standards

In April 2014, the Financial Accounting Standards Board ("FASB") issued authoritative guidance to change the criteria for reporting discontinued operations. Under the new guidance, only disposals representing a strategic shift in a company's operations and financial results should be reported as discontinued operations, with expanded disclosures. In addition, disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify as discontinued operations is required. This guidance is effective for the Partnership as of January 1, 2015. ~~This~~Disposal ~~amendment~~of ~~has~~the ~~had~~rental noproperty ~~impact~~during onthe the three months ended March 31, 2016 was concluded by the Partnership's ~~financial~~not ~~statements~~to represent a strategic shift in the business and, therefore, discontinued operations is not presented in accordance with the revised accounting standard.

~~Accounting~~In ~~Standards~~January ~~Issued~~2015, ~~But~~FASB ~~Not~~issued ~~Yet~~ASU ~~Effective~~No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. On January 1, 2016, the Partnership adopted ASU 2015-01 and the adoption had no impact on the Partnership's consolidated financial statements.

In May 2014, FASB issued Accounting Standards Update (“ASU") No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Partnership beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Partnership is in the process of determining the method of adoption and assessing the impact of this guidance on the Partnership’s consolidated financial position, results of operations and cash flows.

In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of the new requirements is not expected to have a significant impact on the Partnership's consolidated financial statements.

In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Partnership does not expect the adoption of ASU No. 2015-01 to have a significant impact on its consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" (“ASU 2015-02”), which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest

entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. ASU 2015-02 is effective for the Partnership beginning January 1, 2016. ~~The~~On ~~Partnership~~January is1, ~~continuing to evaluate this guidance; however~~2016, ~~it does not expect~~ the ~~adoption~~Partnership ofadopted ASU 2015-02 toand ~~have~~the aadoption ~~significant~~had no impact on ~~its~~the Partnership's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance was effective and was adopted by the Partnership on January 1, 2016 and as result the Partnership has reclassified $261,000 of unamortized debt issuance costs at December 31, 2015 from deferred financing costs to liabilities as reduction of the related mortgage notes payable

In September 2015, FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. ASU 2015-16 was effective and adopted by the Partnership on January 1, 2016 and the adoption had no impact on its consolidated financial statements.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

InAccounting ~~April~~Standards ~~2015,~~Issued ~~the~~But ~~FASB~~Not ~~issued~~Yet ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discountsEffective. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Partnership will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for the Partnership beginning January 1, 2016. The Partnership is continuing to evaluate this guidance; however, it does not expect the adoption of ASU 2015-03 to have a significant impact on its consolidated financial statements.

In ~~September 2015~~May 2014, FASB issued Accounting Standards Update (“ASU") ~~2015~~No. 2014-1609, ~~"Simplifying~~“Revenue ~~the~~from ~~Accounting~~Contracts ~~for~~with ~~Measurement-Period~~Customers”, ~~Adjustments"~~which ~~("ASU~~will ~~2015-16"),~~replace ~~which~~most ~~eliminates~~existing ~~the~~revenue ~~requirement~~recognition toguidance ~~retroactively~~in ~~revise~~GAAP. The ~~comparative~~core ~~financial~~principle ~~information~~of ~~for~~ASU ~~prior~~No. 2014-09 ~~periods~~is ~~presented~~that inan ~~financial~~entity ~~statements~~should ~~due~~recognize torevenue ~~changes~~for inthe ~~provisional~~transfer ~~amounts~~of ~~recorded~~goods ~~for~~or ~~acquisitions~~services inequal ~~subsequent~~to ~~periods.~~the ~~Upon~~amount ~~adoption,~~that ~~disclosure~~it ofexpects ~~the~~to ~~amounts~~be ~~recorded~~entitled into ~~current~~receive for those goods or services. ASU No. 2014-~~period~~09 ~~earnings~~requires ~~that~~additional ~~would~~disclosure ~~have~~about ~~been~~the ~~recorded~~nature, inamount, ~~previous~~timing ~~reporting~~and ~~periods~~uncertainty ifof ~~the~~revenue ~~adjustment~~and tocash ~~the~~flows ~~provisional~~arising ~~amounts~~from ~~had~~customer ~~been~~contracts, ~~recognized~~including atsignificant ~~the~~judgments ~~acquisition~~and ~~date~~changes ~~are~~in ~~required~~judgments. ASU ~~2015~~No. 2014-1609 iswill be effective for the Partnership beginning January 1, ~~2016.~~2018, ~~The~~including ~~Partnership~~interim isperiods ~~continuing~~in to2018, ~~evaluate~~and ~~this~~allows ~~guidance;~~for ~~however,~~both itretrospective ~~does~~and ~~not~~prospective ~~expect~~methods ~~the~~of adoption. The Partnership is in the process of ~~ASU~~determining ~~2015-16~~the tomethod ~~have~~of aadoption ~~significant~~and assessing the impact of this guidance on ~~its~~the Partnership’s consolidated financial ~~statements~~position, results of operations and cash flows.

In February 2016, FASB issued ASU No. 2016-02, "Leases" ("ASU No. 2016-02"). which is intended to improve financial reporting about leasing transactions and requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is continuing to evaluate this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements.

NOTE 3 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements. A summary of the components of restricted cash follows (in thousands):

	September 30, 2015		December 31, 2014
	March 31, 2016		December 31, 2015
Real estate taxes	$	~~791~~146	$	1,~~089~~034
Insurance	~~135~~255		~~227~~180
Capital improvements	~~476~~400		~~673~~386
Total	$	~~1,402~~801	$	1,~~989~~600

NOTE 4 - ~~SALE~~MORTGAGE OFNOTES ~~RENTAL~~PAYABLE, ~~PROPERTY~~NET

InThe ~~March~~following ~~2015,~~is ~~the Partnership sold its interest in Hills,~~ a ~~multifamily~~summary ~~residential apartment complex, and recognized a gain~~ of ~~$9.6~~mortgage ~~million~~notes onpayable, ~~the~~net ~~sale.~~ (in thousands):

NOTE 5 - DEFERRED FINANCING COSTS



	March 31, 2016							December 31, 2015
Property	Mortgage balance		Deferred Finance Costs, Net ⁽¹⁾			Carrying Value		Mortgage balance		Deferred Finance Costs, Net⁽¹⁾			Carrying Value
Bent Oaks	$	5,708	$	(46	)	$	5,662	$	5,731	(50		)	$	5,681
Cape Cod	5,927		(46		)	5,881		5,951		(51		)	5,900
Woodhollow	4,897		(40		)	4,857		4,916		(43		)	4,873
Village	9,247		(108		)	9,139		9,293		(117		)	9,176
Total	$	25,779	$	(240	)	$	25,539	$	25,891	$	(261	)	$	25,630

(1) Deferred financing costs include unamortized costs incurred to obtain financing which are being amortized over the term of the related debt. Accumulated amortization as of September 30, 2015 and December 31, 2014 was $1.0 million and $1.2 million, respectively. Estimated amortization of the Properties’ existing deferred financing costs for the next four years ending September 30, is as follows (in thousands):

2016	$	85
2017	83
2018	82
2019	35
	$	285

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

~~NOTE~~The 6following -table ~~MORTGAGE~~includes ~~NOTES~~additional ~~PAYABLE~~information about the Partnership's mortgage notes payable, net (in thousands):

The following is a summary of mortgage notes payable (in thousands, except percentages):



Property	Maturity Date		Annual Interest Rate	Monthly Debt Service
Bent Oaks	01/01/2019	⁽²⁾	5.99%	$	37	⁽¹⁾
Cape Cod	01/01/2019	⁽²⁾	5.91%	$	38	⁽¹⁾
Woodhollow	01/01/2019	⁽²⁾	6.14%	$	32	⁽¹⁾
Village	04/01/2019		3.76%	$	44	⁽¹⁾

	Balance at		Balance at
Property	September 30, 2015		December 31, 2014		Maturity Date		Annual Interest Rate		Monthly Debt Service
Tamarlane	$	8,906	$	8,906	05/01/2016		2.69%		$	20	(1)
Tamarlane	919		935		05/01/2016		2.69%		$	5	(3)
Bent Oaks	5,754		5,820		01/01/2019	(4)	5.99%	(4)	$	37	(2)
Cape Cod	5,975		6,045		01/01/2019	(4)	5.91%	(4)	$	38	(2)
Woodhollow	4,936		4,991		01/01/2019	(4)	6.14%	(4)	$	32	(2)
Hills	—		12,527		01/01/2016	(5)	—%		$	—	(5)
Village	9,337		9,468		04/01/2019		3.76%	(2)	$	44	(2)
Total	$	35,827	$	48,692


(1)	Monthly payment includes principal and interest. Interest is at a fixed rate.

(12) ~~Interest only through the date of maturity, at which time the principal is due.~~ The Partnership ~~exercised~~has ~~the~~an option to extend the maturity date ~~of the Tamarlane mortgage note~~ for an additional one year to ~~May~~January 1, ~~2016~~2020. ~~Interest~~During ~~will be variable and calculated monthly based upon~~ the ~~one-month British Bankers Association London Interbank Offered Rate ("LIBOR") plus 2.5% for the term of the loan. The LIBOR at September 30, 2015 was 19 basis points.~~extension

~~(2)~~period, ~~Monthly~~the ~~payment~~interest ~~includes~~rate ~~principal~~would ~~and~~convert ~~interest~~to the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5%.

~~(3)~~Annual ~~Monthly payment includes~~ principal ~~and~~payments ~~interest.~~on ~~The Partnership exercised~~ the ~~option to extend the maturity date of the Tamarlane~~ mortgage ~~note~~notes ~~for~~payable ~~an additional one year to May 1, 2016. Interest will be variable and calculated monthly based upon the one-month LIBOR plus 2.5%~~ for the ~~term~~future ofyears ~~the~~ending ~~loan.~~March ~~The LIBOR at September 30~~31, ~~2015~~are ~~was~~as 19follows ~~basis points.~~(in

(4thousands) The Partnership has an option to extend the maturity date for an additional one year to January 1, 2020. During the extension period, the interest rate would convert to the one-month LIBOR plus 2.5%. The LIBOR at September 30, 2015 was 19 basis points.:

(5) On March 19, 2015, the Partnership paid the balance of the mortgage with the proceeds from the sale of the Hills.



2017	$	460
2018	485
2019	16,159
2020	8,675
	$	25,779

Annual principal payments on the mortgage notes payable for each of the next four years ending September 30, are as follows (in thousands):

2016	$	10,270
2017	472
2018	498
2019	24,587
	$	35,827

The mortgage notes payable are with recourse only to the Properties securing them subject to certain limited standard exceptions, as defined in the mortgage notes, which the GP has guaranteed with respect to each property. These exceptions are referred to as “carveouts”. In general, carveouts relate to damages suffered by the lender for a subsidiary’s failure to pay rents, insurance or condemnation proceeds to the lender, to pay water, sewer and other public assessments or charges, to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents. The exceptions also require the GP to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the subsidiary voluntarily files for bankruptcy or seeks reorganization, or if a related party of the subsidiary does so with respect to the subsidiary.

~~NOTE~~Deferred 7financing -costs ~~CERTAIN~~include ~~RELATIONSHIPS~~unamortized ~~AND~~costs ~~RELATED~~incurred ~~PARTY~~to ~~TRANSACTIONS~~obtain financing which are being amortized over the term of the related debt. Accumulated amortization as of March 31, 2016 and December 31, 2015 was $507,000 and $486,000 respectively. Estimated amortization of existing deferred financing costs for the next four years ending March 31, is as follows (in thousands):

In the ordinary course of its business operations, the Partnership has ongoing relationships with several related entities. Receivables from and payables to related parties are summarized as follows (in thousands):



2017	$	83
2018	81
2019	73
2020	3
	$	240

NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Partnership has ongoing relationships with several related entities.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

Substantially all of the ~~accounts~~receivables ~~receivable due~~ from related parties represents escrow funds held by RAI for self- insurance. The Partnership's ~~properties~~Properties participate in insurance pools with other properties directly and indirectly managed by RAI for both property insurance and general liability. RAI holds the escrow funds related to the insurance ~~pools~~pool on its books. The insurance pool covers losses up to $2.5 million for property losses and the first $~~750~~25,000 ~~for~~of each general liability ~~losses~~loss up to an annual maximum of $1.0 million. Catastrophic insurance ~~covers~~would cover property losses in excess of the insurance pool up to $~~85.0~~140 million. ~~Unforeseen~~Therefore, unforeseen or catastrophic losses in excess of the Partnership's insured limits could have a material adverse effect on the Partnership's financial condition and operating results.

RCP is entitled to receive an annual investment management fee, payable monthly, equal to 1% of the gross offering proceeds, net of any amounts otherwise attributable to LP interests owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return. As of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, the amount of unpaid subordinated investment management fees totaled $~~119~~62,000 and $~~1.9 million~~15,000, respectively. ~~The~~During ~~annual~~the ~~investment~~three ~~management~~months ~~fee~~ended ~~was~~March 31, ~~paid~~2016 ~~down~~and ~~with~~2015 ~~proceeds from~~ the ~~sale~~Partnership ofpaid ~~Woodland~~investment ~~Hills~~management infees ~~the~~totaling ~~first~~$0 ~~quarter~~and $1.9 million, respectively.

A wholly-owned subsidiary of RCP, Resource Real Estate Management, LLC (“RREML”) is entitled to receive property and debt management fees. RREML engaged Resource Real Estate Management, Inc (“RREMI”), an indirect wholly owned subsidiary of RAI, to manage the Partnership’s Properties. As of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, property management fees due totaled $~~108~~50,000 and $8562,000, respectively. Because the Partnership has not acquired any real estate debt investments, there were no debt management fees as of March 31, 2016 and December 31, 2015.

During the ordinary course of business, RCP and RREMI advance funds for ordinary operating expenses on behalf of the Properties. As of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, advances due totaled $~~102~~34,000 and $6761,000, respectively. Total operating expenses reimbursed during the three months ended March 31, 2016 and March 31, 2015 were $429,000 and $523,000, respectively. Reimbursed expenses include payroll and miscellaneous operating expenses. Reimbursed operating expenses are included in property rental operating expenses in the consolidated statements of operations.

The Partnership pays ~~Investment~~investment ~~Management~~management ~~Fees~~fees and ~~Property~~property ~~Management~~management ~~Fees~~fees to related parties. These expenses are summarized as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2015		2014		2015		2014
	2016		2015
RCP:
Investment management fees	$	59	$	82	$	196	$	242
Investment management fees (1)	$	46	$	78
RREML:
Property management fees - 5% of gross cash receipts	125		153		399		455
Property management fees - 5% of gross cash receipts (2)	102		155
	$	~~184~~148	$	~~235~~233	$	~~595~~	$	~~697~~

~~NOTE~~(1) 8RCP -is ~~FAIR~~entitled ~~VALUE~~to OFreceive ~~FINANCIAL~~an ~~INSTRUMENTS~~annual investment management fee, payable monthly, equal to 1% of the gross proceeds that have been deployed in real estate investments from the offering of partnership units, net of any LP interest owned by RCP. During the term of the Partnership, RCP must subordinate up to 100% of its annual investment management fee to the receipt by the LPs of their Preferred Return.

(2) RREML is entitled to receive monthly property management fees equal to 5% of the gross operating revenues from the Partnership’s 100% owned Properties for managing or obtaining and supervising third party managers.

NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In analyzing the fair value of its financial instruments disclosed or accounted for on a fair value basis, the Partnership follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Partnership determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the financial instruments. The fair value of cash, tenant receivables and accounts payable approximate their carrying values due to their short term nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or can be corroborated with observable market data for substantially the entire contractual term of the asset.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset and are consequently not based on market activity, but rather through particular valuation techniques.

(Back to Index)

RESOURCE REAL ESTATE INVESTORS 7, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~SEPTEMBER~~MARCH 3031, ~~2015~~2016

(unaudited)

Level 1 - Quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

The following methods and assumptions were used to estimate the fair value of the Partnership’s financial instruments:


•	Mortgage notes payable. Rates currently available to the Partnership for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

The estimated fair value measurements of the mortgage notes payable are classified within level 3 of the fair value hierarchy.

The carrying amounts and estimated fair values of the Partnership’s financial instruments were as follows (in thousands):

	September 30, 2015				December 31, 2014
	March 31, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Mortgage Balance		Fair Value		Mortgage Balance		Fair Value
Mortgage notes payable:
Tamarlane	$	9,825	$	9,751	$	9,842	$	9,867
Bent Oaks	5,708		6,162		5,731		6,121
Bent Oaks	5,754		6,175		5,820		6,327
Cape Cod	5,927		6,385		5,951		6,343
Cape Cod	5,975		6,398		6,045		6,554
Woodhollow	4,897		5,269		4,916		5,234
Woodhollow	4,936		5,281		4,990		5,416
Village	9,247		9,373		9,293		9,305
Hills	—		—		12,527		12,342
Total mortgage notes payable	$	25,779	$	27,189	$	25,891	$	27,003
Village	9,337		9,353		9,468		9,485
Total mortgage notes payable	$	35,827	$	36,958	$	48,692	$	49,991

NOTE 97 - ~~SALE~~SUBSEQUENT OFEVENTS ~~PROPERTIES~~

OnThe ~~September~~Partnership ~~30,~~has ~~2015,~~evaluated subsequent events through the ~~Partnership~~date ~~signed~~these aconsolidated ~~contract~~financial tostatements ~~sell~~were ~~Tamarlane.~~issued

~~NOTE~~and 10determined -that ~~SUBSEQUENT~~no ~~EVENTS~~events have occurred which would require an adjustment to the consolidated financial statements.

The Partnership has evaluated subsequent events through the date these consolidated financial statements were issued and determined that no other events have occurred which would require an adjustment to the consolidated financial statements.

(Back to Index)


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited)

This report contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology. Such statements are subject to the risks and uncertainties inherent in partnerships that invest in real estate and real estate assets, including those referred to in our filings under the Securities Exchange Act of 1934. These risks and uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

Overview

We are a Delaware limited partnership that was formed on March 28, 2008 and commenced operations on June 16, 2008. Through wholly owned subsidiaries, we own in fee, operate and invest in multifamily residential rental properties located in ~~Maine,~~ South Carolina and Texas, which we refer to as our Properties. We also may invest in interests in real estate mortgages and other debt instruments that are secured, directly or indirectly, by a multifamily residential rental property or an interest in an entity that directly owns such a property. As of ~~September~~March 3031, ~~2015~~2016, we did not own any real estate debt investments. If we were to acquire mortgages or other real estate debt investments in the future, these investments would be in an amount that would not cause us to become an investment company within the meaning of Section 3(a)(1) of the Investment Company Act of 1940.

The Partnership has begun the process of dissolution through the strategic disposal of assets. On March 19, 2015, the Partnership sold its interest in Woodland Hills. On ~~September~~December 301, 2015, the Partnership ~~entered~~sold ~~into~~its ainterest ~~purchase and sale agreement to sell Tamarlane~~ in ~~Portland, Maine~~Tamarlane. The ~~sale~~remaining isassets are expected to be ~~completed~~disposed of in ~~December 2015~~2016.

As of ~~September~~March 3031, ~~2015~~2016, we ~~have six subsidiaries and we~~ own ~~five~~four multifamily residential rental Properties through our 100% owned subsidiaries. During the year ended December 31, as2015 ~~follows~~we sold 2 multifamily properties. The following table presents our multifamily residential rental properties:

Subsidiary / Property	Purchase Date	Leverage Ratio (1)	Number of Units	PropertyLocation
RRE Tamarlane Holdings, LLC, or Tamarlane	07/31/2008	68%	115	Portland, ME
RRE Tamarlane Holdings, LLC, or Tamarlane (3)	07/31/2008	68%	—	—
RRE Bent Oaks Holdings, LLC, or Bent Oaks	12/10/2008	57%	146	Austin, TX
RRE Cape Cod Holdings, LLC, or Cape Cod	12/10/2008	57%	212	San Antonio, TX
RRE Woodhollow Holdings, LLC, or Woodhollow	12/12/2008	60%	108	Austin, TX
RRE Woodland Hills Holdings, LLC, or Hills (2)	12/19/2008	65%	—	~~(2)~~—
RRE Woodland Village Holdings, LLC, or Village	03/07/2012	77%	308	Columbia, SC
			889
			774

(1) Original face value of mortgage divided by total property capitalization, including reserves, escrows, fees and closing costs.

(2) The Hills, a 228 unit multifamily apartment complex in Georgia, was sold on March 19, 2015.

(3) Tamarlane, a 115 unit multifamily apartment complex in Maine, was sold on December 1, 2015.

(Back to Index)

The following ~~tables~~table ~~set~~sets forth operating statistics about our multifamily residential rental properties. This table does not include information with respect to two properties, Woodland Hills and Tamarlane, which were sold during fiscal year 2015:

	AverageOccupancy Rate (1)		Average Effective Rentper Square Foot (2)				Ratio of OperatingExpense to Revenue (3)
	Three Months Ended September 30,		Three Months Ended September 30,				Three Months Ended September 30,
	Three Months Ended March 31,		Three Months Ended March 31,				Three Months Ended March 31,
Property	~~2015~~2016	~~2014~~2015	~~2015~~2016		~~2014~~2015		~~2015~~2016	~~2014~~2015
Tamarlane	98.1%	98.5%	$	1.49	$	1.42	38%	40%
Bent Oaks	92.9%	91.6%	$	1.25	$	1.20	64%	54%
Bent Oaks	94.0%	97.0%	$	1.26	$	1.24	66%	47%
Cape Cod	94.9%	90.8%	$	1.05	$	0.95	60%	52%
Cape Cod	95.0%	95.4%	$	1.02	$	0.97	72%	62%
Woodhollow	93.1%	94.5%	$	1.10	$	1.06	61%	57%
Woodhollow	94.6%	93.7%	$	1.10	$	1.07	68%	53%
Village	94.4%	93.8%	$	0.56	$	0.54	61%	56%
Village	94.6%	93.5%	$	0.55	$	0.53	65%	61%

	AverageOccupancy Rate (1)		Average Effective Rentper Square Foot (2)				Ratio of OperatingExpense to Revenue (3)
	Nine Months Ended September 30,		Nine Months Ended September 30,				Nine Months Ended September 30,
Property	2015	2014	2015		2014		2015	2014
Tamarlane	97.9%	96.4%	$	1.44	$	1.33	37%	40%
Bent Oaks	92.3%	96.6%	$	1.22	$	1.22	59%	52%
Cape Cod	94.0%	94.1%	$	0.99	$	0.96	61%	60%
Woodhollow	94.0%	95.0%	$	1.07	$	1.07	63%	54%
Village	94.6%	93.9%	$	0.55	$	0.54	61%	62%


(1)	Number of occupied units divided by total units adjusted for any unrentable units; average calculated on a weekly basis.


(2)	Average rental revenue divided by total rentable square footage. We calculate average rental revenue by dividing gross rental revenue by the number of months in the period.


(3)	Rental operating expenses, excluding certain one-time expenses funded from reserves for capital expenditures, and general and administrative expenses, excluding asset management fees and transaction expenses, as a percentage of rental income, excluding any adjustment for concessions.

Results of Operations

We generate our income from the net revenues we receive from our Properties. In addition to the rental revenues we also generate funds from the sales or refinancing of our Properties as seen with the sale of the Hills in the first quarter of 2015 and ~~expected~~the sale of Tamarlane in the fourth quarter of 2015. Should economic conditions in the areas in which our remaining Properties are located deteriorate, we could experience lower occupancy, lower rental revenues and higher operating costs, all of which could harm our operations and financial condition, reduce the value of our Properties and limit our ability to make distributions to our limited partners.

Our operating results and cash flows from our Properties are affected by four principal factors:


•	occupancy and rental rates,


•	property operating expenses,

• interest rates on the related financing, ~~and~~

• capital expenditures., and

• net proceeds from property dispositions.

The amount of rental revenues from our Properties depends upon their occupancy rates and concessions granted. We seek to maximize our rental revenues through aggressive property-level programs, including, in particular, our Lease Rent Optimizer, or LRO, program which includes rent concessions. Under our LRO program, we seek to price our rents for apartment units on a daily basis, based upon inventory in the marketplace and competitors’ pricing. Our Properties experienced an overall ~~decrease~~increase in the average occupancy rate during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 of approximately 01.61%, with an average occupancy of 9493.68% as compared to an average occupancy rate of 9592.27% during the same period of ~~2014~~2015. ~~This~~Our ~~fluctuation~~Properties isexperienced ~~within~~an ~~our~~overall ~~expected~~increase ~~range~~in the average effective rent per square foot of $0. 05 during the three months ended March 31, 2016 compared to the same period in 2015 for the same Properties.

We seek to control operating expenses through our General Partner’s automated purchase order system that compares actual to budgeted expenses and requires management approval of variances, and through the use of third-party service providers to seek best available pricing.

Our existing financing is at fixed rates of interest and, accordingly, our interest cost has remained relatively stable during

the period of our ownership of the Properties. Based upon current economic conditions we expect that our financing costs will

remain relatively stable during fiscal year 2016.

(Back to Index)

~~Our~~Three ~~Properties~~Months ~~experienced~~Ended anMarch ~~overall increase in the average effective rent per square foot of $0.07 during the nine months ended September 30~~31, ~~2015~~2016 ~~compared~~Compared to ~~the~~Three ~~same~~Months ~~period~~Ended inMarch ~~2014 for the same Properties. The net impact of the lower average occupancy rate offset by the higher average effective rent per square foot during the quarter ending September 30~~31, 2015 ~~was to increase rental revenue for the quarter.~~

The following table sets forth the results of our operations for the periods indicated (in thousands, except per unit data):



	March 31,						Increase (Decrease)
	2016			2015			Amount			Percent
Revenues:
Rental income	$	2,039		$	2,993		$	(954	)	(32	)%

Expenses:
Rental operating	1,217			1,442			(225		)	(16	)%
Management fees – related parties	148			228			(80		)	(35	)%
General and administrative	208			200			8			4	%
Depreciation and amortization	377			498			(121		)	(24	)%
Total expenses	1,950			2,368			(418		)	(18	)%

Income before other income (expense)	89			625			(536		)	(86	)%

Other income (expense):
Interest expense, net	(359		)	(651		)	(292		)	(45	)%
Gain on sale of rental property	10			9,603			9,593			(100	)%
Loss on disposal of fixed assets	(1		)	—			1			100	%
Total other income (expenses)	$	(350	)	$	8,952		$	(9,302	)	(104	)%

Net (loss) income	$	(261	)	$	9,577

Weighted average number of limited partner units outstanding	3,270			3,270

Net (loss) income per weighted average limited partner unit, basic and diluted	$	(0.08	)	$	2.93

With the exception of two Tamarlane mortgage notes, our existing financing is at fixed rates of interest and, accordingly, our interest cost has remained relatively stable during the period of our ownership of the Properties. Based upon current economic conditions and their effect on interest rates, and because two of our mortgage notes otherwise due on May 1, 2015 had options to extend the maturity dates for one year, which we exercised, we expect that our financing costs will remain relatively stable during fiscal year 2015. The interest rate on the two mortgage notes which have been extended to May 1, 2016 were converted to the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5%. However, should interest rates change materially, the interest component of our variable rate financing, which is based upon either the Federal Home Loan Mortgage Corporation Bill Index Rate plus 2.5% or the one-month London Interbank Offered Rate plus 323 basis points, and is capped at 7%, could change.

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

	September 30,						Increase (Decrease)
	2015			2014			Amount			Percent
Revenues:
Rental income	$	2,540		$	3,114		$	(574	)	(18	)%
Expenses:
Rental operating	1,364			1,579			(215		)	(14	)%
Management fees – related parties	184			235			(51		)	(22	)%
General and administrative	100			109			(9		)	(8	)%
Depreciation and amortization	499			670			(171		)	(26	)%
Total expenses	2,147			2,593			(446		)	(17	)%
Income before other income (expense)	393			521			(128		)	(25	)%
Other income (expense):
Interest expense, net	(433		)	(634		)	(201		)	(32	)%
Loss on disposal of fixed assets	(7		)	(2		)	5			250	%
Net (loss)	$	(47	)	$	(115	)	$	(68	)	(59	)%
Weighted average number of limited partner units outstanding	3,270			3,270
Net (loss) per weighted average limited partner unit	$	(0.01	)	$	(0.04	)

Revenues

We attribute the $~~574~~954,000 decrease in revenues principally to the sale of the Hills ~~property in the first quarter. Average effective rent per square foot~~ and ~~occupancy~~Tamarlane ~~rates~~properties ~~have~~in ~~varied within our expected range.~~ the

first and fourth quarter of 2015, respectively. Average effective rent per square foot and occupancy rates have varied within our

expected range.

Expenses

We attribute the $~~446~~418,000 decrease in expenses principally to:

• a $~~215~~225,000 decrease in rental operating ~~expense~~expenses ofprimarily ~~which~~due ~~$200,000 is directly attributable~~ to ~~the sale of the Hills and $15,000 relates to a decrease in repair and maintenance expense on the remaining properties.~~:


▪	a $35,000 increase in property and general liability insurance claims across the RAI managed portfolio,


▪	a $193,000 decrease in rental operating expenses due to sale of the Hills and Tamarlane in the first and fourth quarter of 2015, respectively, and

▪a $67,000 decrease in real estate taxes primarily attributable to the sale of the Hills in the first quarter of 2015.

(Back to Index)

• a $5180,000 decrease in management fees corresponding to the decrease in revenues attributable to the sales of both the Hills and Tamarlane.

• a $~~171~~121,000 decrease in depreciation and amortization ~~primarily~~of which $120,000 related to the sale of ~~the Hills~~Tamarlane.

Other income (expense)

• a $~~201,000~~9.3 million decrease in ~~interest~~other income (expense) ~~attributed~~is principally due to the gain on sale of ~~the~~rental ~~Hills~~properties ~~and~~of ~~the~~$9.6 ~~pay-off~~million ofrealized on the ~~mortgage~~sale of the ~~disposed property~~Hills.

~~Nine~~• ~~Months~~a ~~Ended~~$292,000 ~~September~~decrease ~~30,~~in ~~2015~~interest ~~Compared~~expense is related to ~~Nine~~the ~~Months~~amortization ~~Ended~~of ~~September~~principal ~~30,~~balances ~~2014~~on our mortgage notes

	September 30,						Increase (Decrease)
	2015			2014			Amount			Percent
Revenues:
Rental income	$	7,995		$	9,180		$	(1,185	)	(13	)%
Expenses:
Rental operating	4,053			4,689			(636		)	(14	)%
Management fees – related parties	595			697			(102		)	(15	)%
General and administrative	438			444			(6		)	(1	)%
Depreciation and amortization	1,495			2,048			(553		)	(27	)%
Total expenses	6,581			7,878			(1,297		)	(16	)%
Income before other income (expense)	1,414			1,302			112			9	%
Other income (expense):
Interest expense, net	(1,546		)	(1,896		)	350			(18	)%
Gain on sale of rental property	9,603			—			9,603			100	%
Loss on disposal of fixed assets	(7		)	(27		)	(20		)	(74	)%
Net income (loss)	$	9,464		$	(621	)	$	10,085		1,624	%
Weighted average number of limited partner units outstanding	3,270			3,270
Net income (loss) per weighted average limited partner unit	$	2.89		$	(0.19	)

and the payoff of the Hills and Tamarlane mortgages upon sales of the Properties.

Revenues

We attribute the $1.2 million decrease in revenues principally to the sale of the Hills property in the first quarter. Average effective rent per square foot and occupancy rates have varied within our expected range.

Expenses

We attribute the $1.3 million decrease in expenses principally to:

• a $636,000 decrease in rental operating expenses primarily due to a $135,000 decrease in insurance expense as a result of limited losses in the property insurance and general liability insurance pool portfolio managed by RAI. $413,000 decrease in operating expenses resulted from decrease in repair and maintenance expenses due to sale of the Hills in the first quarter and a $87,000 decrease in real estate taxes is primarily attributable to the sale of the Hills.

• a $553,000 decrease in depreciation and amortization of which $519,000 related to the sale of the Hills.

Other income (expense)

• a $10.1 million increase in other income (expense) is due to the gain of $9.6 million realized on the sale of Hills.

• a $350,000 decrease in interest expense is related to the amortization of principal balances on our mortgage notes and the payoff of the Hills mortgage upon sale of the Property.

(Back to Index)

Liquidity and Capital Resources

The following table sets forth our sources and uses of cash (in thousands):

	Nine Months Ended
	Three Months Ended
	September 30,
	March 31,
	2015			2014
	2016			2015
Cash provided by operating activities (1)	$	233		$	1,938
Net cash provided by (used in) operating activities (1)	$	228		$	(1,225	)
Provided by (used in) investing activities	23,651			(523		)
Net cash (used in) provided by investing activities	(129		)	11,611
Used in financing activities	(22,967		)	(1,705		)
Net cash used in financing activities	(352		)	(9,531		)
Net increase (decrease) in cash	$	917		$	(290	)
Net (decrease) increase in cash	$	(253	)	$	855


(1)	Includes changes in operating assets and liabilities.

Our liquidity needs consist principally of funds used to pay the Properties’ debt service, operating expenses, capital expenditures and monthly distributions to the limited partners. Our ability to meet our liquidity needs will be subject to our ability to generate cash from both operations and sales, and to control property operating expenses. The ability to generate cash from operations will depend on the occupancy rates, rates charged to tenants compared with competing properties in the area and the ability of tenants to pay rent. Occupancy rates can fluctuate based on changes in local market conditions where the Properties are located such as: excessive building resulting in an oversupply of similar properties, deterioration of surrounding areas, a decrease in market rates or local economic conditions including unemployment rates. The rental rates charged to tenants compared to competing properties can be impacted by a lack of perceived safety, convenience and attractiveness of a property. We have retained a portion of the proceeds from the sale of the Hills to ensure adequate operating liquidity for the remaining term of the fund, pay off related debt and make distribution to investors. We have retained a portion of the proceeds from the sale of the Hills to ensure adequate funding for the future capital expenditures which we may determine to be necessary to position the remaining properties for eventual sale.

~~Under~~expenditures and monthly distributions to the limited partners. Our ability to meet our ~~capital~~liquidity ~~improvements~~needs ~~program,~~will webe ~~expect~~subject to ~~spend~~our ~~approximately~~ability ~~$2.5~~to ~~million~~generate incash ~~the~~from ~~next~~both ~~two~~operations and asales, ~~half~~and ~~years~~to ~~for~~control property ~~improvements~~operating ~~intended~~expenses. The ability to ~~increase~~generate cash from operations will depend on the ~~Properties’~~occupancy ~~appeal~~rates, rates charged to tenants. Ascompared wewith ~~implement~~competing ~~planned~~properties ~~improvements~~in tothe ~~our~~area ~~Properties,~~and wethe ~~seek~~ability of tenants to ~~maintain~~pay ~~our~~rent. ~~occupancy~~Occupancy rates ~~and~~can fluctuate based on changes in local market conditions where the Properties are located such as: excessive building resulting in an oversupply of similar properties, ~~potentially~~deterioration of surrounding areas, toa ~~increase~~decrease ~~our~~in market rates or local economic conditions including unemployment rates. The rental rates charged to tenants compared to competing properties can be impacted by a lack of perceived safety, convenience and ~~our~~attractiveness ~~cash~~of ~~flow~~a property. We have retained a portion of the proceeds from the sales of the Hills and Tamarlane to ensure adequate operating ~~activities~~liquidity for the remaining term of the Partnership, pay off related debt and make distribution to investors. We also have retained a portion of the proceeds from the sales of the Hills and Tamarlane to ensure adequate funding for any future capital expenditures which we may determine to be necessary to position the remaining properties for eventual sale.

WeUnder ~~are~~our ~~planning~~capital improvements toprogram, ~~the~~we ~~Properties~~could ~~for~~potentially ~~the~~spend ~~two~~approximately ~~and~~$273,000 aduring ~~half~~the ~~years~~remaining ~~based~~partnership onterm ~~the~~for ~~assumption~~property ~~that~~improvements ~~the~~intended ~~General~~to ~~Partner~~increase ~~will~~the ~~exercise~~Properties’ ~~its~~appeal ~~right~~ to ~~extend~~tenants ~~the~~and ~~term~~prospective ofpurchasers. ~~the~~As ~~partnership~~we ~~for~~implement ~~the~~planned ~~two~~improvements ~~one-year~~to ~~extensions. At~~our ~~this time~~Properties, we ~~expect~~seek ~~that~~to ~~the~~maintain ~~General~~our ~~Partner~~occupancy ~~will~~rates and, ~~in fact~~potentially, doto soincrease inour ~~order~~rental torates ~~maximize~~and ~~the~~our ~~return~~cash toflow ~~our~~from ~~investors~~operating activities.

~~The~~We ~~following~~are ~~table~~planning ~~sets~~improvements ~~forth~~to the ~~capital~~Properties ~~expenditures~~for ~~incurred~~the ~~during~~next two years based on the ~~nine~~assumption ~~months~~that ~~ended~~the ~~September 30,~~General ~~2015~~Partner ~~and~~will ~~estimated~~exercise ~~future~~its ~~capital~~right ~~expenditures~~to extend the term of the partnership through March of 2018. At this time, ~~which~~we ~~are~~expect ~~discretionary~~that the General Partner will, in ~~nature~~fact, (do so in ~~thousands):~~order to maximize the return to our investors.

Subsidiaries	Capital Expenditures		Future DiscretionaryCapital Expenditures
Tamarlane	$	80	$	12
Bent Oaks	32		529
Cape Cod	103		807
Woodhollow	45		429
Hills	6		—
Village	219		751
Total	$	485	$	2,528

The following table sets forth the capital expenditures incurred during the three months ended March 31, 2016 and estimated future capital expenditures, which are discretionary in nature (in thousands):

Our capital expenditures were $485,000 during the nine months ended September 30, 2015. We have planned a series of future major capital projects for our Properties, including further landscaping, parking lot paving, signage upgrades, upgrades to exterior structures, replacing the HVAC condensing units and replacing water heaters. We review future expenditures periodically and adjust them based on both operating results and local market conditions. If market conditions improve and there is an acceptable return on the additional expenditures, we will consider restoring a previously contemplated interior upgrade program. We cannot assure you that we will complete projects currently planned or that we will not change our plans in response to changes in market conditions. Any excess cash flow not used for capital expenditures would be distributed to the investors.

(Back to Index)

1918

(Back to Index)

In connection with the acquisitions of our Properties, we have $35.8 million of total mortgage financing outstanding. For information regarding mortgage financing with respect to each Property, see Note 6 of the notes to our consolidated financial statements.



Subsidiaries	Capital Expenditures		Future Discretionary Capital Expenditures
Bent Oaks	22		62
Cape Cod	7		44
Woodhollow	5		74
Village	105		93
Total	$	139	$	273

Our ~~payables~~capital toexpenditures ~~related~~were ~~parties~~$139,000 ~~consist~~during ofthe ~~investment~~three ~~management~~months ~~fees~~ended ~~due~~March 31, to2016. We ~~our~~have ~~General~~planned ~~Partner,~~a ~~payable~~series ~~monthly,~~of ~~equal~~future tomajor 1%capital ofprojects ~~the~~for ~~gross~~our ~~offering proceeds~~Properties, ~~net~~including offurther ~~any~~landscaping, ~~limited~~parking ~~partnership~~lot ~~interest~~paving, ~~owned~~signage byupgrades, ~~the~~upgrades ~~General~~to ~~Partner. The~~exterior ~~General~~structures, ~~Partner~~replacing ~~must~~the ~~subordinate~~HVAC upcondensing tounits ~~100%~~and ofreplacing ~~its~~water ~~annual~~heaters. We ~~investment~~review ~~management~~future ~~fee~~expenditures toperiodically ~~the~~and ~~receipt~~adjust bythem ~~the~~based ~~limited~~on ~~partners~~both ofoperating ~~their~~results ~~Preferred~~and ~~Return~~local market conditions. ~~The~~If ~~limited~~market ~~partners~~conditions ~~received~~improve ~~their~~and ~~Preferred~~there ~~Return~~is ~~during~~an ~~the~~acceptable ~~nine~~return ~~months~~on ~~ended~~the ~~September 30~~additional expenditures, ~~2015~~we ~~due~~will toconsider ~~the~~restoring ~~sale~~a ofpreviously ~~the~~contemplated ~~Hills.~~interior Asupgrade aprogram. We ~~result,~~cannot ~~the~~assure ~~subordinated~~you ~~investment~~that ~~management~~we ~~fee~~will ofcomplete ~~$1.94~~projects ~~million~~currently ~~was~~planned ~~paid~~or asthat ofwe ~~September 30,~~will ~~2015. The~~not ~~investment~~change ~~management~~our ~~fee~~plans ~~continues~~in response to ~~accrue~~changes ~~for~~in ~~the~~market ~~remaining rental properties~~conditions.

~~Our~~In ~~debt~~connection ~~service~~with ~~requirements~~the ~~for~~acquisitions ~~the~~of ~~next~~our 12Properties, ~~months~~we ~~are~~have $1025.38 million incarrying ~~the~~value ~~aggregate~~of total mortgage financing outstanding. For information regarding mortgage financing with respect to each Property, see Note 4 of the notes to our consolidated financial statements.

Our payables to related parties consist of primarily of investment management fees due to our General Partner, payable monthly, equal to 1% of the gross offering proceeds, net of any limited partnership interest owned by the General Partner. The General Partner must subordinate up to 100% of its annual investment management fee to the receipt by the limited partners of their Preferred Return. The limited partners partially received their Preferred Return during 2015 due to the sale of the Hills in the amount of $1.9 million. The investment management fee continues to accrue for the remaining rental properties.

The aggregate debt service requirement for all our loans for the twelve months ended March 31, 2017 is $1.8 million, including principal payments of $460,000. In addition to annual principal payments on the mortgage notes payable, total aggregate required escrow payments are $4.3 million through April 1, 2019.

Redemption of Units

We are permitted, in our General Partner’s sole discretion, to redeem units upon a unitholder’s request. However, we have no obligation to redeem units at any time, and we can decline to redeem units for any reason. Cumulatively through ~~September~~March 3031, ~~2015~~2016, a total of 5,000 units have been redeemed at an aggregate price of $46,710, although no units were redeemed in the three ~~or nine~~ months then ended.

Legal Proceedings

We are a party to various routine legal proceedings arising out of the ordinary course of our business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to certain accrued liabilities. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of our critical accounting policies and estimates, see the discussion in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015.

(Back to Index)

Off-Balance Sheet Arrangements

As of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, we did not have any off-balance sheet arrangements or obligations, including contingent obligations, other than guarantees by the General Partner of certain limited standard expectations to the non-recourse nature of the mortgage notes which are secured by the Properties.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Omitted pursuant to Regulation S-K, Item 305(e).


ITEM 4.	CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our General Partner, including its chief executive officer and its chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(Back to Index)

Under the supervision of the chief executive officer and chief financial officer of our General Partner, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the quarter ended ~~September~~March 3031, ~~2015~~2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 6. EXHIBITS

Exhibit No.		Description
3.1		Amended and Restated Agreement of Limited Partnership. (1)
3.2		Certificate of Limited Partnership. (1)
4.1		Forms of letters sent to limited partners confirming their investment. (1)
10.1		Agreement of Purchase and Sale - Casco Bay Portfolio (Tamarlane)
10.2		Agreement of Purchase and Sale - ~~Woodland~~The Hills
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1		The following information from the Partnership's Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2015~~2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Changes in Partners' Capital; and (iv) Consolidated Statements of Cash Flows.


(1)	Filed previously as an exhibit to the Partnership’s registration statement on Form 10 for the year ended December 31, 2008 and by this reference incorporated herein.

(Back to Index)

2120

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RESOURCE REAL ESTATE INVESTORS 7, L.P.
	By: Resource Capital Partners, Inc., its general partner
November 10, 2015	By: /s/ Kevin M. Finkel
May 16, 2016	By: /s/ Kevin M. Finkel
	KEVIN M. FINKEL
	President
	(Principal Executive Officer)

November 10, 2015	By: /s/ Steven R. Saltzman
May 16, 2016	By: /s/ Steven R. Saltzman
	STEVEN R. SALTZMAN
	Vice President – Finance
	(Principal Financial and Accounting Officer)

(Back to Index)

Filing Compare · Resource Real Estate Investors 7, L.P.