The following is a reproduction of a letter sent on 23 December 2009 to all shareholders by Stephen Vernon, Board President, on behalf of the Nagle Apartments Corp. Board of Directors and Management.

Dear Shareholders,

I wanted to give you an update on the Board’s December 5th annual budget meeting and arrearage. Since the last letter went out, progress has been made both in the Court cases and other arrearage balances. The Board and management will continue to aggressively pursue collection of arrearage balances until the amounts are fully paid.

The Board voted to not increase maintenance at this time for 2010. Some shareholders may actually see a decrease in their monthly charges staring in January 2010 as the annual STAR credits are applied to shareholder bills January through June.

This decision not to increase maintenance at this time comes at a cost. In order to accomplish this, the Board put off some funding to the Capital Reserves and is counting on lower natural gas prices to offset increases in real estate taxes, Water/sewer bills and wages. One of the reasons we are able to do this is the great news that our natural gas usage per heating degree day (a measure of efficiency) is down approximately 40% from 2005 due to Board action on energy issues. With more work to do, we are more efficient now than ever.

As our budget is cost driven, it is unlikely that these actions can be repeated. Deferring repairs only increases costs in the end. Or more properly, deferring saving for repairs only drives up funding needs in the end. However, with the economy the way it is, the Board decided that an increase at this time could be deferred.

You will no doubt notice that I used the phrase “at this time.” Should an adverse budget event cause us a shortage in operating funds, the Board may have to reconsider its decision: but no increase for now.

The Board and Management want to wish you, your family and friends a happy holiday season and a fantastic new year!

Sincerely,

Stephen Vernon, President
On behalf of the Nagle Apartments Corp. Board of Directors and Management