Item 3. LEGAL PROCEEDINGS

In November 2016, we were included as a defendant in a class action lawsuit related to predatory towing by a third party company we had retained to provide towing services at several of our properties in Montgomery County, Maryland. We were not named as a defendant in the litigation prior to the certification of the defendant class. In December 2015, the towing company defendant reached a settlement with the plaintiff class that resulted in a $22 million judgment being entered against them. After the judgment was entered, the Circuit Court for Montgomery County, Maryland certified a defendant class of approximately 600 property owners, including us. We believe this is the first time a Maryland court has certified a defendant class that has resulted in a complete denial of due process to the members of that class and together with the others, filed a Writ of Mandamus challenging the certification of the defendant class. The hearing of the Writ by the Court of Appeals is discretionary. Because of the specific facts and circumstances of our contractual relationship with the towing company, we do

not believe we should have been included in the defendant class nor do we believe we should have any liability in this matter. We are currently pursuing all available legal remedies and intend to vigorously defend ourselves in the matter, including defenses based on the total lack of due process afforded to us to present our unique facts and circumstances. We believe our potential loss in this matter ranges from $0 to an undetermined share of the $22 million judgment. The judgment does not provide any guidance for how the judgment amount is to be shared amongst the defendant class.