Purchase of Treasury Stock and Debt Refinancing

On August 30, 2006 Tower Properties Company (Tower) acquired all of the shares of Tower's common stock owned by Mercury Real Estate Advisors LLC and its affiliates (Mercury). Tower purchased Mercury's shares for $326.43/share; the same price per share it paid to shareholders owning less than 50 shares in its reverse split stock transaction on March 7, 2006. The 21,471 shares purchased for $7,008,779 from Mercury represented approximately 12% of Tower's outstanding shares. On September 1, 2006, the Company refinanced the loans for Hillsborough Apartments. The two original loans had a total outstanding balance of $5,687,350 at September 1, 2006. The Company paid off the existing loans on September 1, 2006, paid prepayment penalties totaling $1,022,592 and replaced the original loans with a new $16,000,000, 10-year non-recourse loan (30 year amortization) at 6.0l%, with interest only due the first year, that matures on September 1, 2016.