HomeMy WebLinkAboutHouston Moore NEF Letter of Intent
August 4, 2024
Rusty Snow
Houston Moore Apartments, LP
Lincoln Avenue Communities
401 Wilshire Blvd., 11th Floor
Santa Monica, CA 90401
RE: Houston Moore Apartments (the “Project”)
1601 S 13th Street Wilmington, NC 28401
Dear Rusty:
We are pleased to present the following summary terms for an equity investment in a limited partnership, which
will own and operate a 200-unit, low-income housing project to be known as Houston Moore Apartments in
Wilmington, NC. This summary of terms is based on information we have received and is further based on certain
assumptions made by the National Equity Fund (“NEF”) regarding the development budget, lease-up schedule,
pro-forma operating statements, and ownership structure.
NEF, an affiliate of the Local Initiatives Support Corporation (LISC), was incorporated in 1987 with the mission
to identify and develop new sources of financing to help provide affordable housing for low income families and to
assist non-profit organizations in creating this housing. NEF has worked with 700 local development partners in
forming partnerships which acquire, develop, rehabilitate and manage low- income rental housing. Since the enactment
of the Federal Low Income Housing Tax Credit in 1986, NEF has raised more than $11 billion in equity and invested
it in more than 2,200 affordable housing projects in 46 states, including Washington, D.C. and Puerto Rico.
Described below are the basic terms, conditions and assumptions of this preliminary commitment:
▪ The Project consists of a proposed LIHTC, multifamily community which will consist of 200 total
housing units located in Wilmington, NC. All units will be LIHTC targeted to families with
incomes at or below 60% AMI.
▪ The Project will be owned by Houston Moore Apartments, LP. The General Partner will be a to be
formed single purpose entity owned by Wilmington Housing Authority. The Special Limited
Partner will be a to be formed single purpose entity owned by various affiliates of Lincoln
Avenue Communities. The Limited Partner will be NEF Assignment Corporation. NEF has
reviewed the entities and principals involved and has no reservations at this time.
▪ NEF proposes to be the Federal Low Income Housing tax credit investor with an equity investment
of $27,259,202 based on annual LIHTC allocation of $3,133,555 which represents a price of $0.87.
NEF’s proposed equity pay-in schedule is on the following page:
o 25% at Closing;
o 25% at Construction Completion;
o 50% at Stabilization & 8609
The final timing and amounts of equity payments at closing and during construction will be agreed upon by NEF
and the General Partner prior to closing. NEF will charge a $60,000 Due Diligence fee.
▪ Reserves - The Limited Partner will require the following reserves:
• Operating Reserve of $1,820,950
• Replacement Reserve of $300 per unit per year to be funded monthly.
▪ Guaranties and Adjusters – NEF will require Lincoln Avenue Capital (“LAC”), Lincoln Avenue
Capital Management (“LACM”), and LAC Guarantor Holdings (“LACG”) to serve as guarantors to
provide guaranties of development completion, operating deficits, and the repurchase of NEF’s interest
if the project fails to meet basic tax credit benchmarks. The project’s partnership agreement will include
adjusters to the Limited Partner’s capital contributions if there is a change in the agreed upon amounts
of total projected tax credits or projected first year credits.
A final determination of our investment will depend upon confirmation of the project’s assumptions; a full
underwriting of the Project, the development team and their financial statements; the review of plans and
specifications; the commitment for all other sources of financing; the development schedule; review of due diligence
materials; successful negotiation of the partnership agreement and approval by NEF’s Investment Review Committee
and by its final tax credit investors.
Sincerely,
Jason Aldridge
Managing Director
National Equity Fund