Loading...
HomeMy WebLinkAbout2023-09-26 Memorandum of Understanding-NRP LoneStar Development LLC- Anna ApartmentsCHAPMAN AND CUTLER LLP DRAFT OF SEPTEMBER 14, 2023 MEMORANDUM OF UNDERSTANDING BETWEEN ANNA PUBLIC FACILITY CORPORATION KO51 NRP LONE STAR DEVELOPMENT LLC "ANNA APARTMENTS" THIS MEMORANDUM OF UNDERSTANDING (this "MO U ") is between the ANNA PUBLIC FACH= CORPORATION (the "Anna PFC"), a nonprofit public facility corporation organized under Chapter 303 of the Texas Local Government Code (the "Act"), and NRP LONE STAR DEVELOPMENT LLC (the "Developer" or "NRP"), a Ohio limited liability company and is dated and effective as of [September 26], 2023. The Developer is a developer of affordable and market rate housing in the State of Texas. The Anna PFC is a nonprofit public facility corporation whose mission is to assist in the financing of public facilities. The Developer and the Anna PFC hereby agree to work cooperatively to acquire, finance and develop a 337-unit multifamily housing development to be located in the City of Anna, Collin County, Texas (the "Project "), in accordance with the terms of this MOU and the term sheet attached hereto as Exhibit C. In order to accomplish this purpose, the parties agree as follows: AGREEMENTS A. OWNERSHIP STRUCTURE 1. The Developer will form a limited partnership named Meryl Street LP (the "Partnership ") for the purpose of leasing and developing the Project. A single -purpose entity that is controlled by the Developer will be admitted into the Partnership as the sole General Partner (the "General Partner"). 2. The Anna PFC may designate an affiliate to serve as a special limited partner of the Partnership (the "Special LP "), with certain limited oversight and approval rights. 3. The duties of the General Partner, the Special LP and the Investor LP shall be set forth in a partnership agreement (the "Partnership Agree»ent ") to be entered into among the General Partner, the Special LP and the Investor LP. The parties will cooperate in good faith to cause the Partnership Agreement to contain terms consistent with those set forth in Exhibit B hereto, it being recognized that approval of the Anna PFC's Board of Directors is contingent upon the Partnership Agreement containing terns consistent with Exhibit B. Memorandum of Understanding - Anna PFC and NRP 4886-4299-4434 v6.docx Memorandum of Understanding Anna Apartments [September 26] , 2023 Page 2 of 17 The Special LP's execution of the Partnership Agreement shall be subject to the following terms: (i) The Special LP's representations shall be hnuted to those within the Special LP's actual knowledge and in no case shall due inquiry be required, it being understood and agreed that the Special LP's will not be looked upon by the General Partner or the Investor LP to conduct Project -related diligence, and any such diligence conducted by the Anna PFC is solely for its own benefit; (ii) The Special LP shall be indemnified by the Developer and the Partnership for any liabilities incurred tinder the Partnership Agreement, except for liabilities incurred as a result of the Special LP's gross negligence or willful misconduct and in no event shall such indemnification be contingent upon a ruling of a court of law; (iii) The Special LP shall not be required to covenant to undertake actions or obligations that the General Partner will be required to take under the Partnership Agreement, and (iv) The Partnership Agreement shall contain a provision wherein the General Partner and Investor LP acknowledge that the obligations of the Special LP under the Partnership Agreement are obligations solely of the Special LP and not the owner of the Special LP. 4. Title to the land (the "Land ") and all improvements constructed thereon (including without limitation the Project) shall be taken in the name of a subsidiary of the ;Anna PFC (the "Lessor"), and the Lessor shall then enter into a 99-year lease (the "Lease") with: the Partnership (sometimes referred to as "Tenant "), as tenant, holding a leasehold interest in the Land and all improvements constricted thereon. Funding for the acquisition of the Land will come from the financing of the Project, and may be paid to the Lessor in the form of an up -front Lease payment. Upon termination of the Lease, ownership of the improvements constitutuig the Project shall revert to the Anna PFC. The Lessor shall be indemnified by the Developer and the Partnership for any liabilities incurred under the Lease; provided, that following substantial completion of the constriction of the Project, such indemnification shall be limited to any liabilities incurred in relation to operation of the Project. Such indemnification shall not apply to liabilities incurred as a result of the Lessor's gross negligence or willful misconduct and in no event shall such indemnification be contingent upon a ruling of a court of law. So long as the Tenant is not in default under the Lease, the Tenant will be permitted under the Lease to assign its interest in the Lease in accordance with Section I.1 below; provided, however, that the Lessor's consent shall not be required for Tenant to assign its interest in the Lease to an affiliate of Tenant. Lessor will not be permitted to assign its interests under the Lease in any manner which jeopardizes the availability of the ad valorem tax exemption of the Project or as may be prohibited under the Partnership Agreement or any loan documents. 5. The General Partner shall only be permitted to assign its interests in the Partnership upon the prior written consent of the Special LP which such consent shall not be unreasonably Memorandum of Understanding Anna Apartments [September 26], 2023 Page 3 of 17 withheld, conditioned, or delayed; provided, however, that the Special LP's consent shall not be required for General Partner to assign its interest in the Partnership to an affiliate of Tenant. B . DuE DILIGENCE As a condition to the Anna PFC's participation ui the financing and ownership of the Project, the Anna PFC requires the Developer to provide due diligence information on the Project and its proposed financing and operations pursuant to the due diligence checklist (the "Clieckl ist ") attached hereto as Exhibit A. The Developer shall deliver the due diligence items on the Checklist at the times stated on the Checklist. Failure of the Developer to deliver to the Anna PFC due diligence items reasonably acceptable to the Anna PFC shall be grounds for the Anna PFC to terminate this MOU in its discretion. C. FINANCING 1. The Developer will apply for construction and permanent financing (the "Loma ") on behalf of the Partnership, which shall include a leasehold mortgage on the Project. The Developer shall be responsible for selecting the lender and negotiating the loan terms on behalf of the Partnership; provided, that the Anna PFC shall have the right to review and approve the initial financing arrangements and the terms and conditions of any Loan documents, which approval shall not be unreasonably withheld, conditioned or delayed. To the extent required by the Loan, Anna PFC, and/or its affiliates, as applicable, agree to subordinate their interests in the Project, and the Lessor will execute a joinder of its fee interest in the Project to a mortgage or deed of trust. 2. On behalf of the Partnership, the Developer will cause the investor limited partner, that is controlled by an affiliate of the Developer (the "Iywestor LP "), to make an equity contribution to the Partnership (the "Equity "), which will be documented in the Partnership Agreement. The Investor LP may receive a hurdle return for all or a portion of its equity contribution. The Investor LP and Special LP are collectively referenced herein as "Limited Partners." 3. The Developer shall pay all costs and fees associated with applying for the Loan and facilitating the Equity investment, which costs, along with all other pre -development costs incurred by the Developer (to the extent included within the approved budget), may be reimbursed at Closing (as defined herein) from the proceeds of the Loan and Equity. In the event this MOU is terminated or the transaction fails to close as contemplated herein, the Developer shall be solely responsible for all costs described above, and the Anna PFC and its affiliates shall have no responsibility for payment or reimbursement of such costs. 4. The Developer and its affiliates shall provide any guarantees of construction completion, operating expenses, return on Equity investment, and the like that may be required in conjunction with the Loan or the Equity financing. Neither the Anna PFC, the Special LP nor any Memorandum of Understanding Anna Apartments [September 26], 2023 Page 4 of 17 of their affiliates will provide any guarantees or indemnities in connection with the financing of the Project. D. DESIGN AND CONSTRUCTION 1. The Developer shall provide comprehensive development services to the Partnership pursuant to a Development Agreement to be entered into by the Partnership and Developer. 2. The Developer shall prepare and promptly provide the Anna PFC a detailed development budget for the Project. 3. The Developer shall be responsible for obtaining the services of design professionals for the design of the site plan and design of the Project. The Anna PFC will be provided copies of the final plans and specifications for the Project, including all construction contracts. The Anna PFC will have the right to review, comment and approve such plans, specifications and contracts at least five (5) business days prior to the execution of the contracts, which approval shall not be unreasonably withheld, conditioned or delayed. 4. In order to secure an exemption from state sales tax for the acquisition of building materials, an affiliate of the Anna PFC (the "Contractor"), shall serve as the general contractor in connection with the constriction of the Project. In connection with the participation of the Contractor as described in the previous sentence, the Contractor shall be entitled to a fee equal to 1% of construction hard costs, which is estimated to be $554,421, payable half at Closing (as defined herein) and the remaining half upon issuance of the final certificate of occupancy for the the Project. The Contractor will enter into a master subcontract with NRP Contractors H LLC, an affiliate of the Developer, which master subcontractor shall be entitled to fees as set forth in Exhibit C. The Developer, the Partnership and the master subcontractor shall provide indemnification to the Contractor for all liabilities incurred by the Contractor in connection with the Project except those caused by the Contractor's gross negligence or willful misconduct. 5. The Developer shall be responsible for obtaining all governmental approvals and permits needed in order to constrict and operate the Project. 6. The Project shall be constructed so as to comply with Americans with Disabilities Act and Section 504 of the Rehabilitation Act of 1973 requirements, as applicable under federal and state law. E. MANAGEMENT AND OPERATION 1. NRP Management LLC, or such other Developer designated affiliate shall serve as the property manager (the "Property Matutger ") for the Project, which will be memorialized in a management agreement (the "Matwgenient Agreeitient ") if form and substance reasonably Memorandum of Understanding Anna Apartments [September 26], 2023 Page 5 of 17 acceptable to the Anna PFC. The Management Agreement will include fees payable to the Property Manager, as set forth in Exhibit C. 2. Annually, by no later than December 1 of the preceding calendar year, the Property Manager shall provide the Partnership with a proposed annual operating and capital budget. F. COMMUNITY SUPPORT The Developer shall be responsible for interfacing with the local governmental officials in connection with support for the Project, and the Anna PFC shall provide reasonable cooperation in connection with such matters, if requested by the Developer. The parties will consult with each other and coordinate the response to any media inquiries and/or public opposition to the Project that may arise. G. AD VALOREM PROPERTY TAX EXEMPTION/COMPLIANCE AND REPORTING REQUIREMENTS 1. The ownership structure contemplated herein is expected to generate ad valorem tax exemption for the Project, for an initial duration of up to 60 years (the "Initial E.reniption Period") and renewals as set forth herein. The Anna PFC, on behalf of the Partnership, shall work with the Developer and the applicable appraisal district to request confirmation of the availability of such exemption in the form of a pre -determination letter delivered to the Partnership prior to Closing. Upon Closing, the Anna PFC will request that the appraisal district apply the tax exemption to the Project. The Anna PFC makes no representations or guaranties that the exemption will be obtained and will take no responsibility for maintaining the exemption after Closing (as defined herein) other than to provide cooperation to and at the direction of the General Partner. At Closing, the Developer shall cause an opinion of counsel to be delivered, in form and substance acceptable to the Anna PFC, with respect to the ad valorem tax exemption. Upon direction of the General Partner and no later than three years prior to the expiration of the Initial Exemption Period, the Anna PFC shall reasonably cooperate to seek approval for extension of the exemption for an additional 60 years following the end of the Initial Exemption Period. If the appraisal district does not approve an extension or if the Project's ad valorem tax exemption is otherwise lost for any reason (the "Loss of Tax Status "), the Anna PFC and the Tenant shall use reasonable efforts to modify the structure to allow the ad valorem tax exemption to continue. If such efforts are unable to cure the Loss of Tax Status, then the Lessor shall convey fee title of the Project to the Partnership for a nominal fee, and the Lease will terminate, and the Special LP's interest in the Partnership shall likewise be redeemed or conveyed for a nominal fee plus any fees that have accrued and are payable under the Partnership Agreement to the Special LP prior to the date of the Loss of Tax Status, such that the Special LP will no longer have an interest in the Partnership. 2. The General Partner shall cause the Project to be operated pursuant to the requirements of the Act, to the extent applicable to the Project, including but not lunited to the standards for tenant participation in the housing choice voucher program. The General Partner Memorandum of Understanding Anna Apartments [September 26], 2023 Page 6 of 17 shall provide information not less than quarterly, and upon reasonable request, sufficient for the Anna PFC to post on its website the Project's compliance with Section 303.0425 of the Act and policies regarding tenant participation in the housing choice voucher program. 3. To the extent applicable to the Project, the General Partner shall cause, at the Partnership's expense, an annual audit report to be prepared and submitted to the Texas Department of Housing and Community Affairs (the "TDHCA ") and the Chief Appraiser of the applicable appraisal district pursuant to Section 303.0426 of the Act and any procedures and rules established by TDHCA regarding such annual audit. The General Partner shall be responsible for resolving any notice of noncompliance from TDHCA in connection with such annual audit. H. FEEs AND EXPENSES 1. The Developer shall be entitled to receive a development fee (the "Development Fee") from the Partnership as set forth in Exhibit C. 2. The Anna PFC or its designated affiliate shall be entitled to receive an acquisition fee (the "Acquisition Fee") from the Partnership in the amount of $806,552, which fee shall be payable at Closing (as defined herein). 3. The Lessor (or its designated affiliate) shall be entitled to receive an annual lease payment under the Lease on each January 1, commencing the first January 1 of', the Lease term after stabilization of the Project, in the initial annual amount of $27,000 and increasing by 3% annually (the "Annual Lease Pco)ment "). The Annual Lease Payment shall be payable as the first item in the cash flow waterfall under the Partnership Agreement and shall accrue without interest in the event net cash flow is insufficient to pay such lease payment in any year. The parties agree that the Annual Lease Payment will be structured as subordinate to debt service for a Loan as reasonably requested by Lender. 4. The Special LP shall be entitled to receive a partnership management fee (the "SLP Management Fee") in the initial amount of $10,000 and increasing by 3% annually for its services in connection with management of the Partnership. To the extent that cash flow is insufficient to pay such fee in any year, the SLP Management Fee will accrue without interest until paid. 5. The Special LP shall be entitled to receive an amount equal to 1% of the gross sales price for a sale of the Project to a third party, with such amount to be payable to the Special Member after repayment of the Loan but prior to any Equity payment. In the event of the initial refinance of the Loan to the Project with a new lender, the Special LP shall be entitled to receive an amount equal to 10% of the net cash flow generated from the refinancing, subordinate to the Investor LP's return of all capital and any preferred return, as well as any costs of the refinance. The amounts payable to the Special LP under this Paragraph H.5, together with any other fees or distributions to which the Special LP may be entitled under the Partnership Agreement, shall be retained by the Memorandum of Understanding Anna Apartments [September 26], 2023 Page 7 of 17 Special LP, and the Special LP shall not be required, under any circumstance, to share any such amounts with the Developer. 6. Neither party shall enter into any contractual relationship or agreement relating to the Project that would cause either financial or legal liability to the other, without the other party's prior written consent. 7. All expenses incurred by the Anna PFC in connection with this MOU, including but not limited to costs for staff time to review the proposed Project, third -party reports, the Anna PFC's legal counsel, special real estate counsel and other expenses incurred by the Anna PFC in connection with the proposed Project (the "Costs "), shall be included in the Project's development budget and reimbursed by the Partnership to the Anna PFC concurrently with the closing on the Loan (the "Closing "). Anna PFC expects to incur costs for Special LP Counsel and Hilltop Securities (each defined below) in the amount of $100,000 each, which fees shall be payable at Closing and are in addition to the fees set forth in the immediately succeeding paragraph. In addition to the fees set forth above and as a precondition for the Anna PFC proceeding with the Project as set forth in this MOU, upon execution and delivery of this MOU and approval of the same by the Anna PFC Board of Directors, the Developer shall pay the amount of $25,000 to each of Hilltop Securities and Special LP Counsel. Such fees are nonrefundable. I. LONG TERM OWNERSHIP 1. Tenant shall be permitted to sell its interest in the Lease (the "Leasehold Estate") at any time following the thirtieth (30th) day after completion of construction of the Project, as evidenced by issuance of the final certificate of occupancy for the Project (the "Construction Completion."). (i) Any such sale will be a transfer of the Leasehold Estate to a third ;parry purchaser with this Lease remaining in full force and effect, which transfer shall be expressly subject to the ROFR (defined below) and Tenant's receipt of Lessor's written approval (such approval not to be unreasonably withheld, conditioned or delayed) of the intended third -party purchaser (a "Leasehold Sale"). (ii) If Tenant identifies a third party to acquire the Leasehold Estate pursuant to a Leasehold Sale, it shall first provide written notice of the identity of the third party to Lessor. Lessor shall have thirty (30) days following its receipt of such notice in which to perform a due diligence review on the proposed replacement tenant. Lessor shall not unreasonably withhold, condition or delay its consent if the proposed replacement tenant would satisfy a national bank's customary "know your customer" requirements. Lessor's failure to provide a consent to or a disapproval of a proposed replacement tenant within such thirty (30) day period shall be deemed to constitute its approval of such Leasehold Sale. Following Lessor's approval (or deemed approval) of a Leasehold Sale, Tenant may transfer the Leasehold Estate and all of its rights and Memorandum of Understanding Anna Apartments [September 26], 2023 Page 8 of 17 obligations under this Lease to the proposed replacement tenant and this Lease shall continue in full force and effect on all of the same terms and conditions. 2. Following Construction Completion, in the event of a proposed Leasehold Sale, the Special LP, the Anna PFC, or the Anna PFC's designated affiliate shall have a right of first refusal to acquire the Leasehold Estate on the same terms offered by such third party buyer (the "ROFR"). The Special LP shall have 30 days in which to notify the Partnership of its intent to purchase the Leasehold Estate pursuant to the ROFR at terms of the bona fide offer, and closing of such sale much occur within the sooner of (i) 60 days or (ii) the closing timing proposed in the bona fide offer. The ROFR shall expire after the Leasehold Sale. 3. To the extent required by a Leasehold Sale or refinance, the Lessor, Anna PFC, and/or their affiliates, as applicable, shall subordinate their interests (including the leasehold interests) in the Project to the interest of a lender in connection with such sale or refinance, and the Lessor will execute a joinder of its fee interest in the Project to a mortgage or deed of trust. J. REGULATORY RESTRICTIONS The Developer and the Anna PFC agree that (i) at least 10% of the units in the Project will be restricted for rent to individuals and families earning less than 60% of the area median income (as published from time to time by the Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937, as amended) (the "AW"); (ii) at least 40% of the units in the Project will be restricted for rent to individuals and families earning less than 80% of the AMI; (iii) rents charged shall not exceed 30% of the applicable AMI per each category of units, adjusted for family size; and (iv) the Project will be subject to any such other restrictions as shall be reasonably required by the Anna PFC, consistent with the Act. Income shall be verified by the Developer pursuant to a review of the tenants' federal income tax returns or other commercially reasonable method acceptable to the Anna PFC. The Developer and the Anna PFC will enter into a Regulatory Agreement at Closing to be recorded in the applicable county land records that will set forth the income restrictions and describe the methodology for income verification and reporting, and require that the income restrictions shall last at least for the longer period of 20 years from the effective date of the Regulatory Agreement or the date on which the Special LP is no longer a partner of the Partnership. K. MISCELLANEOUS 1. This MOU reflects the entire understanding between the parties and may only be amended in writing, signed by both parties. This MOU is a contract and not merely an "agreement to agree:' 2. Each parry hereto is prohibited from assigning any of its interests, benefits or responsibilities hereunder to any third parry or related thud party, without the prior written consent of the other parry, such consent not to be unreasonably withheld, conditioned, or delayed. Memorandum of Understanding Anna Apartments [September 26], 2023 Page 9 of 17 3. The parties agree to execute such documents and do other such reasonable things as may be necessary or appropriate to facilitate the development of the Project and the constunmation of the agreements set forth herein. 4. This MOU may be executed in several counterparts, each of which shall be deemed to be an original and all of which together shall constitute one contract binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart ��I U • � _ - 1•-i-��I� __�� • �� �--• � _ � • � � _ •� './M�� MCI __ • THE STATE OF TEXAS, EXCLUSIVE OF CONFLICT OF LAWS PRINCIPLES. 6. In case any one or more of the provisions contained in this MOU for any reason is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision hereof, and this MOU will be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 7. The parties hereto submit exclusively to the jurisdiction of the state and federal courts of Collin County, Texas, and venue for any cause of action arising hereunder shall lie exclusively in the state and federal courts of Collin County, Texas. 8. Should any party employ an attorney or attorneys to enforce any of the provisions hereof, to protect its interest ui any manner arising under this MOU, or to recover damages for the breach of this MOU, the non -prevailing party in any action pursued in courts of competent jurisdiction (the finality of which is not legally contested) agrees to pay to the prevailing party all reasonable costs, damages and expenses, including specifically, but without implied limitation, attorneys' fees, expended or incurred by the prevailing party in connection therewith. 9. The subject headings contained in this MOU are for reference purposes only and do not affect in any way the meaning or interpretation hereof. 10. This MOU shall continue until terminated upon the occurrence of I any one of the following conditions: (a) The Anna PFC and the Developer sign a mutual consent to terminate this MOU; (b) Loan and Equity financing for the Project are not closed within 2 years of the execution hereof, subject to one 2-year extension at the written request of the Developer; (c) The Anna PFC's Board of Directors takes action to disapprove of the participation of the Anna PFC in the financing of the Project as described in this MOU at any time prior to the Closing; Memorandum of Understanding Anna Apartments [September 26], 2023 Page 10 of 17 (d) If Developer determines that the transactions contemplated by this MOU are not feasible, Developer may terminate this MOU by delivery written notice thereof to the Anna PFC; (e) Either party breaches its obligations under this MOU, the non -breaching party provides the breaching party notice of such fact and a 15-day opportunity to cure, and the breaching party fails to do so; or (f) Either party files for bankruptcy protection, makes an assignment for the benefit of creditors, has a receiver appointed as to its assets, or generally becomes insolvent. Upon termination of this MOU for any of the reasons cited above, neither party shall have any ongoing obligation to the other with respect to this MOU nor the Project. In addition, the provisions of this MOU with respect to the Project will be terminated when the General Partner is admitted to the Partnership and the Anna PFC and the Developer and their affiliates, as applicable, enter into definitive agreements with respect to the governance of the Partnership and the development, constriction, financing, and operation of the Project as contemplated herein. 11. The parties acknowledge that the Special LP, the Anna PFC and its affiliates will be represented in this transaction in a legal capacity by Chapman and Cutler LLP ( "Special LP Cotatsel ") and Hilltop Securities Inc. in a financial advisory capacity ( "Hilltop Securities "). The Developer, the Partnership, the General Partner and their affiliates will be represented by separate counsel and will not be entitled to rely on Special LP Counsel for representation in this matter. [Remainder of Page Intentionally Left Blank] EXECUTED to be effective as of the date above shown. By Stan Carver II President NRP LONE STAR DEVELOPMENT LLC By _ Natne: Title: [Signature Page to "Anna Apartments" MOT] EX IT A ANNA PUBLIC FACILITY CORPORATION CHECKLIST OF DUE DILIGENCE PROPERTY ITEMS RECEIVED ITEM DEADLINE NOTES Project Description, including number of units, unit sizes, and amenities Site Location information, with ma Proposed Rent Schedule, with tenant income restrictions Site Plan Appraisal Phase I Environmental Soils Report Evidence of site control Evidence of zonin Title commitment with all exceptions Survey DEVELOPMENT ITEMS RECEIVED ITEM DEADLINE NOTES Detailed Development Budget Sources and Uses Statement of Developer's experience, including evidence of net worth Resume of Master Subcontractor, with evidence of experience Plans and Specifications Resume of Architect, with evidence of experience FINANCING ITEMS RECEIVED ITEM DEADLINE NOTES 15- ear Pro Forma Debt financing commitment Equity financing commitment Description of all other sources of fmancin Application for debt financing OPERATIONAL ITEMS RECEIVED ITEM DEADLINE NOTES Resume of property management company, with evidence of experience Proposed Rent Schedule, with tenant income restrictions ORGANIZATIONAL ITEMS RECEIVED ITEM DEADLINE NOTES Organizational documents for limited partnership EXHIBIT B PARTNERSHIP AGREEMENT TERMS The following is a summary of terms that the Anna PFC will require in the Partnership Agreement. The following list is not intended to be exhaustive and is untended to supplement and not limit the terms of the MOU. REPRESENTATIONS • The Special LP will make representations only as to its tax status, existence and due authorization and execution of Partnership documents. • The Special LP will become a limited partner in the Partnership at Closing, therefore pre - closing items must be addressed by the General Partner or other Developer affiliate. Under no circumstances will the Special LP execute documents on behalf of the Partnership. • The Special LP is not performing due diligence on the Project. Therefore, any representations regarding the Project must be provided by the General Partner. • The Special LP's representations are generally as to its own knowledge. The knowledge of the Special LP may not be qualified by phrases such as "after due inquiry." The Special LP will make no inquiry. COVENANTS • The Special LP may covenant not to take affirmative actions, but the Special LP cannot covenant not to permit or allow others to do things. • The Special LP cannot covenant to maintain the property tax exemption, but the Special LP shall agree to cooperate with the General Partner in making any required filings if and when directed by the General Partner. • Any covenants relating to the operation of the Partnership or the construction or operation of the Project should be made by the General Partner. • The Special LP will not covenant to maintain adequate capital. INDEMNITIES AND GUARANTEES • The Special LP should be indemnified for all losses other than those caused by its gross negligence or willful. misconduct. • The Special LP's indemnification should not be conditioned on a court determination. • The Special LP will indemnify only for its oven gross negligence or willfuil misconduct. The Special LP will not indemnify for actions or inactions of the General Partner. • The Special LP will not provide completion guarantees, environmental guarantees, credit guarantees, or covenant to make up for cash flow short falls. • The Special LP will not be required to make loans to the Partnership. • If the Partnership is required to provide a guarantee, the guarantee should either be limited to the assets of the Partnership or should explicitly state that the guarantee is not intended to be recourse to the Special LP or its affiliates. DUTIES AND OBLIGATIONS FOR ADMINISTRATION OF PARTNERSHIP • The General Partner will be the partner responsible for the administration of the Partnership and the operation of the Project. • The General Partner will be responsible for obtaining any insurance required by the Partnership Agreement or other Partnership documents and will name the Special LP as an additional insured where applicable. • The General Partner will be responsible for ensuring any requirements for maintaining the ad valorem tax exemption are met, including any ongoing correspondence with the applicable appraisal district. The General Partner shall cause its counsel, at the expense of the Partnership, to deliver an opinion at Closing regarding the ad valorem exemption, which opinion must be addressed to and in form and substance acceptable to the Anna PFC and the Lessor. The Special LP will agree to provide reasonable cooperation at the direction of the General Partner with respect to the ad valorem tax exemption. • All reports that are required by the Investor LP shall be made by the General Partner, and any penalties imposed for late reports shall be imposed only on the General Partner. • Notices required by the Investor LP shall be made by the General Partner. OPTION/RIGHT OF FIRST REFUSAL • The Anna PFC will be granted the right of first refusal described in the MOU. TAXES AND ALLOCATIONS • The General Partner will be responsible for the preparation of the tax return and tax filings. The General Partner will cooperate with the Special LP to the extent its signature is required. • Losses in excess of capital accounts are allocated to the General Partner. • The Special LP will not have a deficit restoration obligation either annually or on liquidation. • The General Partner will be the "partnership representative" for the purposes of tax audits. • If the Partnership has an adjustment on audit, the Special LP will pay its allocated share but will not put additional fronds into the Partnership. REMOVAL • Unless a removal is caused by its own gross negligence or willftd misconduct, the Special LP will not be liable for the costs related to removal or replacement. • The Special LP will not be liable for events after removal, except those related to the Special LP's sole gross negligence or willful misconduct. MISCELLANEOUS • The governing law, jurisdiction and venue will be Texas. EXffiBIT.0 TERM SHEET TERM SHEET FOR THE DEVELOPMENT OF ANNA APARTMENTS IN THE CITY OF ANNA, TEXAS //4023 This Term Sheet, in addition to the Memorandum of Understanding ("MOU") above, addresses the terms for the development and financing of the Project (hereafter defined). This Term Sheet is not meant to be an exhaustive document and will be replaced and superseded by definitive documentation. No legally binding obligations on either party will be created, implied or inferred until documents in final form are executed and delivered by all parties in a form acceptable to each party, in each party's sole and absolute discretion. This Term Sheet and the MOU, together, replace all previous understandings and agreements, written or oral, with respect to the Project. The Project will be owned by a wholly -owned subsidiary of the Anna Public Facility Corporation ("APFC"). Such subsidiary ("Lessor") shall hold fee title to the Land and Improvements upon payment, on the Closing Date, to the NRP affiliate that owns the Land of the amount of the contract price for NRP or its affiliate's purchase of the Land ("Land Price"). On the Closing Date, the Lessor will simultaneously enter into a lease with the Tenant, which will make an upfront lease payment to the Lessor in the amount of the Land Price. Tenant will be responsible for the costs of the Improvements. The Land and Improvements will be leased to Tenant on a long term lease. Capital Event: A sale of the entire Project (including any proposed assignment of the entire Lease) to a third party for consideration or of all of the interests in the Tenant Partnership to a third party for consideration. City: City of Anna, Texas. Closing Date: The date of closing for all financing for the Project. Construction: Tenant will contract with APFC, or its wholly -owned subsidiary, as general contractor, to construct the Improvements ("General Contractor"); and General Contractor will enter into a Master Sub - Contract with NRP Contractors II LLC, an affiliate of NRP ("NRP Contractors"), to construct the Improvements. NRP Contractors will receive a Contractor Fee of 5%, plus general conditions and 1.5% IGA fee, and any construction contract with NRP Contractors will also include a contractor's contingency of 3% solely for the use of NRP Contractors. NRP Contractors will provide construction completion guarantees necessary to satisfy any lenders and Equity Contribution Partners for the Project on terms acceptable to NRP Contractors in its sole discretion. General Contractor shall be indemnified to the fullest extent permitted by applicable law by each of the Tenant and NRP Contractors, and the indemnification shall be reflected in the construction contract documentation. Developer: NRP Lone Star Development, LLC, or another affiliate of NRP. Development Agreement: Developer, APFC (or its designated affiliate) and Tenant will enter into a development agreement ("Development Agreement") in a form acceptable to the parties of the contract, in accordance with the terms set forth herein and in the MOU. Developer Fee: Developer is to receive a Developer Fee in connection with the development of the Project in an amount equal to three and one-half percent (3.5%) of the total development costs of the Project. It is anticipated thirty percent (30%) of the Developer Fee will be earned and paid at the construction loan closing. Fifty percent (50%) of the Developer Fee will be earned and paid monthly out of the loan proceeds as part of the monthly construction loan process and the final twenty percent (20%) will be earned and paid upon issuance of the final certificate of occupancy for the Project. The timing and amount of the payment shall be subject to the lender and Equity Partner's consent. Equity Contribution Partners: The entity or entities which are selected by NRP to contribute common equity (cash or property) to the Equity Partner and to be admitted as a limited partner to the Equity Partner, one of which will, be NRP Partner. Such interest may receive a hurdle return for all or a portion of its equity contribution. Equity Partner: A Texas limited partnership, the sole general partner of which will be NRP Manager, and whose limited partners will be NRP Partner (which will contribute the Land Contribution and some cash in accordance with the Project Budget) and the Equity Contribution Partners (which will contribute cash in accordance with the Project Budget). The structure is expected to look similar to the attached Schedule 1. Governing Law: State of Texas. Guarantees: Certain financial obligations will be guaranteed by NRP Contractors or an affiliate on terms to be negotiated by NRP and lenders and the Equity Contribution Partners. APFC and its affiliates will not be required to provide any financial guarantees with respect to financing or construction of the Project. Improvements: Approximately 337 units of multifamily residential housing, together with all onsite infrastructure improvements for the Project, pursuant to Plans and Specifications developed by Developer, and will include a pool, fitness center, clubhouse space, and other Class -A multifamily amenities appropriate for the Project as determined by Tenant Partnership. 1) Land: Approximately 15.4 +/- acres for the Project to be built and operated as proposed by this Term Sheet, in Collin County, Texas, and as shown on the parcel map attached as Exhibit A hereto. The Land will be conveyed to Lessor in return for an upfront lease payment in the amount of the Land Price. Lease: Lease between the Lessor and Tenant, pursuant to which Lessor leases the Project to the Tenant for a term of 99 years (the "Lease"). So long as Tenant is not in default under the Lease, Tenant will be permitted under the Lease to assign its interest in the Lease as set forth in the MOU. Landlord will not be permitted to assign its interests under the Lease in any manner which jeopardizes the availability of exemption of the Project from ad valorem taxation or to the extent as may prohibited in any loan documents with the lenders or any agreement between the Tenant and the Equity Contribution Partner. The rent will be (1) prepaid rent at the Closing Date in the amount of the Land Price and (2) $27,000 starting on the first January 1 of the Lease term after stabilization of the Project and continuing each January 1 thereafter, increasing annually by 3%. A memorandum of the Lease and/or a Regulatory Agreement to be recorded concurrent with the Closing Date will provide that for any year the Tenant wishes to obtain a property tax exemption, it will set aside or rent at least 10% of the units to tenants whose income is less than 60% of the area median income (AMI) and it will set aside or rent at least 40% of the units (collectively, the "Affordable Units") to tenants whose income is less than 80% of AMI. Such AMI shall have a floor no lower than the AMI at the Closing Date. Management: NRP Management LLC, an affiliate of NRP Group ("NRP Manager"), will be designated the property manager for the Project and will manage the leasing and operations of the Project. NRP Management will receive a base Management Fee as follows: Commencing with the end of the first complete calendar month after the first employee of NRP or any affiliate commences work on site at the Project (provided such date is typical for when a management company would commence work on promotional'; and/or leasing activities at similar project), the greater of (i) $35 per unit per month or (ii) $9,000 per month; and Commencing with substantial completion of the first residential building, the greater of (i) $35 per unit per month or (ii) 3% multiplied by the effective gross income of the Project as (outlined in the Management Agreement; but in no event less than $9000 per month. NRP Manager shall receive a setup fee, payable no later than the first (1') annual anniversary of the Closing Date. NRP Manager shall 3 further receive a property lease up fee, payable upon stabilization of the project. The amounts of such fees shall be determined by the Equity Partner and NRP based on market conditions. Miscellaneous Expenses: Tenant will be responsible for and will include in the Project Budget all legal fees of APFC and its affiliates actually incurred in connection with the preparation, negotiation and execution of the Project and financing documents, all reasonable out-of-pocket expenses, including, without limitation, all business, financial, collateral due diligence expenses, and, to the extent provided herein, all appraisal fees and all examination fees. In addition to the fees set forth !above and as a precondition for the APFC proceeding with the financing of the Project, upon execution and delivery of this MOU and board) approval of the same by APFC, the Developer shall pay the amount of $25,000 to each of Hilltop Securities Inc. and Chapman and Cutler LLP. Such fees are nonrefundable but shall be reimbursed by the Project', to Developer at the Closing Date. NRP: NRP Properties LLC, an Ohio limited liability company, or its affiliates. NRP Partner: An affiliate of NRP, which will be a limited partner of the Equity Partner, which in turn will be a limited partner of the Tenant. Other Terms: In addition to and consistent with the terms set forth in the MOU, Tenant's organization documents will contain such usual and customary terms for limited partnership formed for the acquisition, financing, ownership, development, management, leasing and sale of the Project, including, without limitation, provisions for limitation on transfer of partnership interests, delivery of periodic financial and other reports necessary for securities laws disclaimers, accredited investor representations and compliance under the Development Agreement. PFC Structuring Fee: APFC, or one of its affiliates, will receive a structuring fee equal to $806,552, payable at the Closing Date, in return for providing the organizational structure described in this Term Sheet, which is anticipated to allow the Project to be sales tax exempt during the construction of the Project, and to be and remain 100% property tax exempt (including the Property and the Project Improvements) as set forth in the MOU. Plans and Specifications: APFC, Tenant, Lenders, and Equity Contribution Partner will have the right to review and approve the Plans and Specifications for Project once they are materially completed, the approval of which will not be unreasonable withheld or delayed. Once they have approved the conceptual and/or schematic design for the Project, it may not object to such design Plans and Specifications, unless the subsequent Plans and Specifications materially and adversely affects the design character or value of the Project. 4 Project: The Project will be the Land and Improvements, to be developed by Developer. Project Budget: The Project Budget will be finalized and approved by fall parties to the transaction prior to the Closing Date, and will include the proposed sources of funds that will be needed to develop, construct and operate the Project, and the uses on which the funds will be spent. Sources of revenue include, without limitation, rental income, capital contributions and other revenues. Project uses include all reasonable and necessary direct and hard costs incurred in connection with the Project. Project Financing: Lessor will provide the leasehold estate for the Project to the Tenant pursuant to the Lease. The Lease will be prepared once the Lenders are identified and will include commercially reasonable provisions required by the Lenders, which may include a requirement for Lessor to subordinate its interests in the Project, including the leasehold and to execute a joinder of its fee interests in the Project to a mortgage or deed of trust. Loans For the Project, Developer will obtain a senior loan from a senior lender to the Tenant for approximately the amount shown in the Project Budget for development of the Project to be secured by a first -lien deed of trust on the Tenant's leasehold interest in the Project, and if required, a lien on Lessor's fee interest in the Project. Developer may also obtain subordinated loans (which may be structured as mezzanine financing) from a subordinate lender for approximately the amount shown in the Project Budget which may be secured by a second -lien deed of trust on the Tenant Leasehold interest, a lien on Lessor's fee interest in the Project or partnership interest in the Tenant or Equity Contribution Partner. All financings and guarantees must be acceptable to Developer in their sole and absolute discretion. APFC or its designated, affiliate, Equity Partners, and Developer will be provided with a right of notice and the right to cure Tenant Partnership's defaults for all financings. Equity Developer will obtain one or more Equity Contribution Partners who will invest approximately the amount shown in the Project Budget. One of the Equity Contribution Partners will be NRP Partner (which will make a contribution of the Land at the Agreed Value and a contribution of cash as provided for in the Project Budget). Contributions from the Equity Contribution Partners will be E contributed to the Equity Partnership, (which will be contributed by the Equity Partnership to the Tenant for approximately the amounts shown in the Project Budget). The Equity Partner will be paid from cash flow and will at all times be subordinate to the Loans. The Equity Contribution Partners and NRP will receive a returnhurdle which is expected to be approximately 10% on their initial contributions and will be repaid their investment from a Capital Event before any "Promote". Accordingly, cash flow splits will adjust after the payment of the hurdle returns. Project Term: The "Project Term" is from commencement of Project for a period of 99 years after closing. Representations and Warranties: Those customarily found in credit agreements for asset -based lending transaction of this type and others appropriate to this transaction in the reasonable credit judgment of APFC and NRP, subject to limitations and exceptions as set forth in the MOU and to be agreed upon. Sale: Upon a sale of the entire Project (including any proposed assignment of the entire Lease) to a third party for consideration or of all of the interests in the Tenant to a third party for consideration, Special Limited Partner shall receive a fee equal to 1.00% of the Sale Price. To the extent required by a Sale or refinance, Lessor shall subordinate its interests in the Project to the interest of a lender, including the leasehold, as well as a joinder of its fee interests in Ithe Project to a mortgage or deed of trust. Sale Price: The sales price received by the Tenant for the sale of the Project. Sales Tax: The General Contractor will be responsible for the purchase of materials for the construction of the Project so that the purchases will be exempt from all sales and use taxes pursuant to applicable law. In connection with its services, the General Contractor will receive a fee as set forth in the MOU. SLP Management Fee: Special Limited Partner shall be entitled to receive a partnership management fee as set forth in the MOU. Special Limited Partner: A to -be -formed wholly -owned subsidiary of APFC. Tenant: Meryl Street LP, will be a single purpose Texas limited partnership, the sole General Partner of which will be ultimately managed by NRP Manager, LLC, a Florida limited liability company (or an affiliate), the Special Limited Partner of which will be a wholly -owned subsidiary of APFC, and the Limited Partner of which will be the Equity Partner. This instrument may be executed in several counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument, and will become effective when R counterparts have been signed by each of the parties and delivered to the other party; it being understood that all parties need not sign the same counterpart. The exchange of copies hereof and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial -up connection or whether mediated by the worldwide web), by electronic mail in "portable document format" ("..Rdf') form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, will constitute effective execution and delivery hereof as to the parties and may be used in lieu of the original document for all purposes. Signatures of the parties transmitted by any of the foregoing methods will be deemed to be their original signatures for all purposes. Signature Pages Follout 7 MI NRP Properties LLC, an Ohio limited liability company LE Name: Title: APFC: Anna Public Facility Corporation, a Texas nonprofit public facility corporation Stan Carve President EXIMIT A Property Lot 8, Block A and Lot 1, Block B of the FinW Replat of Lots i R, 3R, 69 71 g, 9 of Block A and Lot l of Block B, Anna Retail Addition, an addition to the City of Anna, Golf County, Texas, according to the plat thereof, recorded in Plat Book ice, Page 471, Piai Reow& of Collin County, Texas, Sthedidel, 10 General Partner NRP Meryl GP LLC a to -be -formed Delaware limed liability company Formed: TBD EIN: TBD 0% GP of both Meryl Street Ltd and Meryl Street Apt LP Meryl Street (PFC) Ground Lessee (Borrower) Meryl Street LP a to -be -formed Delaware limited partnership Formed: TBD EIN: TBD Limited Partner Meryl Street Apt LP a to -be -formed Delaware limited liability partnership Formed: TBD EIN: TBD 100% LP of Meryl Street LP and Sole Member of NRP Meryl GP LLC Meryl Street JV LLC a to -be -formed Delaware limited liability company Farmed: TBD EIN: TBD 100% Common 90% Residual Special Limited Partner APFC Anna Apartments; SLP, LLC a Texas limited liability company formed on TBD EIN: TBD 0% Common Residual Interest Sole Member Anna Public Facility Corporation a Texas public facility corporation formed on TBD EIN: TBD 0% Common Residual Interest Directors TBD Officers TBD Meryl Street (PFC) Meryl Street ]V LLC a to -be -formed Delaware limited liability company Formed: TBD EIN: TBD 100% Common 90% Residual Managing Member: NRP Meryl Street Holdings LLC A to -be -formed Delaware limited liability company formed TBD EIN: TBD Common Member 1000/o Promoted Member Non- Managing Member: NRP Meryl Street Promote LLC A to -be -formed Delaware limited liability company formed TBD EIN: TBD 100% Promoted Member See page 4 Non -Managing Member: [Investor TBD] Common Member Managing Member: NRP Meryl Street Sponsor LLC A to -be -formed Delaware limited liability company formed TBD EIN: TBD 100% Common Member See page 3 VA JDH Meryl Street Investment LLC An Ohio limited liability company Formed: TBD EIN: TBD 9 938% J. David Heller Trustee, UAD 12116/1998. 100% *Interests will be transferred to Heller Family Trusts post -dosing NRP Meryl Street Sponsor LLC A to -be -formed Delaware limited liability company formed TBD EIN: TBD 100% Common Member 2023 NRP DCP LLC An Ohio limited liability company Formed: 9/26/2022 EIN: 92-0634073 1.027% RP Market Rate Ken Outcalt Subsidiary LLC 33.33% 66.67% Managing Member NRP TCP GP Fund IV LLC a Delaware limited liability company EIN: 92 1625071 85.049% AGT NRP Invesbor IV, L.L.C. a Delaware limited liability company Formed: EIN: 75% NRP 2023 Employee Co -Investment Fund LLC Formed: 12/7/2023 EIN: 92-1624788 3.987% NRP Market Rate Subsidiary LLC 25% (see ownership on Page 5)- 3 Meryl Street E-Group LLC an Ohio limited liability company formed TBD EN: TBD Residual Interest NRP Meryl Street Promote LLC A to -be -formed Delaware limited liability company formed TBD EIN: TBD 100% Promoted Member NRP Market Rate Subsidiary LLC 62.408% AGT NRP Investor IV, L.L.C. a Delaware limited liability company Formed: EIN: 33.605% NRP 2023 Employee Co -Investment Fund LLC Formed: 12/7/2023 EIN: 921624788 3.987% AGT NRP Investor, LLC a Delaware limited liability company 40% LIMITED PARTNER Declaration of 7Wst dated as of December 16,1998, as amended by the amended and Restated Declaration of Thist dated as of June 20, 2017 99% Trustee J. David Heller NRP Enterprises LLC a Delaware limited liability company formed: June 15, 2015 EIN: 35-2538440 100% NRP Direct Subsichary LLC an Ohio limited liability company Formed : June 15, 2015 EIN: 37-1788623 60% Common Member NRP Master L.P. a Delaware limited partnership Formed: June 15, 2015 EIN: 47-4652432 100% LIMITED PARTNER Restatement of Declaration of Trust dated as of July 9, 2012 .5% (non -economic Interest and no control) Trustee T. Richard Bailey GENERAL PARTNER JDH Realty Investments Corp. An Ohio corporation Formed on 6/15/2015 -5% Declaration of Trust dated as of December 16,1998, as amended by the Amended and Restated Declaration of Trust dated As of June 20, 2007. (see Trustee Information on this page) 5 NRP GUARANTORS Organizational Structure Note: All Guarantors have 096 Ownership Interestin the Borrower Ownership ofAll Guarantor enfities can be linked via NRP Enterprises LLC whose ownership is described on Page 3. Nm-Menhc MmaW NbniNerrber 9g CommMember LLC Member Nbn+le�MT Sde Member en sole Member MP Drect Sbsldlary LLC Ohb ImtlMd labllty NRP Enteprim LLC W Mager L.P. MP MestmerttS LLC a Fbrlda IM �Debilly NRP Enterprises LLC Ohb Ilrited IabIlty company conpany a Delayrare Im[ed IM ty company a Dcla a e Imted pat asht) an Ohb IMted Wblity company mmrpary a Debrrae Imted y-bllty fomed on6/S015 (� cesscr by a erson to formed on 6/15-'015 forced m 6/15/.DS (s oemcr by convesbn to Famed 1aly con4MY 100% common Ow wshp MP Investments Corp.) (see Page 3 for or rshlp) (sae Page 3 far oyvnershp) MP Imestments Cap.) EN: 46.20/5/1 formed on 6/15/ZOS See 3fcr OWWSh orighaly formed on 31WI999 formed on 3/15/1999 s Oft Imred wbnq corrpa y (v oewar by comesbn to MP Imedmerts Corp.) corrpTy I I an J