Denver TOD Fund, LLC.

The Denver TOD Fund (the Fund) is the first affordable housing-focused structured acquisition revolving loan fund in the country. Its investment strategy focuses on creating and preserving affordable housing near transit by acquiring and preserving strategic properties in transit corridors.

The Fund's design answers the social need to provide and preserve homes near transit for low-income households, who on average spend 60% of their gross income on housing and transportation expenses combined.

Originally capitalized at $15 million in April 2010, the Fund is seeking another $15 million to facilitate regional expansion and leverage over $500 million in local economic development.

Enterprise, along with The Urban Land Conservancy (ULC), the City of Denver, and its key partners, the City of Denver and its local and national partners bring together a combined expertise and knowledge of financing community development and ensuring that the benefits of expanded public transportation will be available for all residents.

The Fund currently seeks $2-$3M in near-equity investments from institutional and foundation investors. If successfully raised, the Fund will seek Charitable Purpose and Senior Debt investments to fill out the capital stack.

Financial description

Investment tranches for investors into the fund include:
Tranche A
Investor Category: Senior Market-Rate Debt
Debt: $5.5 MM
Tranche B
Investor Category: Charitable Purpose & Below-Market Debt*
Debt: $5.5 MM
ROI: 2%
Tranche C
Investor Category: Subsidy & Recoverable Grants
Debt: $2.5 MM
ROI: 0%
Borrower Equity
Investor Category: Initial Start-up Equity
Equity: $1.5 MM
* Enterprise Community Partners took the only Second-Tier position with Below-Market Debt.
The fund will deploy capital as debt for an average investment period of 5 years, and as debt so long as the below criteria are satisfied:
1) Guarantee - the ULC guarantees only the Senior Capital position of any loan, or approximately 40% of each loan
2) Liquidity - the borrower (e.g. developer) is required to maintain an equity balance of 93% of each outstanding loan total and liquidity of at least 12 months of total debt service for operating property loans (1.10DSC) and 24 months for all other loans.