EXHIBIT 10.20
October 31, 2006
NNN Apartment REIT Holdings, L.P.
1606 Santa Rosa Road
Suite 109
Richmond, Virginia 23229
Attn: J. Jay Olander

Re:   Credit Agreement dated as of October 31, 2006 among NNN Apartments REIT
Holdings, L.P. (“Borrower”), Wachovia Bank, National Association, as Agent, and
the lenders from time to time a party thereto (the “Credit Agreement”)

Gentlemen:
     Terms used herein but not otherwise defined herein shall have the meanings
set forth in the Credit Agreement. Borrower desires to obtain an advance of
proceeds of the Revolving Loan and the Mezzanine Loan to acquire property
commonly known as Walker Ranch. Following such acquisition, Borrower would not
be able to comply with the covenants set forth in Section 9.1(a) (the Debt to
Total Asset Value Ratio), Section 9.1(b) (the Fixed Charge Coverage Ratio) and
Section 9.1(c) (the Implied Debt Service Coverage Ratio) (collectively, the
“Financial Covenants”). Borrower has requested that the Lenders provide a
temporary waiver of the Financial Covenants.
     Based upon the foregoing and subject to the execution and delivery of this
letter by Borrower, Guarantors, Agent and the Lenders, this letter shall confirm
that the Lenders shall waive compliance with the Financial Covenants through the
period ending December 31, 2006. Until such time as the Borrower is able to
comply with the Financial Covenants, Borrower shall, except as otherwise
provided in the Mezzanine Loan Agreement, cause the net proceeds of any Equity
Issuance (gross proceeds less reasonable and customary costs of sale and
issuance paid to Persons not Affiliates of any Obligor) to be paid to the Agent
under the Mezzanine Loan Agreement for the account of the applicable lenders
thereunder within three days of receipt of such proceeds as a prepayment of the
Mezzanine Loans.
     By execution hereof Borrower and Guarantors certify that each such Person
is and will be in compliance with all covenants under the Loan Documents after
the execution and delivery of this letter, and that no Default or Event of
Default has occurred and is continuing.
     Except as hereinabove set forth, all terms, covenants and provisions of the
Credit Agreement and the other Loan Documents remain unaltered and in full force
and effect and the parties hereto do hereby expressly ratify and confirm the
Credit Agreement and the other Loan Documents. Nothing in this letter shall be
deemed or construed to constitute, and there has not otherwise occurred, a
novation, cancellation, satisfaction, release, extinguishment, or substitution
of the indebtedness evidenced by the Notes or the other obligations of Borrower
and Guarantors under the Loan Documents. By execution hereof, Borrower and
Guarantors acknowledge that the Agent and the Lenders have made no agreement,
and are in no way obligated, to grant any future extension, waiver, indulgence
or consent. This letter shall constitute a Loan Document. This letter may be
executed in any number of counterparts which shall together constitute but one
and the same agreement.

 

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NNN Apartment REIT Holdings, L.P.
October 31, 2006
Page 2

                  LENDERS:  
 
                WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as Agent
 
           
 
  By:   /s/ Cathy A. Casey    
 
                Name: Cathy A. Casey     Title: Managing Director

                      BORROWER:  
 
                    NNN APARTMENT REIT HOLDINGS, L.P.,a Virginia limited
partnership
 
                    By:   NNN Apartment REIT, Inc., a Maryland corporation, its
General Partner
 
               
 
      By:   /s/ Shannon K S Johnson    
 
                        Name: Shannon K S Johnson             Title: Chief
Financial Officer    

[SIGNATURES CONTINUED ON NEXT PAGE]

 

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NNN Apartment REIT Holdings, L.P.
October 31, 2006
Page 3

                              GUARANTORS:    
 
                            NNN APARTMENT REIT, INC., a Maryland corporation    
 
                            By:   /s/ Shannon K S Johnson                      
Name: Shannon K S Johnson         Title: Chief Financial Officer    
 
                            APARTMENT REIT WALKER RANCH, LP, a Texas limited
partnership    
 
                            By:   Apartment REIT Walker Ranch GP, LLC, a
Delaware limited liability company, its General Partner    
 
                                By:   NNN Apartment REIT Holdings, L.P., a
Virginia limited partnership, its Manager    
 
                                    By:   NNN Apartment REIT, Inc., a Maryland
corporation, its General Partner    
 
                       
 
              By:   /s/ Shannon K S Johnson    
 
                                        Name: Shannon K S Johnson              
      Title: Chief Financial Officer    
 
                            APARTMENT REIT WALKER RANCH, GP, LLC,         a
Delaware limited liability company    
 
                            By:   NNN Apartment REIT Holdings, L.P., a Virginia
limited partnership, its Manager    
 
                                By:   NNN Apartment REIT, Inc., a Maryland
corporation, its General Partner    
 
                                    By:   /s/ Shannon K S Johnson              
                        Name: Shannon K S Johnson                 Title: Chief
Financial Officer