EX-10.4






	 	 	 
	this instrument prepared by	 	 
	and when recorded return to:	 	 
	Kilpatrick Stockton LLP	 	 
	Hearst Tower, Suite 2500	 	 
	214 North Tryon Street	 	 
	Charlotte, North Carolina 28202	 	 
	Attn: James M. Tucker., Esq.	 	 
	
 
	 	(SPACE ABOVE THIS LINE FOR RECORDER’S USE)






Loan No.: 50-2860302 Walker Ranch Apartments



APARTMENT REIT WALKER RANCH, LP,

as Borrower




to




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Lender




ASSIGNMENT OF LEASES AND RENTS




Dated: April 12, 2007




NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL
OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC
RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.





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ASSIGNMENT OF LEASES AND RENTS




THIS ASSIGNMENT OF LEASES AND RENTS (as the same may be hereafter amended, restated or
modified, this “Assignment”) made as of April 12, 2007, by APARTMENT REIT WALKER RANCH, LP, a Texas
limited partnership (“Borrower”), having an address at c/o Triple Net Properties, LLC, 1551 North
Tustin Avenue, Suite 300, Santa Ana, California 92705, in favor of WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association (together with its successors and assigns, “Lender”),
whose address is Commercial Real Estate Services, 8739 Research Drive URP - 4, NC 1075, Charlotte,
North Carolina 28262.



W I T N E S S E T H:




THAT, WHEREAS, Borrower has executed that certain Promissory Note (the “Note”) dated of even
date herewith, payable to the order of Lender in the stated principal amount of Twenty Million and
No/100 Dollars ($20,000,000.00); and



WHEREAS, the Note is secured by that certain Deed of Trust, Security Agreement and Fixture
Filing (as the same may from time to time be amended, consolidated, renewed or replaced, the
“Security Instrument”) dated of even date herewith, from Borrower, for the benefit of Lender,
encumbering that certain real property situated in the County of Bexar, State of Texas, as more
particularly described on Exhibit “A” attached hereto and incorporated herein by this
reference, and all buildings and other improvements now or hereafter located thereon (collectively,
the “Improvements”) (said real property and the Improvements are hereinafter sometimes collectively
referred to as the “Property”); and



WHEREAS, Borrower desires to further secure to Lender the performance of the terms, covenants
and agreements hereof and of the Note, the Security Instrument and each other document evidencing,
securing, guaranteeing or otherwise relating to the indebtedness evidenced by the Note (the Note,
the Security Instrument and such other documents, as each of the foregoing may from time to time be
amended, consolidated, renewed or replaced, being collectively referred to herein as the “Loan
Documents”).



NOW, THEREFORE, in consideration of the making of the loan evidenced by the Note by Lender to
Borrower and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower does hereby irrevocably, absolutely and unconditionally transfer,
sell, assign, pledge and convey to Lender, its successors and assigns, all of the right, title and
interest of Borrower in and to:



(a) any and all leases, licenses, rental agreements and occupancy agreements of whatever form
now or hereafter affecting all or any part of the Property and any and all guarantees, extensions,
renewals, replacements and modifications thereof (collectively, the “Leases”); and



(b) all deposits (whether for security or otherwise), rents, issues, profits, revenues,
royalties, accounts, rights, benefits and income of every nature of and from the Property,
including, without limitation, minimum rents, additional rents, termination payments, forfeited
security deposits, liquidated damages following an Event of Default (as defined in the Security
Instrument) and all proceeds payable under any policy of insurance covering loss of rents resulting
from untenantability due to destruction or damage to the Property, together with the immediate and
continuing right to collect and receive the same, whether now due or hereafter becoming due, and
together with all rights and claims of any kind that Borrower may have against any tenant, lessee
or licensee under the Leases or against any other occupant of the Property, any award or other
payment which Borrower may hereafter become entitled to receive with respect to any of the Leases
as a result of or pursuant to any bankruptcy, insolvency or reorganization or similar proceedings
involving the tenants under such Leases, and any and all payments made by or on behalf of any
tenant of any part of the Property in lieu of Rent (collectively, the “Rents”).



TO HAVE AND TO HOLD the same unto Lender, its successors and assigns.



IT IS AGREED that this Assignment is made upon the following terms, covenants and conditions



1. Borrower represents, warrants and covenants to and for the benefit of Lender: (a) that
Borrower now is (or with respect to any Leases not yet in existence, will be immediately upon the
execution thereof) the absolute owner of the landlord’s interest in the Leases, with full right and
title to assign the same and the Rents due or to become due thereunder; (b) that, other than this
Assignment and those assignments, if any, specifically permitted in the Security Instrument, there
are no outstanding assignments of the Leases or Rents; (c) that no Rents have been anticipated,
discounted, released, waived, compromised or otherwise discharged, except for prepayment of rent of
not more than one (1) month prior to the accrual thereof; (d) that there are no material defaults
now existing under any of the Leases by the landlord or tenant, and there exists no state of facts
which, with the giving of notice or lapse of time or both, would constitute a default under any of
the Leases by the landlord or tenant, except as disclosed in writing to Lender; (e) that Borrower
has and shall duly and punctually observe and perform all covenants, conditions and agreements in
the Leases on the part of the landlord to be observed and performed thereunder; and (f) the Leases
are in full force and effect and are the valid and binding obligations of Borrower, and, to the
knowledge of Borrower, are the valid and binding obligations of the tenants thereto.



2. Notwithstanding that this instrument is a present, absolute and executed assignment of the
Rents and of the Leases and a present, absolute and executed grant of the powers herein granted to
Lender, Borrower is hereby permitted, and is hereby granted a revocable license by Lender, to
retain possession of the Leases and to collect and retain the Rents unless and until there shall be
an Event of Default under this Assignment, the Security Instrument or the other Loan Documents. In
the event of such Event of Default, the aforementioned license granted to Borrower shall
automatically terminate without notice to Borrower, and Lender may thereafter, without taking
possession of the Property, take possession of the Leases and collect the Rents. Further, from and
after such termination, Borrower shall be the agent of Lender in collection of the Rents, and any
Rents so collected by Borrower shall be held in trust by Borrower for the sole and exclusive
benefit of Lender, and Borrower shall, within one (1) business day after receipt of any Rents, pay
the same to Lender to be applied by Lender as hereinafter set forth. Furthermore, from and after
such Event of Default and termination of the aforementioned license, Lender shall have the right
and authority, without any notice whatsoever to Borrower and without regard to the adequacy of the
security therefor, to: (a) manage and operate the Property, with full power to employ agents to
manage the same; (b) demand, collect, receive and sue for the Rents, including those past due and
unpaid; and (c) do all acts relating to such management, operation, rental, leasing, repair
improvement and alteration of the Property as Lender in its sole subjective judgment and discretion
shall determine. Lender may apply the Rents received by Lender from the Property, after deducting
the costs of collection thereof, including, without limitation, attorneys’ fees and a management
fee for any management agent so employed, against amounts expended for repairs, upkeep,
maintenance, service, fuel, utilities, taxes, assessments, insurance premiums and such other
expenses as Lender incurs in connection with the operation of the Property and against interest,
principal, required escrow deposits and other sums which have or which may become due, from time to
time, under the terms of the Loan Documents, in such order or priority as to any of the items so
mentioned as Lender, in its sole subjective discretion, may determine.



3. Without limiting the rights granted hereinabove, in the event Borrower shall fail to make
any payment or to perform any act required under the terms hereof and such failure shall not be
cured within any applicable grace or cure period, then Lender may, but shall not be obligated to,
without prior notice to or demand on Borrower, and without releasing Borrower from any obligation
hereof, make or perform the same in such manner and to such extent as Lender may deem necessary to
protect the security hereof, including specifically, without limitation, appearing in and defending
any action or proceeding purporting to affect the security hereof or the rights or powers of
Lender, performing or discharging any obligation, covenant or agreement of Borrower under any of
the Leases, and, in exercising any of such powers, paying all necessary costs and expenses,
employing counsel and incurring and paying attorneys’ fees. Any sum advanced or paid by Lender for
any such purpose, including, without limitation, attorneys’ fees, together with interest thereon at
the Default Interest Rate (as defined in the Note) from the date paid or advanced by Lender until
repaid by Borrower, shall immediately be due and payable to Lender by Borrower on demand and shall
be secured by the Security Instrument and by all of the other Loan Documents securing all or any
part of the indebtedness evidenced by the Note.



4. This Assignment shall not operate to place responsibility for the control, care, management
or repair of the Property upon Lender, nor for the performance of any of the terms and conditions
of any of the Leases, nor shall it operate to make Lender responsible or liable for any waste
committed on the Property by the tenants or any other party or for any dangerous or defective
condition of the Property or for any negligence in the management, upkeep, repair or control of the
Property. Lender shall not be liable for any loss sustained by Borrower resulting from Lender’s
failure to let the Property or from any other act or omission of Lender in managing the Property.
This Assignment shall not be construed as making Lender a mortgagee-in-possession. Lender is
obligated to account to Borrower only for such Rents as are actually collected or received by
Lender.



5. BORROWER SHALL AND DOES HEREBY INDEMNIFY AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND
ALL LIABILITY, LOSS, CLAIM, DEMAND OR DAMAGE WHICH MAY OR MIGHT BE INCURRED BY REASON OF THIS
ASSIGNMENT, INCLUDING, WITHOUT LIMITATION, CLAIMS OR DEMANDS FOR SECURITY DEPOSITS FROM TENANTS OF
SPACE IN THE IMPROVEMENTS DEPOSITED WITH BORROWER, AND FROM AND AGAINST ANY AND ALL CLAIMS AND
DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST LENDER BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS OR AGREEMENTS
CONTAINED IN ANY OF THE LEASES. SHOULD LENDER INCUR ANY LIABILITY BY REASON OF THIS ASSIGNMENT OR
IN DEFENSE OF ANY CLAIM OR DEMAND FOR LOSS OR DAMAGE AS PROVIDED ABOVE, THE AMOUNT THEREOF,
INCLUDING, WITHOUT LIMITATION, COSTS, EXPENSES AND ATTORNEYS’ FEES, TOGETHER WITH INTEREST THEREON
AT THE DEFAULT INTEREST RATE FROM THE DATE PAID OR INCURRED BY LENDER UNTIL REPAID BY BORROWER,
SHALL BE IMMEDIATELY DUE AND PAYABLE TO LENDER BY BORROWER UPON DEMAND AND SHALL BE SECURED BY THE
SECURITY INSTRUMENT AND BY ALL OF THE OTHER LOAN DOCUMENTS SECURING ALL OR ANY PART OF THE
INDEBTEDNESS EVIDENCED BY THE NOTE.



6. Borrower hereby irrevocably appoints Lender as its attorney-in-fact which power of attorney
is coupled with an interest by virtue of this Assignment and is irrevocable so long as any sums are
outstanding under the loan evidenced by the Note to, from and after the occurrence of an Event of
Default by Borrower hereunder or under any of the other Loan Documents, do, make or perform any
act, right or privilege which Lender shall have under or by virtue of this Assignment.



7. Borrower covenants and agrees that Borrower shall not, without the prior written consent of
Lender, further pledge, transfer, mortgage or otherwise encumber or assign the Leases or future
payments of Rents, except as otherwise expressly permitted by the terms of the Security Instrument,
or incur any material indebtedness, liability or other obligation to any tenant, lessee or licensee
under the Leases, or permit any Lease to become subordinate to any lien other than the lien of the
Security Instrument.



8. Borrower covenants and agrees that Borrower shall, at its sole cost and expense, appear in
and defend any action or proceeding arising under, growing out of, or in any manner connected with
the Leases or the obligations, duties or liabilities of the landlord or tenant thereunder, and if
Borrower shall fail to do so, Lender, at its option but without obligation, may do so. Borrower
shall pay on demand all costs and expenses, including, without limitation, attorneys’ fees, which
Lender may incur in connection with Lender’s appearance, voluntary or otherwise, in any such action
or proceeding, together with interest thereon at the Default Interest Rate from the date incurred
by Lender until repaid by Borrower.



9. At any time, Lender may, at its option, notify any tenants or other parties of the
existence of this Assignment. Borrower does hereby specifically authorize, instruct and direct
each and every present and future tenant, lessee and licensee of the whole or any part of the
Property to pay all unpaid and future Rents to Lender upon receipt of demand from Lender to pay the
same, and Borrower hereby agrees that each such present and future tenant, lessee and licensee may
rely upon such written demand from Lender to so pay said Rents without any inquiry into whether
there exists an Event of Default hereunder or under the other Loan Documents or whether Lender is
otherwise entitled to said Rents. Borrower hereby waives any right, claim or demand which Borrower
may now or hereafter have against any present or future tenant, lessee or licensee by reason of
such payment of Rents to Lender, and any such payment shall discharge such tenant’s, lessee’s or
licensee’s obligation to make such payment to Borrower.



10. Lender may take or release any security for the indebtedness evidenced by the Note, may
release any party primarily or secondarily liable for the indebtedness evidenced by the Note, may
grant extensions, renewals or indulgences with respect to the indebtedness evidenced by the Note
and may apply any other security therefor held by it to the satisfaction of any indebtedness
evidenced by the Note without prejudice to any of its rights hereunder or under any of the Loan
Documents.



11. The acceptance of this Assignment and the collection of the Rents as herein provided shall
be without prejudice to Lender. The exercise or failure to exercise by Lender of the rights
granted Lender in this Assignment, and the collection of the Rents and the application thereof as
herein provided, shall not be considered a waiver by Lender of any Event of Default under the Loan
Documents or prevent foreclosure of any liens on the Property nor shall such exercise make Lender
liable under any of the Leases, Lender hereby expressly reserving all of its rights and privileges
under the Security Instrument and the other Loan Documents as fully as though this Assignment had
not been entered into. The rights of Lender hereunder are cumulative and concurrent, may be
pursued separately, successively or together and may be exercised as often as occasion therefor
shall arise, it being agreed by Borrower that the exercise of any one or more of the rights
provided for herein shall not be construed as a waiver of any of the other rights or remedies of
Lender, at law or in equity or otherwise, so long as any obligation under the Loan Documents
remains unsatisfied.



12. All rights of Lender hereunder shall inure to the benefit of its successors and assigns;
and shall pass to and may be exercised by any assignee of Lender. All obligations of Borrower
shall bind its successors and assigns and any subsequent owner of the Property. Borrower hereby
agrees that if Lender gives notice to Borrower of an assignment of said rights, upon such notice
the liability of Borrower to the assignee of Lender shall be immediate and absolute. Borrower will
not set up any claim against Lender or any intervening assignee as a defense, counterclaim or
set-off to any action brought by Lender or any intervening assignee for any amounts due hereunder
or for possession of or the exercise of rights with respect to the Leases or the Rents.



13. It shall be an Event of Default hereunder (a) if any representation or warranty made
herein by Borrower is determined by Lender to have been false or misleading in any material respect
at the time made, or (b) if Borrower violates the provisions of paragraph 7 hereof, or (c) if any
Event of Default under the Security Instrument or any of the other Loan Documents shall occur.



14. If any provision under this Assignment or the application thereof to any entity, person or
circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this
Assignment and the application of the provisions hereof to other entities, persons or circumstances
shall not be affected thereby and shall be enforced to the fullest extent permitted by law.



15. This Assignment may not be amended, modified or otherwise changed except by a written
instrument duly executed by Borrower and Lender.



16. This Assignment shall be in full force and effect continuously from the date hereof to and
until the Security Instrument shall be released of record, and the release of the Security
Instrument shall, for all purposes, automatically terminate this Assignment and render this
Assignment null and void and of no effect whatsoever. This Assignment shall continue and remain in
full force and effect during any period of foreclosure with respect to the Property.



17. In case of a conflict between any provision of this Assignment and any provision of the
other Loan Documents, the provisions of the Note or the Security Instrument, if such document shall
be the conflicting other Loan Document, shall prevail and be controlling.



18. All notices, demands, requests or other communications to be sent by one party to the
other hereunder or required by law shall be given and become effective as provided in the Security
Instrument.



19. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE PROPERTY IS SITUATED, EXCEPT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR
HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.



20. BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FOREGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR
DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS
AFFILIATED WITH LENDER OR BORROWER IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE.



21. This Assignment may be executed in any number of counterparts, each of which shall be
effective only upon delivery and thereafter shall be deemed an original, and all of which shall be
taken to be one and the same instrument, for the same effect as if all parties hereto had signed
the same signature page. Any signature page of this Assignment may be detached from any
counterpart of this Assignment without impairing the legal effect of any signatures thereon and may
be attached to another counterpart of this Assignment identical in form hereto but having attached
to it one or more additional signature pages.



22. In addition to, but not in lieu of, any other rights hereunder, Lender shall have the
right to institute suit and obtain a protective or mandatory injunction against Borrower to prevent
a breach or Event of Default, or to enforce the observance, of the agreements, covenants, terms and
conditions contained herein.



23. Lender may sell, transfer and deliver the Note and the Loan Documents to one or more
investors in the secondary mortgage market. In connection with such sale, Lender may retain or
assign responsibility for servicing the loan evidenced by the Note or may delegate some or all of
such responsibility and/or obligations to a servicer, including, but not limited to, any
subservicer or master servicer, on behalf of the investors. All references to Lender herein shall
refer to and include, without limitation, any such servicer, to the extent applicable.



24. Lender shall, as a matter of absolute right, be entitled, upon application to a court of
applicable jurisdiction, and without notice to Borrower, to the appointment of a receiver to obtain
and secure the rights of Lender hereunder and the benefits intended to be provided to Lender
hereunder.



25. Notwithstanding anything to the contrary contained in this Assignment, the liability of
Borrower and its officers, directors, general partners, managers, members and principals for the
indebtedness secured hereby and for the performance of the other agreements, covenants and
obligations contained herein and in the Loan Documents shall be limited as set forth in the Note.



[The Remainder of the Page is Intentionally Blank]




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THIS ASSIGNMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. In
case of a conflict between any provision of this Assignment and any provision of the other Loan
Documents, the provisions of the Note or the Security Instrument, if they shall be the conflicting
other Loan Document, shall prevail and be controlling.



IN WITNESS WHEREOF, Borrower has executed this Assignment as of the day and year first written
above.




BORROWER:



	 	 	 	 	 
	 
	 	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,

	BORROWER ACKNOWLEDGES
	 	its General Partner

	AND AGREES THAT THIS
	 	By:  /s/ Andrea R. Biller

	ASSIGNMENT CONTAINS
	 	 	—	 
	INDEMNIFICATION
	 	Name:  Andrea R. Biller

	PROVISIONS PURSUANT
	 	 	—	 
	TO SECTION 5 HEREOF
	 	Title:  Secretary







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STATE OF CALIFORNIA



COUNTY OF ORANGE



Before me, J. Hu, Notary Public, on this day personally appeared Andrea R. Biller, known to me
to be the person whose name is subscribed to the foregoing instrument as Secretary of NNN Apartment
REIT, Inc., a Maryland corporation, the General Partner of NNN Apartment REIT Holdings, L.P., a
Virginia limited partnership, the Manager of Apartment REIT Walker Ranch GP, LLC, a Delaware
limited liability company, the General Partner of APARTMENT REIT WALKER RANCH, LP, a Texas limited
partnership, and acknowledged to me that he/she executed the same on behalf of said limited
partnership, for the purposes and consideration therein expressed, as the act and deed of said
limited partnership.



Given under my hand and seal of office this 10th day of April, 2007.



	 	 	 
	
 
	 	/s/ J. Hu
	
 
	 	 
	
 
	 	Printed Name: J. Hu
	
 
	 	 
	[SEAL]

	 	Notary Public for the State of California







	 	 	My Commission Expires: September 30, 2009






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