
Combined Life Settlement Notes - no external credit warrantor
2
seeking tax advantages, SHIELD refocuses the economic benefits to mission-driven owners such
as Public Housing Authorities (PHAs) and community organizations like churches.
Why It Matters
● Traditional affordable housing finance primarily benefits wealthy investors seeking tax
credits, not the communities being served
● Conventional LIHTC/HUD deals force PHAs or churches to give up ownership and live on
thin cash flow
● Traditional financing methods have high transactional costs (≈10-15% for LIHTC, 3-5% for
HUD 221(d)(4)) compared to SHIELD's ≈0.8%
● SHIELD pays the project's interest with life-settlement income, so project NOI is not
swallowed by debt service
● SHIELD redirects economic benefits from wealthy tax credit investors back to
mission-driven owners and the communities they serve
● No reliance on uncertain tax credit allocations or volatile interest rate markets
How Each Party Wins
Owner / PHA – Immediately receives ≈ 2× the surplus it would get under a 221(d)(4) loan, then
escalates to 100% of cash once the LS pool matures.
Investor / Fund – Earns ~13% net IRR from (i) LS yield, (ii) 6% coupon, (iii) a shrinking share of rent;
principal is repaid via refinance or LS proceeds.
Residents / City – More units, lower rent burden, no tax-credit exit drama.
How the Cash Waterfall Works
1. LS Yield (8-12%) → pays note interest (6%)
2. Owner Target (e.g., ≥ 2× HUD surplus) is distributed next
3. Excess rent + LS surplus flows to investor
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19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com