In our first deal with Urban Standard Capital (USC), Yieldstreet originated a note backed by four first mortgage loans collateralized by three multifamily properties and one mixed-use property in Brooklyn, NY.
As of mid-September, we are pleased to share that despite the complexity of the current environment, progress has been made on the properties.
We expect to conduct another site visit within 4 weeks with USC and receive regular updates on the status of the project in the interim.
This investment has been active on our platform for the past two months and, as of Sept. 24, 2020, has been paying out as expected, with investors receiving their interest payments in a timely manner. As of late, the New York real estate market has been under a microscope given the COVID-19 crisis fallout. Based on our research, we believe the dynamics of the Brooklyn market differ from that of Manhattan. Demand for less dense neighborhoods and extra square footage has increased as individuals spend more time at home. These areas of Brooklyn provide such benefits relative to Manhattan (such as additional green space, extensive street closures for outdoor dining, and overall larger square footage in living areas), which adds to our confidence in the project.
This is the first deal we have originated with Urban Standard Capital, a NYC-based real estate investment company with three lines of business: ground-up development, renovations, and short-term financings.Their track record and experience in the New York market reinforce our confidence in this investment.
Yes, as of Sept. 24, 2020, it has been paying as expected. Investors have been receiving the expected interest payments in a timely manner.
When the building is stabilized (i.e. fully leased up) the net operating income (NOI) is slightly short of the amount due to service the loan, so the sponsor is funding the gap with out of pocket cash. Pages 7-10 of the Series Note Supplement walks through the cash flows of the buildings. In addition, the underlying coupon to USC is over 8%. Once the work is completed and the property is leased, the Sponsor should be able to secure more economically advantageous bank debt.
Underlying properties are expected to generate a debt yield of 8.7% once stabilized and USC is charging the owner of the properties 8.85% interest on the money they have borrowed. The gap is covered by out of pocket cash from the owner of the properties.
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