Key takeaways
- Yieldstreet partnered with Avant Capital Partners to finance a $7.2M loan at a target yield for investors of 8.10%.
- The initial term was 7 months with two additional 6-month extension options.
- The borrower exercised their first extension option and repaid the investment in full ahead of the extended maturity date.
Yieldstreet partnered with Avant Capital Partners to close an $8M first mortgage bridge loan secured by a 17-story office building in Downtown Cleveland, OH in November 2020. Yieldstreet’s position in the loan was $7.2M (or 90% of the loan) with Avant capital contributing the remaining $0.8M. The investment had a remaining initial term of 7 months, with two options to extend the loan for an additional 6 months each subject to certain conditions being met, and a target investor yield of 8.10%. The sponsor’s business plan was to capitalize on increased demand for apartment rentals in the Downtown Cleveland area by converting the property into a 436-unit multifamily residential tower and they contributed $7.5M of equity at closing to demonstrate their conviction in that strategy.
Following the launch of the investment, the borrower was able to keep the development project on track by satisfying the primary required post-close milestones, which included completing a Phase II Environmental study, establishing a Deposit Account Control Agreement, and completion of a lot split to carve out the parking garage from the collateral.
Ahead of its initial maturity in August 2021, the borrower satisfied the conditions necessary to extend the loan by 6 months, which included prefunding an interest reserve for the extended term and satisfying a Loan-to-Value requirement not to exceed 65% — evidenced by a third-party appraisal.
In February 2022, the borrower was able to secure a third-party refinancing to advance its business plan and repay investors in full at the targeted yield.
The $10,000 question
Another way to look at this deal is to consider what would have happened had you invested the minimum of $10,000 when the deal launched in November 2020. The investment was paid off 15 months later in February 2022. The borrower returned all the principal, in this case, your $10,000, with a return that yielded greater than $1,000.
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Yieldstreet provides access to alternative investments previously reserved only for institutions and the ultra-wealthy. Our mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025. We are committed to making financial products more inclusive by creating a modern investment portfolio.
2 Represents an average net realized internal rate of return (IRR) with respect to all matured investments in your portfolio, utilizing the effective dates and amounts to and from the investments and net of management fees and all other expenses charged to the investments. Past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. All securities involve risk and may result in significant losses, including the loss of principal invested.[read more]