Investment Payoff: Cleveland Multi-Family Pre-Development

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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