Key takeaways
- Yieldstreet provided a $4.2 million mezzanine loan to a Washington, D.C. – based developer to convert a 99-room hotel into short-term rental studios.
- Investors were offered a 10% target yield1 with an initial investment term of 36 months, and an option for one twelve-month extension.
- Amidst the swift, successful completion of the renovation work required to finalize the conversion project, the investment was fully repaid two years after launch.
Yieldstreet’s investment in a Washington, DC, based real estate developer was fully repaid in March 2022, two years after the initial loan – and a year in advance of the initially expected maturity date. Investors earned a 10.5% IRR, in excess of the originally targeted 10% IRR.
Investment thesis
Yieldstreet closed a $4.2M mezzanine loan, secured by the borrower’s equity interests in a 99-key limited-service hotel located in a commercial zone in Downtown Washington DC. The goal was to support the developer’s conversion of the property into 99 furnished studio apartments, which would then be turned over – for a 15-year lease – to a leading short-term rental operator. While Washington, DC regulation restricts short-term rentals in residential zones, no such limitations exist for commercial districts.
Investment outcome
The loan had an initial three-year term, with an additional twelve-month extension option. Yieldstreet’s investors payments were scheduled to accrue on their accounts and be paid-in-kind until conversion and lease payments had started.
Following the investment’s launch, the developer was able to keep the conversion project on track by successfully executing on each phase of its business plan, which led to an earlier exit, with returns outperforming the original IRR2.
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1. Target returns are offered as opinion and are not referenced to past performance. Target returns are not guaranteed and results may differ materially.
2 Past performance is not indicative of future results
What's Yieldstreet?
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]