Key Takeaways
- The borrower has repaid 80% of the underlying $16M first mortgage through condo unit sales.
- Almost 90% of the $8.25M senior leverage position has been paid off.
- The borrower exercised its first extension option extending the maturity date to August 1, 2022.
Offering Overview:
In November 2020, Yieldstreet invested -$5.25M in the junior position of a $16M first mortgage loan originated by Avant Capital (“Avant”). It was secured by 13 apartments and 31 parking spaces in a brand new 12-story Class A condominium complex in the River North neighborhood of Chicago, Illinois. The investment included $8.25M of senior leverage from a family office (“Leverage Provider”). At the time, 62% (21 / 34) of the units had been sold for a total of $30.5M.
The investment was offered at a target yield to investors of 9.5% over an 18 – 24 month expected term as the loan included two extension options for three months each.
March Update:
The borrower has remained current on its monthly interest payment obligations and has made progress on their business plan to sell the remaining condo units. Since the start of the investment, the borrower has sold 7 units, with an additional unit recently coming under contract – leaving 6 units unsold (5, assuming the deal for the unit under contract closes).
Eighty percent of the underlying $16M loan balance has been repaid, significantly derisking the investment. This includes almost 90% of the Leverage Provider’s $8.25M investment, which leaves a remaining cost basis of $281.50/SF and just 4 more unit sales needed to conclude the investment (3 assuming successful close of the unit under contract).
Despite slow sales activity early on in the investment and challenging market conditions in Downtown Chicago – where the luxury condo market continues to struggle – the Sponsor remained proactive with their strategy and brought in a new broker to market the property, ultimately leading to 5 projected sales in Q1 2022 alone. The 8 units that have been committed for sale averaged a sales price of $689.43/SF, outperforming the Downtown Chicago market by nearly 38%.
The borrower has opted to exercise its first extension option and extend the maturity date by 3 months until August 1, 2022 in order to execute on their business plan of paying off the loan through unit sales. As a reminder, this was contemplated in the fully extended maturity of this investment, which is November 1, 2022.
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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]