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.
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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