In February 2021, Yieldstreet partnered with Avenue One to take an equity stake of $3.3M in an $11.3M project. Yieldstreet’s stake, combined with an $8.0M loan from an investment-grade financial institution, which holds a senior debt position, funded an acquisition of 55 single family rental properties in the Atlanta, Georgia area. The investment had an expected term of 24 months, with the option for a 12-month extension and – a targeted annualized return of 11 – 13%. At the time of the investment, rents on the underlying properties were well below comparable properties and the sponsors set out to complete renovations on all 55 properties to increase rental rates along with the value of the properties.
The investment portfolio continues to exceed expectations in terms of value creation and continues to see extraordinarily high rent growth. Completed properties across the portfolio continue to see extraordinary increases in rent, largely driven by strong market fundamentals. The Atlanta MSA has continued to be a strong housing market with high rent growth and home price appreciation. According to John Burns Research, SFR rental rates increased by 9.8% in 2021 while home prices increased by 26.8% driven by low supply and heavy demand for housing.
Since the start of the investment, 37 of the 55 properties have completed all renovations, with 31 of those properties being leased at average rental rates that are 53% higher than the time of acquisition and 18% above projections. Six of the renovated properties are being actively marketed for lease at similar rent levels. Of the remaining 18 properties in the portfolio, 16 are being renovated with the expectation for similar rent increase in the near-term. That will leave two ‘lower-rent’ properties awaiting turnover.
The initial term has 11 months remaining with the option to extend for an additional 12 months. Considering the early progress in the business plan to renovate and rent at substantially higher rates, a future portfolio sale strategy at (or above) the targeted returns remains on track within this time horizon.
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