Yieldstreet’s Mitch Rosen – Sr. Director of Real Estate, and Larry L. Curran II – MD of Private Business Credit, took part in a lively discussion about rates, taxation, and opportunities in an uncertain market. Mitch and Larry dove deep into what makes their respective asset classes tick and touched upon offerings such as Motorcycle Loan Portfolio I and Brooklyn Multi-Family Portfolio.
Regarding the Motorcycle Loan Portfolio, the target yield is 10% (for investors), but the coupon is ~20%. If the asset outperforms, will the investor share in the upside? Or does the loan just go back to the servicing agent once the target is met?
Yieldstreet receives all of the principal due and prepaid, plus the full interest rate payable on each motorcycle loan (~20% on average), less fees and expenses, and a 3% servicing fee that goes to the Servicer. Yieldstreet investors receive a net investor target rate of 10%, net of a 2% management fee to Yieldstreet, while any principal prepayment is used to pay down the principal balance on the Yieldstreet portfolio. The excess cash thereafter goes to the Servicer. This creates an incentive for the Servicer to appropriately service the portfolio. .
It should also be noted that all defaulted and delinquent accounts were removed at closing, and any additional accounts that default between August 31, 2020 and November 30, 2020 will be bought back by the Originator at 100% of the outstanding principal balance of each defaulted motorcycle loan.
How does Brooklyn compare to Manhattan proper in the current market?
Through October 2020, there is evidence that Brookyn has performed better than Manhattan in terms of multi-family commercial real estate. Brooklyn is viewed as more spread out, less dense, well amenitized, and has abundant outdoor space. In addition, rents are lower than comparably sized units in Manhattan. One statistic we have pointed to is the large increase in homes under contract. Homes under contract increased close to 40% when comparing August 2019 to August 2020 in Brooklyn, whereas the Manhattan market has stagnated.
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