Real EstateFrankforter Group

Atlanta Multi-Family Equity I

Annualized return3

Term3

36 months

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Status

Closed

Recently funded

Accepting $15,000 - $500,000 investments

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Accepting $15,000 - $500,000 investments

Overview

Invest in an equity ownership of Generation Atlanta, a luxury multi-family complex built in 2020. The property is one of the premier assets in the Downtown Atlanta market and benefits from its location with immediate access to entertainment and dining options in Midtown and offices in Downtown.

Based on 2020 census data, Atlanta was the fourth fastest-growing metro area in the entire nation over the last decade. In addition to a booming social and music scene, Atlanta is home to major industries including healthcare, technology, government, and consulting. Housing Georgia State University, Atlanta University, and Georgia Tech, Atlanta-based companies are provided with a steady stream of graduates annually, resulting in increased demand for local multifamily properties. More specifically, according to Cushman & Wakefield, Downtown Atlanta is expected to have 30,000 new jobs arriving by 2022, including Google’s Southeast HQ and Emory Healthcare Center.

The sponsor has purchased the apartment complex below replacement cost and is subject to a 10-year tax abatement for the property, which is expected to ultimately increase investor returns. Over the next 36 months, the Sponsor plans to lease up the remaining vacant units and eliminate rental concessions provided to current tenants. The Sponsor also intends to increase rents in line with market conditions going forward and expects to benefit from capital appreciation at the time of sale.

The offering is expected to provide investors a targeted annualized net return of 18-20%, of which an annualized ~6% is expected to be distributed quarterly as current income. The balance of the returns are expected to be achieved via appreciation of the property at the time of sale. Since this is an equity investment, there is potential for returns to be above or below the target range.

Important Notes

• Unrelated business taxable income (UBTI) is income earned by a tax-exempt entity that is not related to their exempt purpose. UBTI tends to be generated when a tax-exempt entity becomes an owner (in part or full) of a business (such as a limited partnership). LPs may generate taxable income in a retirement account if the partnership borrows money. As such, this offering is not available to pension plans, defined benefit plans, defined contribution plans, retirement plans, IRAs, 401(k) and 403(b) funds, and funds comprised of these plans and funds.

Highlights

Desirable location
Market dynamics
Quality asset
Experienced team
  • Given the increases seen in population and job growth in Atlanta, and in rents in Midtown Atlanta, Downtown Atlanta is becoming an attractive option for renters where they can save at ~$500 on monthly rent for a product similar to what is available in Midtown. Generation is one of the premier products in the entire Downtown submarket and benefits from its location with quick access to entertainment/dining options in Midtown and offices in Downtown. The trend of the convergence of Downtown and Midtown is expected to continue given transformative projects such as Centennial Yards, The Stitch, and continued job/population growth.

  • According to Costar, the more expensive Midtown gets, the more enticing it is for renters to consider Downtown as a viable option, boosting demand and rent growth prospects in the submarket in the mid to long term.

    • Rent growth was 10.9% over the last twelve months and Costar projects average annual rent growth of 5.4% over the next three years.
    • The current vacancy rate is 10.6% due to numerous projects currently in lease-up but stabilized vacancy (excluding projects in lease-up) is approximately 3%.
    • Costar projects stabilized vacancy to remain flat over the next 5 years.

  • The Class-A property, a property that is one the highest quality buildings in its market and area, was completed in 2020, as such the amenity package is considered best-in-class with a luxury resort style rooftop pool and sundeck, an outdoor theater, a rooftop indoor/outdoor lounge, state-of-the-art fitness center, electric car charging station, etc.

  • Headquartered in Montreal, the sponsor, The Frankforter Group, was founded in 2012 and is led by Yaakov Frankforter. The firm has a focus on acquiring institutional grade multifamily and commercial real estate in Canada and the United States. Investments are in primary and secondary markets in the states of Florida, Georgia, Carolinas, Texas, Arizona, Virginia, Maryland, Tennessee, Nevada, and Alabama. The Frankforter Group’s current real estate holdings total $3.2B in total value and consist of over 8,000 multi-family units, a 3,584-bed healthcare portfolio, a 1,514-unit student housing portfolio, 3 hotels, and 2.5M SF of commercial space.

    The Frankforter Group has realized nine multi-family investments over its lifespan comprising 1,399 multifamily units which have generated an average gross IRR of 19% on invested capital. This is the second offering on Yieldstreet sponsored by the Frankforer Group. The first offering, Pompano Beach Multi-Family Equity, continues to perform in line with expectations.

Essentials

Please refer to the Investment Memorandum in the Documents section for more details about this offering.

Capital structure

Where does Yieldstreet lie in terms of priority?

Yieldstreet’s $28.3M equity position is junior to $104.4M of senior debt. The senior loan was provided by a publicly listed national direct lender. The remaining equity was provided by the sponsor, The Frankforter Group. It is expected that $9M of Yieldstreet's $28.3M equity position will be assigned to an affiliate fund not yet launched to the public.

Cash flow

How do I get paid?

Over the life of the investment, investors are expected to receive a target annualized return of 18% - 20%, net of Yieldstreet’s management fee and structuring fee as further described in the Investment Memorandum. Investors are expected to receive cash flows from two sources: ~6% of annualized income from property rents, which is expected to be paid quarterly beginning second quarter 2022, and the balance of the returns are expected to be achieved via appreciation at time of sale of the property, which is anticipated to be within 36 months.

Assets

What is the collateral underlying the transaction?

Built in 2020, Generation Atlanta is a 17-story luxury multi-family complex with 336 units averaging 831 SF. The complex consists of studios (7% of units), one-bedrooms (69% of units), and two bedrooms (24% of units). As the Property was recently built, the amenity package is considered best-in-class with a luxury resort style rooftop pool and sundeck, an outdoor theater, a rooftop indoor/outdoor lounge, state-of-the-art fitness center, electric car charging station, etc.

The property started leasing in late 2020 and as of 11/1/2021 it was 79% occupied with average in-place effective rents of $1,961($2.41 PSF). In place rents at Generation Atlanta are approximately 33% less than similar buildings in Midtown Atlanta, increasing the attractiveness of the building.

Managed by Greystar, the class-A asset’s prime location in Downtown Atlanta provides immediate access to the I-75 and I-85 highways, public transit (5-minute walk) as well as Atlanta’s top sports and entertainment destinations. Downtown Atlanta has historically been Atlanta’s office hub but large investment from institutional investors is helping reshape the historic core. Of note and less than 1-mile from the Property, CIM Group is constructing a $5B master development, Centennial Yards, which is expected to transform the area into a desirable work-live-play destination, helping create more demand for units at Generation Atlanta

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  • Returns & Management fees

    Ann'l management fee

    2.5%

    Target ann'l net return

    18 - 20%

    Inv share in excess profits

    100%

    Target equity multiple

    1.5x - 1.7x

    Target ann'l cash yield

    ~6%

  • Schedule

    Payment schedule

    Quarterly + event based

    First expected payment date

    2Q 2022

    Target term

    36 months

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Expenses

    Ann'l flat expense

    0.25%

Docs

Content

This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS FFG REQ II LLC ("Issuer"). The Offering is made only by means of the Investment Memorandum relating to the Offering (the "Offering Document"). The information on this offering page is a summary of the Offering, does not purport to be complete and should not be considered a part of the Offering Document, or as incorporated in the Offering Document by reference or as forming the basis of the Offering. No person has been authorized to give any information or to make any representations other than those contained in the Offering Document or in any marketing or sales literature issued by the Issuer or YieldStreet Management, LLC, as adviser thereto, and referred to in the Offering Document, and, if given or made, such information or representations must not be relied upon. All investors must read the Offering Document in its entirety prior to investing in the securities.