Real EstateNazare Capital

Nashville Multi-Family Equity I.B

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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

Performance Update

• View the most recent update for Nashville Multi-Family Equity I.B.

  • Invest in Stacks on Main, a 97.7% occupied Class-A luxury mid-rise apartment complex located in East Nashville, Tennessee.
  • The property benefits from its Nashville location as it is the second fastest growing city in the United States and according to CoStar the increase in rental demand has caused multi-family apartment valuations in the city to grow by 12% per year since 2019.
  • The Sponsor intends to generate increasing cash flows over the next five years while benefiting from Nashville’s expected population growth before seeking to sell the property at an attractive future price.

Important notes

• Please note an investment in Nashville Multi-Family Equity I.B is an investment in the same property as Nashville Multi-Family Equity I.A.

• The offering was split into two transactions due to a local tax benefit that is being passed through to investors via a higher target return.

Premise

Highly demanded luxury building offered at a discount to downtown Nashville

  • Stacks on Main is located in the East Nashville neighborhood at 535 Main Street Nashville, TN 37206 and offers its residents loft-style living with resort style amenities.
  • The East Nashville neighborhood is an area with a quirky vibe and a buzzing food and nightlife scene, street art, upbeat bars, trendy fine-dining restaurants, and the place to go for offbeat shops.
  • Class-A/luxury properties account for only 22% of total inventory in the neighborhood, creating a natural lack of competition for Stacks on Main
  • Units at Stacks on Main are ~20% cheaper than similar buildings in Downtown Nashville, positioning the property at an attractive value relative to Downtown comparables.
  • This is a Core Plus investment strategy, given the business plan which includes performing relatively minor renovations to fully lease up the property to maximize income. As a result of the additional risks, it is expected that investors will be adequately rewarded at the time of re-sale.

Slide 1 of 3

Net operating income is already performing at a rate above projections

  • As of June 2022, the property had an average occupancy rate of 97.7% (up from 95% at acquisition in July 2021)
  • Between January 2022 and June 2022, the Sponsor increased the average effective rent by more than 5%.
  • In addition, new resident leases signed in the month of June were, on average, ~10% higher than the prior lease for the same unit.
  • Over the life of the investment, the property is expected to generate a targeted annualized net current cash yield of ~6.7%. View the property cash flow table here.

Investment managed by an experienced sponsor with a clear business plan to extract value from the property

  • Nazare Capital is a private family office which began operating in 2014 and manages a multifamily real estate portfolio totaling approximately $2B in gross value across 4,000+ Class-A units in five major markets.
  • The Sponsor purchased the property in July 2021 and has since removed all rental concessions, raised rents and increased occupancy to 97.7% as of June 2022.
  • To date, the property is performing above expectations with net operating income ~3.5% above underwritten projections.
  • In addition, the Sponsor intends to inject $2.5M of capital into common area improvements that is expected to enhance the amenity package, further supporting rental increases.
  • The Sponsor intends to generate increasing cash flows over the next five years in line with predicted market conditions while benefiting from Nashville’s expected population growth before seeking to sell the property at an attractive future price.
  • Based on CoStar analysis of multi-family sales in the East Nashville submarket, we believe that the property's value will increase over the next 5 years because valuations have increased 12% from 2019 to current day. CoStar predicts that strong growth trends will continue on a go-forward basis.

Yieldstreet real estate track record to date

  • In 2021, Yieldstreet’s Real Estate team acquired 17 properties which consisted of 3,743 units and 1.1 million square feet of commercial space. These transactions had a total capitalization of over $1 billion including $207 million of equity deployed as majority equity stake holders.
  • Additionally in 2021, Yieldstreet acquired 22 properties, totaling 3,102 units, as a minority equity stake holder.

Potential benefits of investing in private multi-family real estate

  • Multi-family is a useful inflation hedge given shorter lease times, allowing management to adjust pricing more frequently. Property values also tend to increase during inflationary periods, helping to protect the purchasing power of investors.
  • Historically, private real estate has produced stronger returns with less volatility when compared to equity and fixed income.
  • In addition, Yieldstreet remains bullish on multi-family property given the housing shortage that the U.S. is currently facing.
  • Under-development and migration away from major cities as a result of the pandemic, has caused home prices to increase, pricing out many potential buyers and driving them to rent, increasing demand for multi-family rentals.

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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 $9.12M equity position is junior to $62.1M of senior debt.
  • The senior loan was provided by a global investment management and asset management platform with over $100B of AUM.
  • The $4.56M of the remaining equity was provided by the sponsor showing alignment of interests
  • $9.12M of the remaining equity was provided by an affiliated fund of Yieldstreet.

Cash flow

How do I get paid?

  • Over the life of the investment, investors are expected to receive a target annualized return of 16% - 18%, net of Yieldstreet’s management fee, flat expense and structuring fee as further described in the Investment Memorandum.
  • Investors are expected to receive cash flows from two sources: ~6.7% of annualized income from property rents
  • 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 60 months.
  • Please note, as cash flows are received, unpaid fund expenses, reserve amounts, Yieldstreet’s management fees and annual member expenses are deducted first, and then capital contributions are returned to investors. Next, the remaining proceeds are paid to investors.
  • The first income distribution typically occurs at the end of the first full quarter after launch, however, investors may not see this payment reflected in their wallets at this time if amounts set forth in the Operating Agreement have not yet been paid in full. Once those amounts have been paid in full, investors will begin receiving payments in their wallet. Please refer to the Operating Agreement for more details.

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Returns & Management fees

Annual management fee

2.0%

Target annual net return

16 - 18%

Inv share in excess profits

100%

Target equity multiple

1.8x - 2.0x

Target annual cash yield

~7%

Schedule

Current income schedule

Quarterly

First expected payment date

4Q 2023

Capital appreciation

Event-based

Target term

5 years

Structure

Tax document

K-1

Offering structure

SPV

Annual flat expense

0.25%

Slide 1 of 3
  • Returns & Management fees

    Annual management fee

    2.0%

    Target annual net return

    16 - 18%

    Inv share in excess profits

    100%

    Target equity multiple

    1.8x - 2.0x

    Target annual cash yield

    ~7%

  • Schedule

    Current income schedule

    Quarterly

    First expected payment date

    4Q 2023

    Capital appreciation

    Event-based

    Target term

    5 years

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Annual flat expense

    0.25%

Docs

Content

Important notes

• Unrelated business taxable income (UBTI) is income earned by a tax-exempt entity that is not related to its 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.

This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS SND REQ I A 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.

Investing in private markets and alternatives, such as this offering, is speculative and involves a risk of loss, and those investors who cannot afford to lose their entire investment should not invest. Returns are not guaranteed.