Real Estate

Savannah Build-For-Rent Portfolio I

Annualized Return3

Term3

5 years

Per the amended marketing rules adopted by the SEC, some investment details can only be shown to certain logged-in members.
Status

Closed

Recently funded

Accepting $15,000 - $500,000 investments

Have an account? Log in

Accepting $15,000 - $500,000 investments

Overview

Invest in a dedicated rental community of 142 to-be-built single family homes on 38.5 acres of land in Savannah, Georgia. The sponsor expects to lease-up the homes as soon as they are constructed on the back of strong economic and demographic fundamentals in Savannah. Following stabilization, the sponsor will seek to sell the portfolio of homes in 5 years for an attractive future price based on trends predicted for the area.

Premise

Potential benefits of investing in a build-for-rent (BFR) community and this portfolio

  • The lack of supply and high demand for single and multi-family homes in Savannah is expected to provide a strong tailwind for price appreciation throughout the duration of the Fund
  • Less capital and time intensive way to gain exposure to detached homes relative to owning your own individual investment property as you do not bear the burden of management and maintenance.
  • The site is being developed by a team of professionals that have experience in the target market, helping to drive economies of scale and boost returns.
  • Average annual returns from single-family rentals were nearly identical to stocks and bonds over the past 25 years, but with far less volatility.
  • This is a Value-Add investment strategy given the robust business plan that must be carried out to develop and lease up the portfolio of homes. As a result of the additional risks, it is expected that investors will be adequately rewarded at the time of re-sale.

Increased and continually growing long-term demand for single family rentals

  • According to Pew Research, the millennial generation are more likely to rent than own a home compared to previous generations. This is likely due to rising home prices, larger debts, and a preference for flexibility.
  • Furthermore, demographic trends within the millenial and baby boomer populations are also contributing to higher demand for single family homes as millenials are increasingly moving out of urban areas for more space and baby boomers are seeking a low-maintenance lifestyle.
  • This increase in demand has increased the price of single-family homes by 50% over the past five years, with values projected to grow by more than 14% over the next year.
  • Rents for single-family homes are also rising, with recent rent price increases exceeding 16-year highs.
  • As more Americans choose to rent instead of buy (either voluntarily or not) the demand for single family rental homes increases, positioning this portfolio of homes well for growth over the next 5 years both in terms of increasing rents and property prices.

Savannah is one of the fastest growing cities in the country

  • The portfolio of homes is being built on a 38.5 acre parcel of land located near 340 Bush Road.
  • People are flocking to Savannah as the city has been offering a relocation incentive to attract tech workers to the metropolitan area, resulting in high income earners looking for homes to rent.
  • In addition to the growing technology industry, the city is also a thriving seaport community and home to a diverse mix of industry including manufacturing, healthcare, tourism, and film.
  • However, the population growth has not been supported by new housing development, which we anticipate will lead to rising rents and migration from downtown to the outskirts of the city which is where our portfolio is located.

Slide 1 of 2

Convenient location with a deep pool of well paid renters

  • The site is only a 20-minute drive to downtown Savannah where residents can find major retailers as well as restaurants and other areas of interest.
  • Additionally, the site is about a 25-minute drive from the Port of Savannah which is one of the major employers in the area, generating more than 51,000 jobs.
  • According to Zumper, of these jobs, about 41% of the Port’s entire employee base makes more than $100,000, implying that the portfolio is surrounded by residents that can afford to rent the to-be-built homes.
  • With the relocation incentive that the city has been offering to tech workers, a lot of high-income out-of-state workers continue to migrate to this area and remain renters by choice. As a result, Zumper reports about 54% of the housing units in Savannah are occupied by renters.
  • The median rent for a 3-bedroom unit in Savannah has increased by 31% over the last 3 years and John Burns Consulting is forecasting single-family rents in the area to increase by an average 4.5% over the next three years.
  • As the homes are built and subsequently leased, the portfolio is well positioned to capture rental demand and benefit from the expected increase in rents.
  • The BFR community is located only 15 minutes from the planned Hyundai EV Battery Factory which once completed will add 8k jobs to the region, making it the largest single economic development in Georgia's history

Investment managed by an experienced sponsor

  • The Sponsor, Gordian Community, is a 50/50 joint venture between Arabella Capital and Gordian Growth & Income Fund.
  • Arabella is the operating partner in the joint venture, and was founded in 2018 by Adam Whitmire with the goal of providing affordable modern homes in opportunity zones where housing demand is high, and supply is constrained.
  • Arabella is involved in construction of new build-for-rent and for-sale communities, as well as renovation of existing multi-family properties.
  • They have completed over 1k transactions totalling over $265M between single-family build-to-rent, for-sale and multi-family acquisitions, with extensive experience in developing raw land.

A housing community complete with club house and swimming pool

  • Once developed, the community will consist of 142 single-family residential homes.
  • 60 of the homes will be 3 bedrooms/2-bathroom homes, with an average square footage of 1500 SF.
  • 82 of the homes will be 4 bedrooms/3-bathroom homes with an average square footage of 1604 SF.
  • The units will be similar in construction and feel to a single family home that is being built to be sold.
  • All homes will also have a 2-car attached garage which is very desirable for residents.
  • The site will include a clubhouse and a swimming pool that will be constructed as the homes are being built.

Slide 1 of 2

Clear business plan to execute strategy within 5 years

  • The sponsor will develop the 38.5 acres of acquired land over the next two and a half years into a fully amenitized 142-unit build-for-rent community of single-family detached homes.
  • Land development will begin in April 2022, and is expected to be complete by March 2023.
  • A third party home builder will come in once the land development is complete, and will build the homes at an expected rate of 12 homes per month, with the first tranche of homes delivered by September 2023 and the final tranche by July 2024.
  • Leasing will be underway as soon as the first tranche of homes is close to completion, and the entire community is expected to be fully leased and stabilized by September 2024 (30 months from close).
  • At the end of the 5 year term, the properties are expected to be sold as a portfolio, not individually.
  • When built-for-rent communities are sold they are sold in one transaction, typically to an institutional buyer. As such, BFR communities trade at a cap rate like other commercial properties, as opposed to trading on a per-unit basis. The cap rate premium associated with the community at exit may result in a per unit price above what a retail buyer would pay for the same housing unit, creating a potential arbitrage opportunity for investors.

Build your exposure to single family rentals (SFR) on Yieldstreet

  • Over the past 12 months, Yieldstreet has offered a number of different SFR strategies on platform.
  • Holding positions in numerous SFR funds is expected to increase your level of diversification within the sub asset class of real estate as no two strategies are the same.
  • SFR Diversified I & II were scattered site portfolios.
  • This opportunity is located on the one site in Savannah, GA allowing it to benefit from the strong tailwinds that Savannah has been experiencing over the past few years.
  • This community is being built from the ground up, therefore, the sponsor has not paid a premium for the homes implying potentially outsized returns on exit given that we are taking development and lease up risk.
  • When built-for-rent communities are sold they are sold in one transaction, typically to an institutional buyer. As such, BFR communities trade at a cap rate like other commercial properties, as opposed to trading on a per-unit basis. The cap rate premium associated with the community at exit may result in a per unit price above what a retail buyer would pay for the same housing unit, creating a potential arbitrage opportunity for investors.

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 $10.7M equity position is junior to $21.7M of senior debt.
  • The sponsor has a signed term sheet for a senior construction loan from a regional bank. The construction loan will be closed once land construction is underway. Funds from the loan will not be drawn until all equity is deployed.
  • The remaining equity was provided by the Sponsor demonstrating alignment of interest.

Cash flow

How do I get paid?

  • Over the life of the investment, investors are expected to receive a target annualized net return of 20-22%
  • As cash flows are received by the Fund, 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 up to a 17% annualized return (Investor Preferred Return) and then all remaining proceeds (Profit Sharing) are split between investors (85%) and Yieldstreet (15%). Please also refer to the Private Placement Memorandum for additional details regarding the Fund’s prioritization of distributable proceeds.
  • Investors are expected to receive cash flows from rents beginning in year 4 when the community is stabilized.
  • Majority of returns are expected to be achieved via appreciation at time of sale of the community, which is anticipated to be within 5 years.

Slide 1 of 2
Slide 1 of 3
  • Returns & Management fees

    Ann'l management fee

    2.0%

    Target ann'l net return

    Login to view

    Inv share in excess profits

    85%

    Incentive fee

    15%

    Target equity multiple

    2.05x - 2.15x

  • Schedule

    Current income schedule

    Quarterly

    First expected payment date

    Year 4

    Capital appreciation

    Event-based

    Target term

    5 years

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Ann'l flat expense

    0.25%

Docs

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 ARB REQ I 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.