Savannah Build-For-Rent Portfolio I
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Accepting $15,000 - $500,000 investments
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Accepting $15,000 - $500,000 investments
Overview
A dedicated rental community of 142 to-be-built single family homes on 38.5 acres of land in Savannah, Georgia.
A dedicated rental community of 142 to-be-built single family homes on 38.5 acres of land in Savannah, Georgia.
- Potential arbitrage opportunity: 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.
- Attractive cost basis: The land was acquired at $15k/lot. The total capitalization per unit (inclusive of land development costs and home construction costs) is estimated to be $236k/unit. In Q1 2027, the Sponsor expects to sell the portfolio for $329k/unit, representing a ~40% increase on the cost basis.
- Market backdrop: The relocation incentive that Savannah has been offering to tech workers has resulted in a lot of high-income out-of-state workers continuing to migrate to the area. Zumper reports about 54% of the housing units in Savannah are occupied by renters implying demand for our portfolio.
Premise
Investing details
Investing details
What am I investing in?
- An equity investment in a portfolio of 142 to-be-built single family residential homes on a 38.5 acre parcel of land located at 340 Bush Road, Savannah, GA. The land was acquired at a cost basis of $2.06M or $15K per lot.
- The Sponsor is responsible for development of the land (eg. construction of roads/electricity/sewer etc) as well as the construction and subsequent lease up of all the homes. As of December 2022, 30% of the land development is complete.
- The units will be similar in construction and feel to a single family home that is being built to be sold. Each home will have a 2-car attached garage, and the site will include a clubhouse and a swimming pool that will be constructed as the homes are being built.
- Yieldstreet has major decision rights and the right to compel a sale of the portfolio after the 60 month project timeline.
- The offering offers investors a lower capital and time intensive way to gain exposure to detached homes, relative to owning your own individual investment property.
Investment strategy
Investment strategy
What is the value proposition?
- 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.
- The land was acquired at $15k/lot. The total capitalization per unit (inclusive of land development costs and home construction costs) is estimated to be $236k/unit. In Q1 2027, the Sponsor expects to sell the portfolio for $329k/unit, representing a ~40% on the total capitalization price.
- Land development began in May 2022, and is expected to be complete by September 2023. Currently land development is 30% complete.
- The Sponsor has revised their initial development plan and if approved, they will begin building homes in tandem with the remainder of the land development so that the community is potentially stabilized ahead of schedule.
- The home builder is expected to deliver 10-12 homes per month with the first tranche of homes to be delivered by December 2023 and the final tranche by October 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 July 2025 (39 months from investment close in March 2022).
- The portfolio is expected to be sold in one transaction during Q1 2027.
Behind the investment
Behind the investment
Who is the Sponsor and what is Yieldstreet's experience in the space?
- The Sponsor, Gordian Community, is a 50/50 joint venture between Arabella Capital and Gordian Growth & Income Fund.
- Arabella Capital 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.
- The Sponsor is providing ~$1.2M of the equity demonstrating alignment of interests with Yieldstreet investors.
- Over the past 12 months, Yieldstreet has offered a number of different single family rental 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.
Market backdrop
Market backdrop
Why should you consider investing?
- 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 home to a diverse mix of industry including manufacturing, healthcare, tourism, and film.
- However, the population growth in Savannah 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. 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.
- 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. The site is also 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.
- 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.
- In addition, the development of Hyundai’s $5.5B EV manufacturing plant has broken ground with a target completion date of 2025. This site is a 15 minute drive from the portfolio and is expected to create 8000+ jobs in the coming years, further driving demand for our rentals.
- 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.
Essentials
Please refer to the Investment Memorandum in the Documents section for more details about this offering
Please refer to the Investment Memorandum in the Documents section for more details about this offering
Capital structure
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 remaining equity was provided by the Sponsor demonstrating their alignment of interests.
- The venture closed on a senior construction loan from a regional bank with attractive terms agreed upon in March 2022 (before loan spreads in the mortgage market widened significantly).
- The construction loan funds will be drawn once home construction is underway and after all equity has been deployed. As of December, ~$5.5M of equity has been deployed.
Cash flow
Cash flow
How do I get paid?
- This investment is expected to generate capital appreciation for investors via the sale of the portfolio by Q1 2027.
- Current income is not expected until year 4 once the portfolio is stabilized. Any current income generated by the property will be paid on a quarterly basis.
- 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.
Accessibility
Accessibility
Who can invest?
- Eligible investors must verify that they are accredited investors.
- 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 composed of these plans and funds.
Exclusive tiered pricing available
Exclusive tiered pricing available
- We are currently offering a management fee reduction to investors that meet a certain investment threshold.
- Per the adjacent graphic, if an investor allocates $250,000 to the deal they will receive a 0.25% reduction bringing their effective management fee to 1.75% on their entire investment.
Returns & Management fees
Ann'l management fee
2.0%
Target ann'l net return
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85%
Incentive fee
15%
Target equity multiple
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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%
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.
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.
2 Represents an average net realized internal rate of return (IRR) with respect to all matured investments in your portfolio, utilizing the effective dates and amounts to and from the investments and net of management fees and all other expenses charged to the investments. Past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. All securities involve risk and may result in significant losses, including the loss of principal invested.[read more]