Accepting $20,000 - $250,000 investments
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Accepting $20,000 - $250,000 investments
S3 Capital (“Originator”) has closed and funded a $250.0M delayed-draw construction loan (“Opco Loan”) to a New York based private real estate development firm (“Sponsor”), which was used to finance the acquisition of a 0.36 acre parcel of land and the construction of a 1,043-key hotel located in Times Square Manhattan (“Property”). The funding of the Opco Loan originated from two sources – $187.5M from the Leverage Provider (“Senior Loan”) and $62.5M from a consortium of private investors (“Holdco Loan”). YieldStreet has contributed $7.0M to the Holdco Loan, which in effect, allows YieldStreet to indirectly participate in the economics of the Opco Loan.
• The deal is structured as an Opco / Holdco structure, wherein the source of funds of the Opco loan is originating from a $62.5M Holdco loan and a $187.5M senior loan from a financial institution (the “Leverage Provider”). YieldStreet has a membership interest in the Holdco loan lending entity, which in effect, allows YieldStreet to indirectly participate in the economics of the Opco loan. As a result of the deal structure described above, the Holdco loan – which is the loan that YieldStreet has membership interests in – is in a junior position to the Opco loan. Although the $250M loan has a delayed draw mechanism with $120M drawn at closing and the remaining $130M expected to be drawn in increments starting in January 2021, YieldStreet’s $7M hold is expected to remain constant throughout the life of the loan. The Holdco Loan will have an initial term of 36 months, but with two one-year extension options that can be exercised if certain credit metrics are met. If both extension options were to be exercised, the Holdco Loan would have a maximum maturity date of 1/1/2025.
Please refer the Series Note Supplement in the Resources section for more details about this offering.
What Secures My Investment?
The Opco Loan is secured by a first mortgage on a 15,565 SF (0.36 acre) parcel of land to be constructed into a 1,043-key hotel in Times Square Manhattan. At close, the Property had an LTC of 74.1%, and once fully funded, the Property will have an LTC of 75.4%. The LTC is a comparison of the Loan amount and the Property’s total costs. The Property’s “When-Complete” and “As-Stabilized” appraised value is $575.0M at a 43.5% LTV and $637.0M at a 39.2% LTV, respectively. The LTV is a comparison of the Loan amount and the Property’s appraised value. The proceeds from a refinance, sale or foreclosure would have to return less than 56.5% and 60.8%, respectively, of the Property’s appraised value for YieldStreet investors’ principal to be at risk. The Sponsor will be injecting an additional $39.8M of equity on top of its existing $41.9M equity throughout the life of the loan, which will provide additional cushion for the Loan. Lastly, the loan is structured with an interest reserve account of $9.5M to cover the first 12 months of interest payments, after which the Borrower will serve interest expense by drawing on the proceeds of the remaining $130.0M Opco Loan that has yet to be drawn.
How Do I Get Paid?
The Opco and Holdco Loan both have an initial term of 36 months, and two one-year extension options subject to certain credit metrics being met. YieldStreet investors are expected to receive monthly interest payments at a target annualized rate of 10.0% on the outstanding principal balance over the life of the loan. The principal is expected to be repaid upon refinancing or sale of the Property.
Subordinated Position Risk
Upon an event of default, the Leverage Provider is entitled to receive principal and interest payments in full prior to YieldStreet’s receipt of any payments.
The Borrower may default on its financial obligations.
The Construction process may end up being delayed or requiring more funds than anticipated.
Early Prepayment Risk
The Sponsor may repay the Loan much earlier than anticipated, affecting investors’ yields.
Target yieldLogin to view
January 1, 2023
First year expense
Annual flat expense
This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS S3 REL 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.