Real EstateS3 Capital

NYC Times Square Hotel Construction Financing

Annual interest3

Term remaining

11 Mo.

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Status

Closed

Recently funded

Accepting $20,000 - $250,000 investments

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Accepting $20,000 - $250,000 investments

Overview

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.

Performance Update

• View the most recent update for NYC Times Square Hotel Construction Financing.

Important Note

• 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.

Highlights

Prime Location
Collateral Coverage
Large Equity Check
Sponsor Experience
Personal Guarantees
Originator Experience
  • The Property is located in Times Square Manhattan, which had more than 70,000,000 visitors in 2019, is home to numerous Fortune 500 companies, and has close access to various methods of transportation.

  • The loan represents 43.5% of the “As-Complete” value and 39.2% of the “As-Stabilized” value of the Property. The value of the Properties would have to decrease 56.5% from its “When-Complete” value and 60.8% from its “As-Stabilized” value before the loan amount would exceed the value of the collateral securing it.

  • Once fully funded, the Sponsor is expected to have put in a total of $81.7M of equity into this construction project, which will further align the interests of the Sponsor and Lenders.

  • The Sponsor has over 30 years of experience in the hotel industry and has developed more than 75 properties over his career. The Sponsor reported a cumulative net worth of $824.8M.

  • The loan has personal guarantees from the Sponsor for payment of completion costs and carry costs.

  • The Originator has closed more than 320 real estate bridge loans since its inception in 2013 worth almost $2BN, with a default rate of less than 1.0%.

Essentials

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 net proceeds from the sale or refinancing of the Properties would have to be 56.5% less than the Property’s “When-Complete” value in order for the proceeds to be insufficient to repay YieldStreet.

Default Risk

The Borrower may default on its financial obligations.

  • The Opco loan is structured with an interest reserve of $9.5M, which covers 12 months of interest expense, 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.

  • The loan is personally guaranteed by the Sponsor – who reported a net worth of $824.8M – for payment of completion and carry costs.

Construction Risk

The Construction process may end up being delayed or requiring more funds than anticipated.

  • The Sponsor is an experienced hotel developer owner with over 30 years of experience and has developed more than 75 properties throughout his career. The Sponsor holds expertise in developing hotels in New York City.

Early Prepayment Risk

The Sponsor may repay the Loan much earlier than anticipated, affecting investors’ yields.

  • The Opco loan is structured with a call protection until May 17, 2021, so if the Sponsor were to repay the loan prior to May 17, 2021, investors can expect to receive the cumulative interest accrued up to the aforementioned date.

Return & Management fees

Gross yield

11.0%

Yieldstreet fee

1.0%

Target yield

Login to view

Interest Type

Monthly 30/360

Schedule

Payment schedule

Monthly Payments

Prefunded

Yes

Maturity

January 1, 2023

Structure

Tax document

K-1

Offering structure

SPV

Expenses

First year expense

$150

Annual flat expense

$70

Slide 1 of 3
  • Return & Management fees

    Gross yield

    11.0%

    Yieldstreet fee

    1.0%

    Target yield

    Login to view

    Interest Type

    Monthly 30/360

  • Schedule

    Payment schedule

    Monthly Payments

    Prefunded

    Yes

    Maturity

    January 1, 2023

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Expenses

    First year expense

    $150

    Annual flat expense

    $70

Docs

Content

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.