Harrison Multi-Family Recapitalization I
Closed
Recently funded
Accepting $15,000 - $500,000 investments
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Accepting $15,000 - $500,000 investments
Overview
Invest in a junior mortgage and mezzanine loan (the Loan) primarily secured by a substantially completed multi-family development and parcel of land (the Project) in Harrison, New Jersey. The Loan restructures (replaces) an $89.5M loan, which closed in December 2019 after the borrower did not meet its obligations. The COVID pandemic and increased supply costs caused the borrower to fall behind anticipated construction milestones and the project to run over budget. The Loan refinances the previous lender and provides additional capital (a recapitalization) to the borrower to help finish the construction project.
To incentivize the borrower and offer certain protections, the Loan obligates the borrower to complete the vast majority of the construction project by April 29, 2022. Should the borrower fail to meet this milestone, the Loan lenders can force a foreclosure process to take control and ownership of the project.
The underwritten value of the assets is substantially larger than the outstanding value of the Loan, which may allow for complete recovery should the foreclosure process begin. Newmark Knight Frank, a commercial real estate advisory firm, has appraised the project on an “as-is” basis at ~$161M representing a loan-to-value ratio of 61.8%. As such, the value of the project would need to fall by approximately 40% before an investor experiences losses.
The Project’s “as-is” value is expected to increase as future construction milestones are met due to the attractive characteristics of the Project, as well as the surrounding area. The Project which secures the Loan is located in Hudson County, which offers itself as an easily accessible and affordable area as apartment demand continues to spread from the urban core of New York City. The Project is well positioned to benefit from the convenience of the nearby PATH station, which provides direct commuter access to Manhattan in 25 minutes, Newark in under 5 minutes, and Newark Liberty International Airport within 15 minutes.
The loan has a term of 10 months remaining, with one option to extend for 6 months. Investors are expected to earn interest at a target net annualized yield of 16.8%. All interest is expected to be held back in reserve until remaining construction is completed (expected April 2022). After successful completion, reserve interest will be paid and investors can expect to receive ~14.1% per annum distributed monthly and ~2.7% per annum accruing and compounding monthly. Principal and accrued interest are expected to be repaid upon a sale/refinance of the project.
Note that investors earn a floating rate. The rates mentioned above reflect the interest rate at the 3-month LIBOR floor rate of 0.25%. If and when LIBOR rates increase, the interest rate earned by investors would increase correspondingly and any excess interest earned will be paid to investors upon maturity.
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Highlights
Underlying asset
Desirable location
Guaranties
Business plan
Experienced team
Essentials
Please refer to the Series Note Supplement in the Documents section for more details about this offering.
Please refer to the Series Note Supplement in the Documents section for more details about this offering.
Capital structure
Capital structure
Where does Yieldstreet lie in terms of priority?
Yieldstreet, and a Yieldstreet affiliate, have provided, on a pari passu basis, $18M of the subordinated position, with the remaining amount financed by the Originator. The senior loan was provided by a New York City based private equity firm and ranks ahead of the subordinated position. The equity was provided by the Sponsor (of which $2.4M was financed with a term loan provided by the Originator).
Cash flow
Cash flow
How do I get paid?
The loan has a term of 10 months remaining, with one option to extend for 6 months. Net of Yieldstreet’s management fee, investors are expected to earn interest at a minimum target net annualized yield of 16.8%, with ~14.1% per annum distributed monthly and ~2.7% per annum accruing and compounding monthly. All interest is expected to be held back in reserve until remaining construction is completed (expected April 2022). Thereafter successful completion, reserve interest will be paid to investors. Principal and accrued interest are expected to be repaid upon a sale/refinance of the project.
Note that investors earn a floating rate. The rates mentioned above reflect the interest rate at the LIBOR floor of 0.25%. If and when LIBOR rates increase, the interest rate earned by investors would increase correspondingly and any excess interest earned will be paid to investors upon maturity.
Assets
Assets
What is the collateral underlying the transaction?
The mortgage loan is primarily secured by collateral that is located in Harrison, New Jersey and consists of a completed 90-unit multifamily building that is currently 82% occupied, a ~95% complete 115-unit multifamily building, a 6-acre parcel of land fully entitled and approved for up to 898 multifamily units, 205k SF of retail space, a 200-key hotel, and 1,350 additional parking spaces.
The mezzanine loan is secured by a pledge of the borrower’s equity in each of the various property’s ownership entities. Invictus structured the financing with a mezzanine loan component so that, in the event of a default, they would be able to exercise remedies under the mezzanine loan, which includes a UCC foreclosure (generally more expeditious than a mortgage foreclosure).
Returns & Management fees
Ann'l management fee
2.5%
Min. target ann'l net yield
16.8%
Schedule
Payment schedule
Event based
Target term
10 months
Extension options
One, 6 month
Structure
Tax document
1099-INT
Offering structure
BPDN
Expenses
Ann'l flat expense
0.25%
Docs
Content
This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS AltNotes I LLC ("Issuer"). The Offering is made only by means of the Private Placement Memorandum dated January 14, 2022 and the Series Note Supplement relating to the Offering (collectively, the "Offering Documents"). 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 Documents, or as incorporated in the Offering Documents 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 Documents or in any marketing or sales literature issued by the Issuer or Yieldstreet Management, LLC, as adviser thereto, and referred to in the Offering Documents, and, if given or made, such information or representations must not be relied upon. All investors must read the Offering Documents in their 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]