Overview
Invest in a short-term loan secured by a former hotel property and an event space. The properties are located in the historic district of Baltimore, and are within walking distance to the Bromo Arts District, Baltimore Penn Station and the business district. The sponsor’s business plan is to convert the hotel into a multi-family property. The loan serves as bridge financing and allows the sponsor to further progress on its business plan, budget and approvals, and potentially obtain a competitive construction loan for the development.
CoStar reports vacancy rates are projected to fall to 6-7% by 2025 which has the potential to support annualized rent growth in the mid-single digits. Multi-family investment has been solid in the area as demand is driven by the area’s anchor enterprises such as the University of Maryland Medical Center, Johns Hopkins, Transamerica and M&T Bank. Additionally, initiatives to revitalize Downtown Baltimore include plans by the governor to relocate over 3,000 state employees to the area. The properties have been acquired at an attractive cost basis of $69k per unit, with a loan cost basis of $39k per unit. The sponsor’s estimated total project cost is $176k per unit which is currently lower than the replacement cost of recent comparables which sold for $191k per unit on average.
The loan has a term of 11 months remaining. Investors are expected to earn interest at an annualized target yield of 8.75%, of which ~5.8% is expected to be distributed on a current monthly basis and the remaining ~2.9% is expected to accrue and compound. Principal and accrued interest is expected to be repaid at maturity from proceeds of a sale or refinance of the property.
Highlights
Attractive basis
Business plan
Market dynamics
Partial principal guaranty
Sponsor experience
Essentials
Please refer to the Series Note Supplement in the Docs section for more details about this offering.
Please refer to the Series Note Supplement in the Docs 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 funded the entirety of the senior loan. Yieldstreet’s $7.9M loan is in equal position with the Yieldstreet affiliated multi-asset fund’s $4M loan. The senior loan ranks ahead of the equity which was provided by the sponsor and its investors.
Cash flow
Cash flow
How do I get paid?
The loan has a term of 11 months remaining. Investors are expected to earn interest at an annualized yield of 8.75%, of which ~5.8% is expected to be distributed on a current monthly basis and the remaining ~2.9% is expected to accrue and compound. Principal and accrued interest is expected to be repaid at maturity from proceeds of a sale or refinance of the property.
Assets
Assets
What is the collateral underlying the transaction?
The property is located in the historic district of Baltimore, which is in the Downtown Baltimore submarket and within walking distance to Baltimore Penn Station. The hotel is a 37-story, 306-key hotel with a 256k SF gross building area and a 229k SF net rentable area. It was constructed in the 1960s originally as a multi-family property and was subsequently converted into a hotel in 2012. In 2017, the property was sold to the previous ownership group for $46.6M, or $152k per key. The previous owners subsequently spent $11.5M to conduct substantial renovations and the hotel was operational until it was closed down due to COVID-19 in 2020. The sponsor purchased the property off the previous owners for $18.3M and a property condition report concluded that the site is generally in good condition.
Returns & management fee
Ann'l management fee
1.75%
Target ann'l net yield
8.75%
Target current ann'l yield
~5.8%
Target deferred ann'l yield
~2.9%
Structure
Tax document
1099-INT
Offering structure
BPDN
Expenses
First year expense
$100
Annual Flat Expense
$30
Docs
Content
This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS ALTNOTES II 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]