Williamsburg Multi-Family Restructuring Equity
Annualized return3
Term
10 months
Fully repaid
Recently funded
Accepting $50,000 - $500,000 investments
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Accepting $50,000 - $500,000 investments
Overview
Invest in an existing first mortgage and mezzanine loan secured by a multi-family complex in Williamsburg, Brooklyn. It’s expected that the property will be foreclosed upon by the lender group and if successful, the lender group is expected to take ownership of the property. The borrower has failed to meet obligations under the loans, foreclosure proceedings have already commenced and a receiver is expected to be appointed by the court (though it may not occur at all) in the next few months. Upon placement into receivership, the sponsor’s business plan is to lease-up the retail and parking spaces before an eventual sale.
Built in 2018 and located one block from the East River waterfront, the 96-unit luxury rental building is in a hip Brooklyn neighborhood that draws young professionals to its boutiques, trendy cafes and buzzy restaurants. Residents in the area can easily commute to Manhattan via subway or ferry, both of which are located only a couple of blocks from the building. Now considered one of the most desirable NYC neighborhoods, the Williamsburg submarket benefits from its excellent demand drivers causing vacancy rates to remain low and rents to increase over recent years despite constant new supply becoming available.
The offering is expected to provide investors a targeted annualized return of 15-17%. Returns are expected to be achieved at the time of sale or refinance, anticipated to be within 36 months. Since this is expected to be an equity investment, there is potential for returns to be above or below the target range.
Important Notes
• 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.
Highlights
Attractive cost basis
Quality asset
Desirable location
Grounds for foreclosure
Experienced team
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, and a Yieldstreet affiliate, have provided $10M of the equity, and the remaining balance was provided by the sponsor and original lender. The equity position is subordinate to the senior lender, a NY-based private equity firm.
Cash flow
Cash flow
How do I get paid?
Over the life of the investment, investors are expected to receive a target annualized return of 15-17%, net of Yieldtsreet’s management fee, commitment fee and fees earned by the sponsor as further described in the Investment Memorandum. Investors are expected to receive principal and returns at the time of sale or refinancing of the property, anticipated to be within 36 months.
Assets
Assets
What is the collateral underlying the transaction?
The sponsor has purchased the unpaid first mortgage and mezzanine debt from the original lender. The first mortgage was first originated in December 2017 with an aggregate balance of $78 million. It was originally structured with a 24-month term and two six-month extension options. The mezzanine loan was originated in October 2019 to provide additional funding due to budget overruns. At the time of mezzanine loan origination, the original lender amended its first mortgage loan so that both loans terminated on the same date in March 2020.
Not only do both loans remain unpaid, the borrower also failed to meet the temporary certificate of occupancy (TCO) deadline, and so is in default under the loan covenants. Furthermore, the borrower was also obligated to deposit rents and other revenue into a lockbox but failed to do so, ultimately constituting misappropriation of funds. Due to the foregoing, the sponsor is able to pursue all remedies under its rights as a first mortgage and mezzanine lender, and additionally maintains the right to pursue bad act guaranty claims against the guarantors.
Given the numerous instances of default, the litigation strategy is to simultaneously undergo mortgage foreclosure proceedings (already commenced), to potentially gain receivership of the property, as well as undergo a UCC foreclosure under the mezzanine loan. Undergoing UCC foreclosure under the mezzanine loan gives the sponsor a quicker avenue to potentially obtain ownership of the property in an attempt to realize profits through an eventual sale.
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Returns & Management fees
Ann'l management fee
2.5%
Target ann'l net return
15% - 17%
Share in excess profits
100%
Target equity multiple
1.6x - 1.7x
Structure
Tax document
K-1
Offering structure
SPV
Expenses
First year expense
$150
Annual Flat Expense
$70
Docs
Content
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]