Park Slope Multi-Family Property

Annual interest3

Final term

11 months

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Status

Fully repaid

Recently funded

Accepting $10,000 - $250,000 investments

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Accepting $10,000 - $250,000 investments

Overview

A Yieldstreet entity (“Yieldstreet”) provided $1.665M in senior note-on-note financing (the “Loan”) to an affiliate of Urban Standard Capital (“USC” or the “Originator”) so that USC could close on a $1.85M first mortgage loan (“Underlying Loan”) secured by a four story multi-family brownstone (“Property”) in the neighborhood of Park Slope, Brooklyn, NY. Yieldstreet’s investment is senior to the loan made by USC to the property-owning borrower (the “Underlying Borrower”) because of the note-on-note structure of our Loan.

In the event of default by the Underlying Borrower, USC may continue to make monthly debt service on the Yieldstreet Loan for 60 to 150 days depending on the type of default (“Cure Period”). If the Underlying Borrower is unable to resume payment by the end of the Cure Period or if USC otherwise defaults on the loan, Yieldstreet would have the right to become the sole mortgage note holder of the Underlying Loan. Yieldstreet would then have the power to enact any and all rights and remedies of a secured mortgage lender (subject to the mortgage documents) to recover amounts due under the Underlying Loan, including loan modification and initiating foreclosure.

The borrower of the Underlying Loan used the proceeds, along with $775k in cash equity, to purchase the Property, pay closing costs, and partially fund a renovation reserve. The capital that Yieldstreet provided to USC was used to make a loan to the Underlying Borrower. The Underlying Borrower is obligated to contribute $300k in cash equity to cover the cost of the planned renovations required on the property. After this cash has been contributed, the cost of the project (calculated as the cost of the property, closing costs, and renovation costs) equates to $2.9M. As such, the loan to cost (LTC) ratio for the Yieldstreet Loan is 58.2%. In addition to the property securing the Underlying Loan, the principals of the Underlying Borrower provided a $200k personal guarantee for obligations under the Underlying Loan, and a bad actor carve out guarantee. As of July 31, 2020, the principal of the Underlying Borrower had a net worth of $5.4M, $850K of which is held in cash.

The Underlying Borrower’s business plan is to renovate the building and reconfigure the Property’s units. As is, the Property consists of three 1-bedroom units (one of which is a duplex). Upon completion, the Property is expected to consist of four 3-bedroom units. The renovation budget is $400k. At closing, the Underlying Borrower contributed $100k towards this budget and is obligated to contribute another $150K within 60 days of loan closing (October 4, 2020), and another $150k (for a total $300k contribution) within 90 days of loan closing (November 3, 2020).

In addition, the Originator Fund has provided a bad actor carve-out guarantee to Yieldstreet for acts of fraud and misrepresentation by the Originator and its affiliates in relation to the YS Loan and the Underlying Loan.

Important Notes

• The Underlying Borrower is an affiliate of the underlying borrowers in the previous Yieldstreet offering: Brooklyn Multi-Family Portfolio.

• Upon exercise of the extension option, the gross target rate is scheduled to increase to 8.25%, and the target yield to investors to increase to 7.25%.

Yield

Gross yield

8%/8.25%

Yieldstreet fee

1%

Target yield

7%/7.25%

Interest Type

Actual 360

Schedule

Payment schedule

Monthly Payments

Prefunded

Maturity

Date

Initial Maturity

Aug 5, 2021

Extended Maturity

Aug 5, 2022

Structure

Tax document

1099-INT

Offering structure

Expenses

First year expense

$100

Annual flat expense

$30

Slide 1 of 3
  • Yield

    Gross yield

    8%/8.25%

    Yieldstreet fee

    1%

    Target yield

    7%/7.25%

    Interest Type

    Actual 360

  • Schedule

    Payment schedule

    Monthly Payments

    Prefunded

    Maturity

    Date

    Initial Maturity

    Aug 5, 2021

    Extended Maturity

    Aug 5, 2022

  • Structure

    Tax document

    1099-INT

    Offering structure

    Expenses

    First year expense

    $100

    Annual flat expense

    $30

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Essentials

Please refer to the Series Note Supplement for any additional details.

Sources & Uses

What were the Loan proceeds used for?

The Underlying Borrower used the proceeds from the Underlying Loan along with $775k in cash equity to purchase the Property, pay closing costs, and partially fund a renovation reserve. The Underlying Borrower is obligated to contribute an additional $300k towards the renovation reserve, resulting in total project costs of $2.9M, representing a LTC of 58.2% for the Yieldstreet Loan. The sources and uses of the loan proceeds are illustrated in the respective tables.

Slide 1 of 2

Capital structure

Where does the YS entity lie in terms of priority?

Yieldstreet has provided USC with senior note-on-note financing at an advance rate of 90%. Yieldstreet’s exposure is effectively senior to the USC’s retained portion.

Assets

What is the collateral underlying the transaction?

The Yieldstreet loan is secured by the Underlying Loan, which in turn is secured by a first priority interest on the Property. The Property is a four story multi-family building located in the Park Slope neighborhood of Brooklyn, NY. It is in close proximity to the Atlantic Avenue Barclays Center MTA subway station and the LIRR (Long Island Railroad), which provide direct access to Manhattan and Long Island.

The Property consists of three one-bedroom units, of which one unit is a duplex. Upon completion, the Property is expected to consist of four three-bedroom units of approximately 800 SF each. All units are eligible for fair market rent. Upon acquisition of the Property, the Underlying Borrower filed for the necessary construction permits. As of August 25, 2020, it has received the required permit for the duplex split (Alt 1) and the associated demolition and construction work has begun. It has resubmitted the permit for the unit reconfigurations (Alt 1) and expected to receive the permits prior to completion of the duplex split. The principal affiliated with the Underlying Borrower expects the total construction work to be completed in 6-8 weeks, and for lease-up to occur within 90 days of unit availability.

Term and Cash Flow

How do I get paid?

The Yieldstreet loan has a 9-month term remaining with the option for one 6-month extension (total extended term of 15 months remaining) and is co-terminus with the Underlying Loan. The option to extend the Underlying Loan is subject to the satisfaction of certain conditions, including there being no ongoing event of default and the Underlying Borrower funding a reserve for interest, real estate taxes, and insurance premiums due through the extended maturity date. Yieldstreet investors are scheduled to receive monthly interest payments at an annualized target rate of 7% during the investment’s initial term, and 7.25% during the extended term. Principal is expected to be repaid at maturity, upon refinancing or sale of the Property.

Highlights

Basis
Market
Underlying Borrower
Originator
  • The Originator engaged BBG Inc., a property valuation company, to conduct a third-party appraisal of the Property as of July 16, 2020. The appraiser valued the Property on an “As-Is” basis at $2.6M ($851k per unit) and on an “As-Stabilized” basis at $3.1M ($775k per unit). Based on the appraiser’s conclusions, the Yieldstreet Loan has an “As-Is” loan-to-value ratio (LTV) of 65.2% and an “As-Stabilized” LTV of 53.7%. The Property’s purchase price was $2.35M ($588k per unit), equating to a Yieldstreet loan-to-purchase price of 70.9%. The Yieldstreet Loan’s exposure equates to $416k per unit. \ \ This chart breaks down the third party appraiser’s report.

  • According to the appraiser, Park Slope is part of the Prospect Park submarket, which has become a popular residential area among families and young professionals in part due to accessibility to Manhattan and a lively offering of restaurants, entertainment, and green space. Submarket multifamily vacancies neared a record low of 1.86% in 2Q20, and 2019 rent growth topped 2% for the second consecutive year. Developer interest in the area has been strong, with units under construction representing 5% of existing inventory. BBG notes that the live/work/play dynamic of the submarket may be affected by COVID-19, and that key market indicators may deteriorate in the short term given the uncertainty surrounding the pandemic.

  • The Underlying Borrower is an entity affiliated with a vertically-integrated fund which owns and operates residential and commercial real estate in the New York area. The fund focuses on the repositioning of multi-family and mixed-use assets. The fund’s principal has invested in and realized six transactions in NYC. Of the six realized investments, two involved mixed-use buildings and four involved retail properties. The mixed-use and retail investments realized IRR of 24.2% and 48.3%, and MOIC of 2.8x and 8.2x respectively. The principal (through the fund) is currently invested in 14 mixed-use and five multifamily transactions in the New York area.

    The principal of the fund has provided a $200k personal guarantee for obligations under the Underlying Loan and a bad actor carve-out guarantee. As of July 31, 2020, the principal had an estimated net worth of $5.4M, with cash of $850k.

  • Urban Standard Capital is a NYC-based real estate investment company with three lines of business: ground-up development, renovations and short-term financing. It leverages its knowledge across its three verticals to make informed lending decisions. It also has a captive property manager, which provides real-time market intelligence to facilitate due diligence and underwriting. Since 2016, it has originated 47 loans, totaling over $176M, all secured by properties in the Greater NYC area.

Resources

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.