Real Estate

Hudson County Condo Financing

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Status

Closed

Recently funded

Accepting $10,000 - $500,000 investments

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Accepting $10,000 - $500,000 investments

Overview

Invest in a levered mortgage and mezzanine loan (the Loan) secured by 65 newly-built units in a condominium building located in North Bergen, NJ. The property was completed in January 2022, and has sold several condo units since. These loans refinance the construction loan and allow the Sponsor to carry out the sale of the remaining condo units. It is expected that all units will be sold within the next 24 months, and as condo units sell the loans will be paid down.

Premise

Potential benefits of investing in real estate debt

  • According to CBRE, commercial lending markets were highly liquid and continued to expand in Q4 2021.
  • Debt investments typically have shorter hold times than equity investments for investors who do not want to tie up assets for the long-term.
  • These are floating rate loans, as interests are expected to rise, the yield to investors is also expected to increase.
  • Debt investments can provide investors with steady income payments via interest paid by borrowers.

Shortage of multi-family assets in NYC encouraging residents to move to proximate alternative areas

  • According to The New York Times, “rents in New York rose 33 percent between January 2021 and January 2022”.
  • According to the online listing site Apartment List, the increase in rents seen in NYC is almost double the national rate and the highest increase among the 100 largest American cities tracked by the group.
  • Rising prices, coupled with a shortage in new building supply, have pushed residents out of homes they can no longer afford and into nearby New Jersey areas.

Prime location with easy access to NYC

  • The property is located on the west side of River Road in North Bergen, NJ in the northern portion of New Jersey’s Hudson River Waterfront market.
  • Since the 1980s, the New Jersey Hudson River Waterfront market has grown by 24k units of residential development, 10 million SF of office development, and 2 million SF of retail development, demonstrating its desirability.
  • The property is a 3-mile drive to the entrance of the Lincoln Tunnel, is steps from an NJ Transit bus stop providing near-direct service to Port Authority in NYC, and is a 2-mile drive from two separate NY Waterway ferry stops.
  • The close proximity to NYC offers residents a viable and affordable housing alternative to Manhattan, while not compromising on accessibility.

Investment secured by a property with highly favorable characteristics

  • The property is a luxury 70-unit, 102k SF mid-rise residential condominium building with a 107-stall parking garage. All units face NYC with water views.
  • Amenity spaces include a state-of-the-art, two-story fully-equipped fitness center attached to a luxury spa with a hot tub, sauna, steam room, salt room, and heated massage beds, a dog run, and a courtyard with fire pits and grills.
  • Other building amenities include a conference/business center with co-working spaces and a community/rec room with a kitchenette.
  • The Property consists of 10 1-Bed/1-Bath units, 40 2-Bed/2-Bath units, 10 2-Bed/2-Bath + Den units, and 10 3-Bed/3-Bath units with an average unit size of 1,461 SF.

Units are expected to sell quickly and for attractive prices

  • There is limited inventory of newly constructed luxury condominiums available along the northern Hudson County portion of the waterfront market, boosting buyer-demand for this property’s units.
  • Units at the property began selling in January 2022.
  • Units already sold at the property went for an average price of $736/SF. Since then, 9 additional units have gone under contract for an average of $829/SF.
  • Comparable sales at the nearby Glass House include 39 sales between 2019-2021 at an average price of $1,457,556 ($881/SF) for units averaging 1,654 SF. This suggests that units at the property securing the loans are competitively priced and are expected to receive the same level of buyer demand.

Loan originated by an experienced originator

  • The originator, Invictus Real Estate Partners is a New York based, vertically integrated real estate private equity firm founded in March 2020 by Eric Scheffler and Christopher Pardo.
  • As of 12/30/21, Invictus has purchased, capitalized, or developed 10 properties with a total asset value in excess of $1B.
  • Prior to Invictus, Eric developed significant experience as the director at the CMBS group of Bear Sterns (2004-2007), General Counsel and Managing Director at Madison Realty Capital (2007-2010), Principal and General Counsel at Glacier Global Partners, a real estate private equity firm (2010-2020).
  • A summary track record of recent transactions from his Glacier Global and Madison Realty Capital tenure includes the purchase or origination of over 20 transactions, or $3B.
  • This is the fourth offering on Yieldstreet with Invictus Real Estate Partners. The three offerings continue to perform in line with expectations, and include: Harrison Multi-Family Recapitalization I, North-Shore Boston Multi-Family Equity and Williamsburg Multi-Family Restructuring Equity.

Investment managed by an experienced Sponsor

  • The Sponsor has 40+years of experience in real estate development and investments as well as real estate construction and management.
  • The Sponsor has been responsible for managing over 7 million SF of industrial, retail and office spaces, and is currently in various stages of development on 500 residential units.

Business plan

  • The $63.2M loan originated by Invictus Real Estate Partners refinances the Sponsors construction loan.
  • This loan allows the Sponsor to carry out the sale of the remaining units which is anticipated to be within the next 24 months.
  • As units are sold the loan will be paid down.
  • As an additional protection, the loan requires a minimum of $20M of principal to be paid down at the end of month 7, and an additional $10M of principal to be paid down at the end of month 13.
  • The accompanying chart illustrates the projected unit sale rate.

Essentials

Please refer to the Series Note Supplement in the Documents section for more details about this offering.

Capital structure

Where does Yieldstreet lie in terms of priority?

  • Yieldstreet has provided $17.7M of the subordinated position*, with the remaining amount financed by Invictus Real Estate Group.
  • The senior loan was provided by a New York City based private equity firm and ranks ahead of the subordinated position.
  • As the loan is paid down, the senior position and subordinated position will be paid back on a pari passu basis.

Cash flow

How do I get paid?

  • Net of Yieldstreet’s management fee, and other fees and expenses, investors are expected to earn monthly interest at a minimum targeted net annualized yield of 10.7%.*
  • Note that investors earn a floating rate. The rates mentioned above reflect the interest rate at the 1-month SOFR floor rate of 0.1%. If and when SOFR rates increase, the interest rate earned by investors would increase correspondingly and any excess interest earned will be paid to investors monthly.
  • If at any time the Subordinated Portion’s calculated interest rate falls due to a decrease in SOFR and the Loan is still performing, the Originator’s servicing fee will decrease in order to preserve Yieldstreet’s minimum gross rate of 13.24%.
  • As units are sold, all proceeds will be used to pay down the loan or replenish the interest reserve.
  • The loan has a term of 24 months remaining, with two six-month extension options.

Returns & Management fees

Ann'l management fee

2.0%

Target ann'l net yield

10.7%

Schedule

Payment schedule

Monthly + event based

Target term

24 months

Extension options

2, 6-month

Structure

Tax document

1099-INT

Offering structure

BPDN

Ann'l flat expense

0.25%

Slide 1 of 3
  • Returns & Management fees

    Ann'l management fee

    2.0%

    Target ann'l net yield

    10.7%

  • Schedule

    Payment schedule

    Monthly + event based

    Target term

    24 months

    Extension options

    2, 6-month

  • Structure

    Tax document

    1099-INT

    Offering structure

    BPDN

    Ann'l flat expense

    0.25%

Target yields are offered as opinion and are not referenced to past performance. Target yields are not guaranteed and results may differ materially.

Docs

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.