Overview
YieldStreet will act as a co-lender in a portion of a mezzanine loan for the acquisition of a 16-story rental building in a premier area on New York City’s Upper West Side.
The mezzanine loan has full term of 60 months, consisting of a 36-month initial term and two 12-month extensions. YieldStreet investors are expected to receive monthly interest payments at a target annualized rate of 9.5%, 8.0% of which is in cash and 1.5% in accrued interest, which are scheduled to be paid once principal repayment begins, expected to begin in month 32. From the initial close of the mezzanine loan until the refinance of the bank bridge loan by the senior bank loan (contractually required within 120 days of close, but expected by the originator to be within 60 days of close), all interest payments will accrue, meaning there will be no cash interest payments to mezzanine loan investors, including YieldStreet investors, during such period.
The senior bank loan and mezzanine loan are structured such that only interest will be paid until condominium sales begin, which is expected in month 20. Proceeds from the sale of condominiums are first applied to accrued and cash interest payments with remaining cash flow used to first repay the senior bank debt, followed by the mezzanine loan A, and finally mezzanine loan B. The senior bank loan is expected to be repaid by month 32, the mezzanine loan A by month 40, and the mezzanine loan B by month 43.
Things to consider
Foreclosure Risk
Foreclosure Risk
The Property may need to be liquidated to recover funds in the event of a default.
- The Property has a closing LTV of 71.1% based on its appraised valuation of $155.0M, which means the net proceeds from foreclosing and selling the Property would have to return less than 71.1% for mezzanine loan A principal to be at risk.
Market Risk
Market Risk
The Borrower may be unable to sell the condominiums at the expected price due to a downward movement in the UWS condominium market.
- The realized sales price on the condominiums would have to decrease approximately 35% for the mezzanine loan A to experience a loss. During the Great Recession of 2008/09, the median sales price for condominiums on the UWS decreased by 21%.
- In the event the UWS housing market experiences a material decline, historically, these periods have been relatively temporary. Despite decreasing by 21% in 2009, the median UWS condominium sales price increased 9% within a year.
- The UWS neighborhood has strong underlying demographics, consisting of wealthy, permanent family- and community-oriented households. This helps stabilize valuations relative to other premium residential submarkets, which have experienced considerable development in recent years driven by more elastic demand from foreign investors.
Construction and Condominium Conversion Risk
Construction and Condominium Conversion Risk
The Borrower may be unable to convert the Property to condominium status in a reasonable timeframe and/or experience overruns in the cost or timing to complete the remaining renovations.
- The Borrower has experience in condominium conversions and is familiar with the required steps. Additionally, the Borrower has hired a real estate legal adviser to provide counsel on the process and time needed to complete the conversion.
- The remaining renovation is relatively minimal and includes items such as upgrading amenities and replacing existing hallway flooring with marble and hardwood.
- The two guarantors have provided a completion guaranty, which requires them to provide additional equity in the case of delays and/or cost overruns.
Returns & Management fees
Gross yield
10.7%
Yieldstreet fee
1.2%
Target yield
Login to viewInterest Type
Monthly
Schedule
Payment schedule
Monthly
Maturity
September 23, 2022
Structure
Tax document
1099-INT
Offering structure
BPDN
Expenses
First year expense
$100
Annual flat expense
$30
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.
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]