Private Credit

Motorcycle Loan Portfolio II

Annualized yield3

Term

17 Mo.

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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 portfolio of seasoned and performing consumer loans backed by high-end motorcycles, including brands such as Harley Davidson, Suzuki, and Kawasaki. The lender partners with over 560 independent motorcycle dealers across the U.S, and has originated more than 9,700 loans totaling $87.3M since 2015. Motorcycle Loan Portfolio I, the first portfolio in this series, was first offered to investors in September 2020 and continues to perform in line with expectations.

In general, motorcycle sales and ridership have been increasing based on market trends. Demand has outpaced supply during the COVID pandemic as more riders sought socially distant activities. Manufacturers such as Harley Davidson have reduced production during the pandemic, which has kept pricing for both new and used bikes stable.

Each of the loans in the portfolio has been performing in line with expectations for at least 12 months and any defaulted or delinquent loans were removed from the portfolio on the closing date. In addition, a 90-day buy-back provision is also in place, whereby the motorcycle lender is obligated to buy-back any loans in the portfolio that default within 90 days of the closing date.

The portfolio has a target remaining term of 39 months. Investors are expected to receive monthly interest payments at an annualized target yield of 9.25%. Principal will also amortize and is expected to be repaid to investors over the 39-month investment period.

Returns & Management fees

Management fee

1.75%

Target net yield

9.25%

Schedule

Payment schedule

Principal and interest

Interest Type

Actual 360

Prefunded

Yes

Term

Date

Target term

39 months

Structure

Tax document

1099-INT

Offering structure

BPDN

Expenses

First year expense

$100

Annual flat expense

$30

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Returns & Management fees
Management fee
1.75%

Target net yield
9.25%
Schedule
Payment schedule
Principal and interest
Interest Type
Actual 360
Prefunded
Yes
Term
Date
Target term
39 months
Structure
Tax document
1099-INT
Offering structure
BPDN
Expenses
First year expense
$100
Annual flat expense
$30

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Essentials

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

Capital structure

Where does Yieldstreet lie in terms of priority?

Yieldstreet has purchased a 100% participation in an $8.4M portfolio of consumer loans from the motorcycle lender. This offering represents $5.4M of the total loan with the balance being owned by Yieldstreet’s Specialty Finance Fund I.

Term and cash flow

How do I get paid?

The portfolio has a target remaining term of 39 months. Investors are expected to earn monthly interest payments at an annualized target yield of 9.25%, net of all fees. Principal is expected to amortize over the life of the loan and will be repaid to investors as it is received from the consumer loan borrowers. The lender also has the option to buy back the portfolio in full when the amount owed to Yieldstreet is less than 10% of the total facility amount, i.e, $838K. If the lender decides not to exercise the buy-back option, then the portfolio will continue to amortize over an additional 5 months.

Assets

What is the collateral underlying the transaction?

The $8.4M portfolio consists of approximately 700 consumer installment loans backed by motorcycles. The criteria used to select the eligible underlying motorcycle loans included, but were not limited to, the motorcycle manufacturers, new versus used motorcycle collateral, borrowers’ state of residence, payment frequency, interest rate, and average term remaining.

On average, the loans in the portfolio are 12 months from their date of origination. Further to this, there were no known delinquent or defaulted loans in the portfolio as of the closing date. The average outstanding loan amount is approximately $13,750, with an average monthly payment of $363.

This offering does not have any overlap in consumer loans with Motorcycle Loan Portfolio I.

Highlights

Lender track record and experience

Performing loans

Lender incentive

Buy-back provision

This is Yieldstreet’s second investment with the lender. Motorcycle Portfolio I was first offered to investors during September 2020 and has been performing in line with expectations. Additionally, the actual cumulative loss of the portfolio was substantially lower at 0.73% vs. 3.15% projected through May 2021.
The lender is an experienced lender. Since its 2015 inception, the lender has originated, funded and serviced more than 9,700 loans totaling $87.3M in principal deployed across more than 560 dealers in 29 states.
The portfolio at closing consisted of performing, non-delinquent, and non-defaulted motorcycle loans. The underlying consumer loans have been performing in line with expectations for at least 12 months. The lender’s historical performance indicates that approximately 50% of the credit losses occur during the first 12 months of the loans. Given that each loan is at least 12 months old, the lender’s remaining historic loss rate is expected to be 2.65% going forward. However, the lender has assumed a loss rate of 3.1% in their projections. A more conservative loss rate was used to account for the event that defaults may increase as a result of the COVID pandemic. Despite this, delinquencies and defaults have occured at a lower rate over the past 15 months in comparison to pre-pandemic levels.
If monthly performance targets are not attained by the lender, then the lender will not collect its monthly 3.5% per annum servicing fee for such month. Only after Yieldstreet is paid in full will the lender be permitted to collect any deferred servicing fee for months where the performance metric was not attained.
As additional downside protection and to further help to mitigate the risk of adverse selection, Yieldstreet has a 90-day buyback provision in place, whereby the lender must buy back any motorcycle loans in the Portfolio that default within the first 90 days after the closing date.

Resources

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.

¹ Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

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]

³ "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

⁴ Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

⁵ Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

⁶ The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

⁷ Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

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