North Shore Boston Multi-Family Equity

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Status

Closed

Recently funded

Accepting $5,000 - $1,000,000 investments

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Accepting $5,000 - $1,000,000 investments

Overview

Invest in an equity ownership of Eliot on the Ocean, a 94% occupied multi-family mid-rise apartment complex built in 2016 along Revere Beach in Boston’s North Shore suburb. The submarket where the property is located has emerged as a residential alternative to Boston and Cambridge due to its relative affordability, quality of life and easy commute to downtown Boston. The submarket has seen significant development over the past few years with institutional firms such as Rockpoint Group investing in the area.

According to CBRE, Greater Boston is the #1 life science hub in the U.S., anchored by leading academic institutions including Harvard and MIT, top research hospitals such as Massachusetts General Hospital and Brigham and Women’s Hospital, and some of the most innovative companies in the world such as Novartis, Moderna and Microsoft. The high salary employment opportunities, coupled with attractive cost-of-living relative to downtown Boston, have seen the population in Revere increase by 20% over the last decade, according to 2020 Census Data, increasing the demand for its luxury oceanfront apartments.

The sponsor, Invictus Real Estate Partners, is a New York-based real estate PE firm. For this offering, Invictus has opportunistically acquired the luxury apartment complex, charging one of the lowest rents along the Revere oceanfront. It plans to spend $1M to complete light cosmetic renovations prior to potentially increasing rents and benefitting from capital appreciation at time of sale.

The offering is expected to provide investors a targeted annualized net return of 14-16%, of which an annualized ~4% is expected to be distributed quarterly as current income. The balance of the returns are expected to be achieved via appreciation of the property at the time of sale. Since this is 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

Desirable location
Market dynamics
Quality asset
Experienced team
  • The modern developments along Revere Beach represent the high end of the submarket developments and combine easy accessibility to downtown Boston (25 minutes) with relative affordability and oceanside lifestyle/views. Rents for 1-bedroom units on Revere Beach can be ~$1,000 cheaper than comparable quality options in downtown Boston. The current and planned developments, including the 10.5 million square foot, mixed-use redevelopment of the Suffolk Downs racetrack, are creating an attractive living ecosystem for residents in the area and are poised to serve as additional demand drivers in the long run. According to the Boston Planning and Development Agency, Suffolk Downs is one of the largest development projects in the United States and is expected to create up to 30,000 full-time jobs when complete.

  • Costar reports that the submarket has been a prime target for development in the past decade, with inventory increasing by over 50% over this time, which is supported by the highest absorption of any submarket in the Boston area as renters seek affordability and quality of life. Submarket vacancy currently stands at 10.5% as new deliveries are being leased up and is expected to fall to 5% by 2023. Rent growth is projected to be 8% in 2022, averaging 5% per year over the next 4 years. The property is located on Revere Beach, which is a focal point of the submarket and where comparable properties have occupancies greater than 90%.

  • Eliot on the Ocean has unobstructed beach frontage and is in close proximity to the Wonderland T-stop, which provides direct access to downtown Boston. The property consists of 194 market-rate residential units with 219 parking spaces. Units feature in-unit washer/dryer, granite countertops, hardwood floors and island kitchen benches. Building amenities include an electronic doorman, outdoor deck, lounge, co-working space and fitness center. \ \ The property’s project basis of $450k/unit and the projected sale price of $557k/unit compare favorably with comparable sales and construction costs on Revere Beach. A 2019-built property in close proximity to the subject sold for $518k/unit in October 2021.

  • The sponsor, Invictus Real Estate Partners, is a New York-based, real estate PE firm founded in March 2020 by Eric Scheffler and Christopher Pardo. As of 5/31/21, Invictus has closed 8 transactions with total equity investment of $125M. Prior to Invictus, Eric was a director at the CMBS group of Bear Stearns, GC and MD at Madison Realty Capital where he worked on loan workouts, including foreclosures, on over 150 deals. Most recently, Eric was the principal and GC at Glacier Global Partners, a real estate PE firm. \ \ In addition to the experience of Invictus and its founders, the sponsor has also retained Greystar as property manager. Greystar is the largest property manager in the United States, managing approximately 415k units across the nation.

Essentials

Please refer to the Investment Memorandum in the Docs section for more details about this offering.

Capital structure

Where does Yieldstreet lie in terms of priority?

Yieldstreet’s $24.75M equity position is junior to ~$60.9M of senior debt. The senior loan was provided by an international investment management firm that has over $380B in AUM. The remaining equity was provided by the sponsor, Invictus Real Estate Partners.

Cash flow

How do I get paid?

Over the life of the investment, investors are expected to receive a target annualized return of 14% - 16%, net of Yieldstreet’s management fee and structuring fee as further described in the Investment Memorandum. Investors are expected to receive cash flows from two sources: ~4% of annualized income from property rents, which is expected to be paid quarterly, and the balance of the returns are expected to be achieved via appreciation at time of sale of the property, which is anticipated to be within 4 years.

Assets

What is the asset underlying the transaction?

Built in 2015, the luxury property consists of 194 market-rate residential units with 219 parking spaces. Units feature in-unit washer/dryer, granite countertops, hardwood floors and island kitchen benches. Building amenities include an electronic doorman, outdoor deck, lounge, co-working space and a fitness center.

As of 9/8/21, the property was 94% occupied with an average in-place rent of $2.3K/unit ($3.2/SF). During 2020, as a response to Covid-induced market weakness, the property manager reduced rents to boost occupancy. Signalling signs of recovery following the height of the Covid-19 pandemic, the 15 leases signed in August 2021 showed an average effective rent of $2.5k/unit ($3.5/SF), or 17.1% increase year-over-year from the prior year leases’ average. According to Costar, rent growth is projected to be 8% in 2022, trending to 3% per year by 2025.

Returns & Management fees

Ann'l management fee

2%

Target ann'l net return

14% - 16%

Inv share in excess profits

100%

Target equity multiple

1.6x - 1.8x

Target ann'l net cash yield

~4%

Schedule

Payment schedule

Quarterly + event based

Prefunded

Target term

48 months

Structure

Tax document

K-1

Offering structure

SPV

Expenses

Ann'l flat expense

0.25%

Slide 1 of 3
  • Returns & Management fees

    Ann'l management fee

    2%

    Target ann'l net return

    14% - 16%

    Inv share in excess profits

    100%

    Target equity multiple

    1.6x - 1.8x

    Target ann'l net cash yield

    ~4%

  • Schedule

    Payment schedule

    Quarterly + event based

    Prefunded

    Target term

    48 months

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Expenses

    Ann'l flat expense

    0.25%

Docs

Content

This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS IVC REQ II LLC. The Offering is made only by means of the Investment Memorandum relating to the Offering (the "Offering Document"). 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 Document, or as incorporated in the Offering Document 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 Document or in any marketing or sales literature issued by the Issuer or Yieldstreet Management, LLC, as adviser thereto, and referred to in the Offering Document, and, if given or made, such information or representations must not be relied upon. All investors must read the Offering Document in its 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.