Private Credit

Consumer Goods Leasing Portfolio I

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Accepting $10,000 - $500,000 investments

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Accepting $10,000 - $500,000 investments

Overview

Invest in a secured portfolio of 1,000+ consumer leases backed by a range of consumer products such as home appliances, lawn and garden equipment, furniture, jewelry, among others.

Key Takeaways:

Attractive weekly income: The portfolio of leases is expected to pay weekly income at a target annualized net yield above traditional fixed income.

Leases purchased at a discount: Leases are expected to be purchased at a 33% discount to help enhance principal protection.

Buy-back and replacement provision: The Originator is obligated to purchase or replace all leases that default or repay early.

Conservative loss assumptions: In the unlikely scenario the Originator does not fulfill their obligation mentioned above, the portfolio is structured to withstand up to approximately 1.4x historical losses without impacting the target yield and up to 2.1x historical losses before losing any principal.

Collateral backed leases: The leases are backed by the purchased assets, which could be repossessed and sold in the event of default.

Amortizing leases: The term of the portfolio may be shorter than anticipated given principal prepayments made by consumers. In fact, based on historical performance and projected payments, investors can expect to receive their invested principal in approximately 20 months.

Premise

Investing details

What am I investing in?

  • Yieldstreet partnered with the Originator to purchase up to $10M in principal value of newly originated consumer installment leases at a 33% discount of the total lease balances.
  • The portfolio is expected to consist of 1,000+ consumer leases for a variety of consumer purchases ranging from home appliances, lawn and garden appliances, jewelry, electronics, furniture, automotive accessories, and pets.
  • All leases purchased must be performing and consistent with the overall geographic, product type, FICO score, and other makeup of the Originator’s larger portfolio.
  • The weighted average term of the leases in the portfolio is 36 months with a maximum term of 52 months.
  • The investment includes an up to 6-month investment period, followed by an up to 36-month amortization period in which principal and interest will be returned to investors as it is paid by the borrowers according to a waterfall.

Investment Strategy

What is the value proposition?

  • The portfolio is expected to be purchased at a discounted price, and is structured with conservative loss assumptions and buy-back provisions to help provide downside protection.
  • The leases are expected to be purchased at a 33% discount of the total lease balance to provide principal protection.
  • Furthermore, the Originator is obligated to purchase or replace any and all leases that default or repay early at a discounted price.
  • This obligation exists throughout the full life of the leases; however, if this obligation was not fulfilled, the portfolio would be structured to withstand up to 1.4x historical losses without impacting the target yield and up to 2.1x historical losses before losing principal.
  • The investment was also structured to align the Originators' interests with investors as their income will be received at the end of the transaction, after Yieldstreet has realized its preferred return, and the Originator’s departure from the program would negatively impact its liquidity and its ability to grow.
  • While the target term is 35 months, investors can expect to receive their invested principal after 20 months based on the portfolio's weighted average life (WAL).

Behind the investment

Who is the originator?

  • The Originator is a consumer finance firm founded in 2008 that offers small-ticket consumer lease-to-own opportunities for a wide range of consumer products through 1,000+ active merchants across 46 states.
  • The CEO and Founder of the Originator held senior positions at other consumer finance companies prior to developing his proprietary lease underwriting model and founding the Originator.
  • The rest of the management team has decades of experience in the consumer finance industry. The Originator is partnered with over 1000+ active merchant retailers across 46 states to originate eases.
  • Since 2014, the Originator has originated and funded more than 28,000 leases totaling over $118M in principal deployed. The Originator’s existing credit facilities support approximately $50M worth of leases.
  • The Originator has proprietary underwriting guidelines developed to maintain quality and consistent lease portfolio performance. The criteria include, but are not limited to, minimum income requirement, credit score requirement, and employment requirement.

Market Backdrop

The importance of and reliance on specialty finance firms

  • Specialty finance can be broadly defined as any financing activity that takes place outside the traditional banking system.
  • Following the Global Financial Crisis (2007-2009), banks and larger financial institutions were forced by a combination of market conditions and increased regulations to significantly tighten their lending standards.
  • This financial conservatism has essentially closed off the traditional credit market to many consumers and small businesses, opening the door to specialty finance firms to play a larger role in providing structured finance options to these borrowers.
  • Regulatory reforms designed to strengthen traditional lenders’ balance sheets have caused them to become more conservative and provide less credit to large swaths of the economy, including specialty finance companies.
  • This reduction in capital available to specialty finance companies has created an opportunity for new lenders to step in and provide additional financing to help these companies grow.

Essentials

Please refer the Series Note Supplement for more details regarding the offering.

Capital Structure

Where does Yieldstreet lie in terms of priority?

  • Yieldstreet expects to purchase up to $10M of newly originated consumer installment leases from the Originator at a discount for an aggregate purchase price of approximately $6.35M.

Cash Flow

How do I get paid?

  • Investors are expected to receive weekly distributions during the amortization period, which is expected to start in June or July 2023

  • The portfolio has a maximum term of 52 months; however, a target term of 35 months is expected after accounting for early repayments and cash flow sweeps. There is no guarantee that the target term will be achieved.

  • As cash flows are received, unpaid fund expenses, reserve amounts, Yieldstreet’s management fees and annual member expenses are deducted first, and then capital contributions are returned to investors. Next, the remaining proceeds are paid to investors. Please refer to the Operating Agreement for more details.

Accessibilty

Who is eligible to invest?

  • Eligible investors must verify that they are accredited investors. Please refer to the Series Note Supplement for more information.
  • YS IRA accounts are eligible to invest in this offering.

Exclusive tiered pricing available

  • We are currently offering a management fee reduction to investors that meet a certain investment threshold.
  • Per the adjacent graphic, if an investor allocates $250,000 to the deal they will receive a 0.25% reduction bringing their effective management fee to 1.50% on their entire investment.

Returns & Management fees

Annual management fee

1.75%

Target annual net yield

9%

Schedule

Interest payment schedule

Weekly

Target term

35 months

Stated maturity

52 months

Weighted average life

20 months

Structure

Tax document

1099

Offering structure

BPDN

Annual flat expense

0.25%

Slide 1 of 3
  • Returns & Management fees

    Annual management fee

    1.75%

    Target annual net yield

    9%

  • Schedule

    Interest payment schedule

    Weekly

    Target term

    35 months

    Stated maturity

    52 months

    Weighted average life

    20 months

  • Structure

    Tax document

    1099

    Offering structure

    BPDN

    Annual flat expense

    0.25%

Docs

Content

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.