At Yieldstreet, we work with a variety of partners across each asset class to bring deals to market. Origination partners play the critical role of bringing opportunities to Yieldstreet for launch consideration on the platform. Yieldstreet only works with origination partners that are vetted by Yieldstreet’s internal Originations team. Let’s take a closer look at the role that an origination partner plays in the lifecycle of a Yieldstreet offering.
Before we jump into the role that origination partners play, let’s take a closer look at who exactly origination partners are.
Origination partners are a key element of the ‘supply’ side of Yieldstreet’s business. The term ‘origination partner’ is a catch-all for the mix of institutions that source and review deal opportunities. They are individuals or firms that Yieldstreet works with to identify the opportunities that ultimately become available on the Yieldstreet platform. They can include direct borrowers, brokers, banks, investment funds, real estate development firms, and other specialist institutions in their respective markets. Broadly speaking, the origination partner’s role is to source opportunities, perform borrower and collateral due diligence, and provide guidance on the terms of the underlying loan with the Borrower. Many originators also service the loan after it has closed. Origination partners also may themselves fund all or part of the underlying loan. Yieldstreet uses different underwriting criteria for each asset class to help determine the offerings on the platform.
The underwriting criteria may include requirements like deal size, the Yieldstreet portion of the loan, where the loan sits in the capital structure, the type of collateral securing the loan, loan length, rate, and other risk factors.
When the originator also services the loan, the origination partner also typically manages the transaction and the relationship with the Borrower. Origination partners are also expected to intervene if any issues arise, as they generally continue to hold a piece of the investment. The origination partners Yieldstreet typically works to provide varying levels of service as part of originating an opportunity and managing it throughout the course of its lifespan.
Most Yieldstreet opportunities are initially identified by one of three types of origination partners:
Originators can vary in size from a one-to-three person firm with specialists in their field to much larger institutions. Originators have historically included entities extending loans, such as private credit funds, private money lenders, and specialty finance companies. More broadly, they can include local, regional, and national banks, vertically integrated real estate development firms, and other specialist institutions in their respective markets.
Originators often commit their own capital in transactions and seek potential partners to co-fund or participate in the opportunity with them. Some have their own sourcing and sales teams to identify transactions, talk with potential borrowers, and publish underwriting or credit guidelines to generate visibility and deal activity. Originators often play the role of the servicer, wherein they manage the transaction, maintain the Borrower relationship, oversee payment processing, and, depending on the circumstances, may take the lead role in any workout or recovery process in the event of non-payment or default.
Yieldstreet may establish a lending relationship directly with a Borrower because of a Borrower’s need for capital, desire to accelerate growth or other business needs. These Borrowers are often underserved or ill-equipped to engage with traditional lenders like a local bank, national bank, or other sources of capital. They may also seek out alternative lenders such as Yieldstreet and its origination partners to benefit from expedited timing, familiarity with non-traditional asset types, etc.
The third major source of opportunities is introduced by brokers, bankers, and other intermediaries. These are individuals or firms who play a facilitating role because they have access to the investment and may be looking either to place the entire investment with an institution or break it up for sale to different parts of the market. Typically, brokers and bankers make introductions to Originators or directly to prospective Borrowers.
Yieldstreet looks to identify a number of key factors when evaluating a potential origination partner. Some of the characteristics we look for in origination partnerships are data-driven, while others are more subjective.
We look for origination partners that would be good partners for us to work with and who would be capable of managing the underlying loan. Some attributes we look for:
Data, of course, cannot replace subjective and qualitative assessments. We look at their reputation and who their own partners are when it comes to building relationships and identifying suitable origination partners.
The Yieldstreet Originations team and Investment Officers spend time to build relationships with a broad mix of origination partners in the marketplace. Typically the relationship starts by gauging deal flow and suitability within the Yieldstreet underwriting parameters for the specific asset class and we look for origination partners with the right experience and expertise.
The Originations team at Yieldstreet has regular conversations with a variety of potential origination partners as they bring in opportunities to be evaluated. When we discover an opportunity that meets our investment criteria, more details of the opportunity are fleshed out.
Due diligence to evaluate the origination partner
Yieldstreet tries to gain a thorough understanding of the origination partner’s track record so that we are comfortable that they are good at what they do, understand their industry, and conduct appropriate due diligence. We would also look carefully at the specific information about the transaction itself which we would use in our internal modeling and due diligence process to ultimately make a decision on whether to participate in the transaction.
Due diligence to evaluate the opportunity
The next step in this internal due diligence process is negotiations around the commercial terms, capital stack, and where we would be placed in terms of priority in the event of a default or non-payment.
Each asset class has its own set of attributes that are negotiated. But generally, we evaluate the key factors of each opportunity, which includes the loan-to-value ratio (LTV), the loan duration, and other details about the asset itself, as well as our priority as a secured lender in a default scenario.
Once an opportunity is funded, it will launch on our platform. From there, it is monitored by Yieldstreet’s Portfolio Management team. Depending on whether we have an external origination partner in place and the specific services that they might provide, there may be parts of the transaction that are directly handled by Yieldstreet after that.
Post closing, the origination partner acts as the primary servicer of the underlying loan. This means that the origination partner is responsible for all communications with the Borrower and monitoring of the underlying loan, which primarily consists of the following:
Cash management and administrative services. This includes, but is not limited to the following:
Performance and reporting requirements. The origination partner is responsible for monitoring the overall performance of the investment and ensuring that the Borrower remains compliant with all terms and conditions stipulated in the underlying loan documents. This includes adherence to all covenants (financial, reporting, and information) which could include any of the following:
Loan modifications and default-related workouts. In instances where the underlying loan needs to be modified or worked out, Yieldstreet supports the origination partner to assess the appropriate strategy. All workouts will typically involve the appointment of outside counsel and sometimes, depending on the complexity of the situation, a third-party consultant.
Yieldstreet’s internal Portfolio Management and Asset Class teams monitor the status of all transactions through the assessment of all reporting materials and through calls with the origination partner, typically on a weekly or monthly basis depending on the complexity of the investment.
In scenarios where a Yieldstreet entity, or affiliate, is the direct Lender to the Borrower, our internal team acts as the servicer and is responsible for all of the requirements stated above. In these instances, Yieldstreet will typically appoint a third-party servicer to handle the cash management and administrative servicing functions.
As you can see, the origination partner plays an important role in bringing forth the opportunities that Yieldstreet offers investors. They are also responsible for managing the underlying loan and act as important partners throughout the life of an investment. If you have more questions about our originations process, please contact us at [email protected].
This communication and the information contained in this article are provided for general informational purposes only and should neither be construed nor intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Any link to a third-party website (or article contained therein) is not an endorsement, authorization or representation of our affiliation with that third party (or article). We do not exercise control over third-party websites, and we are not responsible or liable for the accuracy, legality, appropriateness, or any other aspect of such website (or article contained therein).
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 a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
5 The Fund will cease investing and seek to liquidate the Fund's remaining portfolio no later than 48 months after the Fund's initial closing. It may take up to twelve months thereafter to fully monetize any remaining illiquid investments in the Fund's portfolio.
6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
7 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments 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 8th, 2021, after deduction of management fees and all other expenses charged to investments.
8 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.
No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.
Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.
Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.
Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.
Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.
Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.
Banking services are provided by Evolve Bank & Trust, Member FDIC.
Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.
Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.