You just put money to work in one of our investment offerings. What happens next? Over the lifetime of an investment, you may see money flowing back into your account not only in different dollar amounts but also in varying time intervals. In this article, we’ll explain why this occurs.
Once your investment is marked active in your portfolio, it begins earning interest. Accrued interest is interest that an investment is earning, but has not paid out yet. Depending on the type of offering, you could be paid your accrued interest monthly, quarterly, on an event-based basis, or upfront.
Depending on the offering structure, a flat annual fund expense will be paid from interest that you’ve earned. Once this expense is satisfied, future interest distributions are made directly to your account. Read more about fund expenses orwatch our video that describes the process.
Some of our offerings have predefined payment schedules that pay interest monthly or quarterly. Although your investment is earning interest daily, that interest is distributed to you during defined intervals. It is important to note that the timing of payments each month may vary by as many as 30 days. This lag is attributed to processing time (funds must flow from the Borrower to the Originator, to Yieldstreet, then processed to investors), and each underlying Loan’s payment grace period as outlined in the underlying loan documents. As an example, please review this infographic on receiving payments for real estate offerings.
Some offerings have event-based payment schedules. Event-based payments are most commonly associated with legal investments offered on the Yieldstreet platform. “Event-based” means that investors receive payments following an “event” — i.e. when individual cases within a portfolio settle (this is also called a “settlement event”). Those payment dates and amounts cannot be pre-determined because the timing of when cases will settle in court is unknown.
When investing in a portfolio of multiple cases, an investor can expect to receive several different payments throughout the targeted length of the investment, depending on the rate of settlement activity. Sometimes several settlements may occur in the same month and trigger multiple payments, other times there may be longer periods where no settlements occur and therefore no payment distributions are made. Similar to Real Estate payments, event-based payments take time to be received and processed, it can take roughly 11-17 business days in processing. This infographic outlines how cash flows from the litigation funding company to Yieldstreet investors, for additional details.
Further, some investments, most commonly short-term Marine investments, may make a single upfront interest payment for the duration of the loan. It’s important to read the details of each individual investment to understand the expected payment schedule. Typically, this type of upfront interest investment with a 6-month duration has a maturity date that is 180 days (6 months) from the funding date. The funding date is when Yieldstreet funds the investment. Investors will receive interest from the date their investment became active to the date of maturity, which may be less than the full 6-month target duration stated.
Depending on the investment structure, you may also receive principal payments during the lifetime of an investment. In a litigation portfolio, for example, this can occur after a settlement event when proceeds are distributed to investors. It is important to note that interest accrues on the entire outstanding principal balance of the portfolio of advances or cases. The breakout of principal vs. interest paid will depend on how much interest has accrued on the overall portfolio at the time a case (or cases) settle. This infographic outlines the repayment of interest and principal.
In a real estate offering that consists of a portfolio of multiple loans, the individual loans often have varying maturity dates. For example, if there are two distinct loans in the portfolio, Loan A may be set to mature in 10 months and Loan B may be set to mature in 12 months. So, investors should expect to receive a portion of their principal back after 10 months and the remaining outstanding principal after 12 months. It is also important to note that there is a chance that the borrower could pay back in full, or a portion of the loan, sooner or later than its expected maturity. This is the nature of bridge loans. The maturity dates of all loans included in a portfolio are always outlined in detail in the offering’s Investment Memorandum. The Investment Memorandum is available to download on the offering page, and is also accessible in your portfolio for any active investments.
Offerings at Yieldstreet can have predefined interest payment schedules or payments with varying intervals. Similarly, principal may be returned throughout the term of the investment, with the remaining principal balance continuing to accrue interest until maturity. It’s important to understand the payment structure of each individual offering. These details can be found in the Investment Memorandum or Series Note Supplement which is posted to each investment’s offering page.
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 June 4th, 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.
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