Yieldstreet

Last updated
YieldStreet Inc.
Company type Private
Industry
Founded2015;10 years ago (2015)
Founders
  • Milind Mehere
  • Michael Weisz
Headquarters
New York City
,
U.S.
Key people
Michael Weisz (CEO)

YieldStreet Inc. is an American financial services company based in New York City. [1] The company focuses on expanding access to private market investment products. [1] [2] YieldStreet provides investments in art, real estate, legal, and various other industries. [3] [4] [5]

Contents

History

YieldStreet was founded by Milind Mehere and Michael Weisz. [3] [6] [7] Mehere was previously a co-founder of Yodle and Weisz had held leadership positions with Soli Capital and American Medical Concierge across the specialty finance spectrum. [8]

YieldStreet acquired Athena Art Finance from The Carlyle Group for $170 million in April 2019. [9] YieldStreet then acquired WealthFlex to integrate a self-directed IRA functionality for their investors later in 2019. [3]

The YieldStreet Alternative Income Fund (formerly known as the YieldStreet Prism Fund [10] ) was introduced in March 2020 as a multi-asset closed-end fund with quarterly distributions, [11] that contains a blended portfolio of asset classes and cash, allowing investors to access multiple alternative asset classes with a single investment. [11] YieldStreet's individual offerings are typically only available to accredited investors, but the YieldStreet Alternative Income Fund does not involve any income or net worth minimums. [2] [4] [12]

In November 2021, YieldStreet launched the Art Equity Platform, which holds a portfolio of artwork from after World War II, as well as contemporary and modern contemporary art. People are able to invest in the art and earn returns of 15 to 17 percent. [13]

In April 2022, YieldStreet announced that it would allow its users to invest in startups, and that the first companies included were Flutterwave and Fetch Rewards. The arrangement is made in partnership with Greycroft. [14]

In August 2022, YieldStreet announced the closing of a $400 million credit facility from Monroe Capital, which is dedicated to pursuing new and compelling investment opportunities that further widen the scope and number of available offerings on YieldStreet's platform. [15]

In November 2023, YieldStreet has announced the acquisition of Cadre, an online real-estate-focused investment platform aimed at institutional and high net worth investors. [16]

Track Record

According to YieldStreet's own statistics as of 12/31/2024, 74.8% of their investment offerings have matured, with $4,79 billion total invested and $2.3 billion in investor returns with a net annualized return (IRR) as of 6/31/2024 of 9.6%. According to the footnote #6 on the YieldStreet platform, this is an average net realized IRR with respect to matured investments and therefore does not include active or defaulted investments in the calculation. [17]

In addition to the 74.8% matured offerings, 18.4% are active, 4.3% have a modified outlook [17] (i.e. not performing according to initial expectations), [18] and 2.7% have defaulted. Below is a breakdown by asset class: [17]

Portfolio Overview [17]
Asset ClassActiveDefaultedMatured
Art614
Crypto300
Legal10263
Other56032
Private Credit25454
Private Equity200
Real Estate361276
Short Term Notes22095
Transportation268
Venture Capital500

In 2023, YieldStreet crossed $2 billion in principal and interest returned to their investors since inception. [17]

In August 2020, the Wall Street Journal reported that "YieldStreet disclosed that 14.7% of the money investors plowed into the firm involved loans that wound up in default as of March." [4]

Partnership With Adam Neumann

Adam Neumann, the founder of WeWork, is the sponsor of two YieldStreet investment offerings via his real estate startup Flow, Stacks on Main in East Nashville and 2010 West End Avenue in Downtown Nashville, both residential apartment buildings. As of 1/12/2024, both properties were facing a cash flow deficit and had to raise new capital in the form of member loans to bridge the gap. [19]

In an update to investors as of 8/20/2024 regarding the equity investment in 2010 West End Avenue, YieldStreet announced "The property needs further capital contributions to continue operations. However, YieldStreet and the Sponsor do not find it prudent to put more equity into this deal given the current capital structure and the aforementioned market backdrop. At this time, the common equity investment is materially impaired, and repayment at any level is not clear." [20]

Marine Default

Yieldstreet attracted attention in 2020 for an $89 million default in their marine portfolio, with YieldStreet alleging in federal district court in Manhattan that the borrower, the Lakhani family, "literally lost track of many vessels, some larger than three football fields." [21]

Shortly thereafter, Yieldstreet obtained an injunction from the UK High Court that froze $76.7 million in Lakhani family assets. [22] The recovery remains ongoing. [21]

Generation Atlanta Default

In 2020, YieldStreet invested a $23.3 million equity stake in Generation Atlanta, a luxury multi-family complex built in 2020 in Downtown Atlanta. Although according to the YieldStreet website the status of the investment is "Fully repaid", the property's owner, Frankforter Group, who is also the sponsor of the YieldStreet equity offering, [23] defaulted on the $104.4 million mortgage resulting in complete impairment of the equity investment. The foreclosure auction was scheduled for September 3, 2024. [24]

Lawsuits

In November 2024, Sonn Law Group, along with Peiffer Wolf, secured a preliminary settlement of up to $9.95 million for investors in three YieldStreet private funds: Vessel Deconstruction I, Vessel Deconstruction III, and Louisiana Oil and Gas. After extensive negotiations, a settlement was reached and Southern District of New York U.S. District Judge Victor Marrero granted preliminary approval. The proposed settlement includes a $6.2 million cash fund for the investors, as well as a waiver of $2.75 million in fees. [25]

Capital raise and potential sale

As of November 22,2024, YieldStreet is in talks to raise another round of capital. YieldStreet has hired advisors and is targeting $75 million to $100 million for the round. They reportedly are also considering a sale or a combination capital raise plus sale but the timing is unclear. [26]

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References

  1. 1 2 Tan, Gillian; Boston, Claire (February 25, 2021). "YieldStreet Weighs Options Including Sale, Starting Own SPAC". Bloomberg News . Retrieved October 7, 2021.
  2. 1 2 Fuscaldo, Donna (January 8, 2019). "YieldStreet's Alternative Investment Marketplace Booms In Times Of Volatility". Forbes . Retrieved October 7, 2021.
  3. 1 2 3 Azevedo, Mary Ann (2 June 2021). "Yieldstreet raises $100M as it mulls going public via SPAC, eyes acquisitions". TechCrunch .
  4. 1 2 3 Lim, Dawn; Michaels, Dave (August 12, 2020). "Two U.S. Agencies Examining Investments Sold by Crowdfunding Site YieldStreet". The Wall Street Journal .
  5. ↑ Saul, Josh; Boston, Claire (November 8, 2018). "Populism Comes to Wall Street: YieldStreet wants to make exotic bets available to individual investors online". Bloomberg L.P.
  6. ↑ Baer, Drake (June 19, 2020). "On Tuesday we're talking with YieldStreet CEO Milind Mehere about how to find product-market fit fast, the essentials of startup leadership, and how fintechs can navigate the downturn". Business Insider .
  7. ↑ Baer, Drake (June 23, 2020). "Yieldstreet founder Milind Mehere". Insider Inc.
  8. ↑ "Michael Weisz Founder & President YieldStreet". Greenwich Economic Forum . March 18, 2020.
  9. ↑ Dafoe, Taylor; Schneider, Tim (April 10, 2019). "Athena Art Finance Was Founded With $280 Million in Funding. It Was Just Sold for Only $170 Million". Artnet .
  10. ↑ "Yieldstreet Alternative Income Fund". Yieldstreet Alternative Income Fund - Official Website. October 9, 2024.
  11. 1 2 Fuscaldo, Donna (February 18, 2020). "BlackRock Makes Alternative Investment Push With YieldStreet Partnership". Forbes .
  12. ↑ Fitzgerald, Maggie (June 2, 2021). "Alternative investments platform Yieldstreet raises $100 million amid pandemic growth". CNBC .
  13. ↑ Frank, Robert (2021-11-12). "Yieldstreet launches fund for smaller investors to bet on art". CNBC. Retrieved 2021-12-02.
  14. ↑ Zerucha, Tony (April 12, 2022). "Yieldstreet Adds Startup Investments in Greycroft Partnership". Crowdfund Insider. Retrieved April 15, 2022.
  15. ↑ "Yieldstreet Closes $400MM Credit Facility From Monroe Capital". ABF Journal. 9 August 2022. Retrieved 9 August 2022.
  16. ↑ "Yieldstreet To Acquire Online Investment Platform Cadre, Ushering in a New Era of Private Market Alternatives Investing" . Retrieved 30 November 2023.
  17. 1 2 3 4 5 "Yieldstreet, By The Numbers". Yieldstreet. 9 February 2023. Retrieved 9 Feb 2023.
  18. ↑ "Yieldstreet investor communication policy". www.yieldstreet.com. Retrieved 2025-01-05.
  19. ↑ Cavanaugh, Isabella Farr and Suzannah (2024-01-12). "Adam Neumann's Flow faces cash crunch at Nashville properties". The Real Deal. Retrieved 2025-01-02.
  20. ↑ Nicoll, Alex. "Adam Neumann's new startup Flow faces trouble in Nashville". Business Insider. Retrieved 2025-01-02.
  21. 1 2 Boston, Claire (May 8, 2020). "YieldStreet Investors Are Learning the Meaning of High Risk". Bloomberg.com .
  22. ↑ Boston, Claire (October 6, 2020). "YieldStreet Wins $77 Million From Family It Accused of Fraud". Bloomberg Law .
  23. ↑ "Atlanta Multi-Family Equity I - Yieldstreet". www.yieldstreet.com. Retrieved 2025-01-02.
  24. ↑ Staff, T. R. D. (2024-09-03). "Frankforter Group faces foreclosure notice at downtown Atlanta apartments". The Real Deal. Retrieved 2025-01-02.
  25. ↑ "Sonn Law: Yieldstreet Investors Reach Preliminary Approval of $9.95 Million Class Action Settlement". Wall Street Journal. 2024-11-14. ISSN   0099-9660 . Retrieved 2025-01-05.
  26. ↑ Beltran, Luisa. "Yieldstreet seeks $75-$100 million in new funding as the investment platform weighs sale". Fortune. Retrieved 2025-01-05.
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