Scarborough, ME
An early 1900’s, 4-square design, home that has been zoned for commercial use and was fully renovated into a commercial real estate office. It is in a rare location along Route 1 in the bustling Dunstan Square area of Scarborough, ME. This sought-after location includes a spacious 0.88 acre lot with 99′ of frontage giving exceptional exposure to over 18,000 passing cars daily.
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BPDNx
SENIOR BPDN - PROMISSORY NOTE SECURED BY COLLATERAL SECURITY AGREEMENTTHIS PROMISSORY NOTE IS SECURED BY THE ISSUER'S PLEDGE OF THE RELEVANT UNDERLYING COLLATERAL LOAN (AS DEFINED BELOW) TO THE LENDER (AS DEFINED BELOW) UNDER THE COLLATERAL SECURITY AGREEMENT AND PROMISSORY NOTE. HOWEVER, EXCEPT TO THE LIMITED EXTENT PROVIDED IN THE PROMISSORY NOTE WITH RESPECT TO THE UNDERLYING COLLATERAL LOAN, THIS NOTE IS NON-RECOURSE TO THE ASSETS, FUNDS AND ACCOUNTS OF YIELDI, LLC (THE "BORROWER", "COMPANY" OR "ISSUER") OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, STOCKHOLDERS, PARENTS, OR SUBSIDIARIES EXCEPT TO THE EXTENT OF THE VALUE OF COLLATERAL LOAN NET PAYMENTS ACTUALLY RECEIVED IN RESPECT OF THE UNDERLYING BORROWER LOAN.
Example Return on Investment
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Investment Amount:
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Annual ROI:
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Why We Like This Opportunity
Property Highlights
An early 1900’s, 4-square design, two-story home that has been zoned for commercial use and was fully renovated into a commercial real estate office. It is in a rare location along Route 1 in the bustling Dunstan Square area of Scarborough, ME. This sought-after location includes a spacious 0.88 acre lot with 99′ of frontage giving exceptional exposure to over 18,000 passing cars daily. The first floor includes a reception area, breakroom, conference room, half bath, and 3 offices with an additional 4 offices and half bath located on the second floor. There is a detached 3-car garage located on the property along with a newly paved parking area.
About the Neighborhood
Scarborough is a coastal town located about 7 miles south of Portland and is part of the Portland-South Portland-Biddeford metropolitan statistical area. The population was 22,135 at the 2020 census, making it the most populous town in Maine. The subject is located on US Route 1, south of the intersection of Route 1 and Route 9. The subject neighborhood is mixed in character with a combination of residential, retail, office, service businesses, and motels in the area. The subject is bordered by residential properties to each side, with other commercial and mixed-use properties along Route 1. Situated on a major road through the area, the location is easily accessible with good visibility.
Why We Like This Opportunity
This is a first position mortgage with an excellent loan to value ratio of 55% with a property value of $1,100,000 and a loan amount of $615,000. The borrower purchased this property in cash and completed an extensive renovation. She is occupying this building with her real estate brokerage of over 27 agents. The borrower is one of the top agents in Maine, typically selling anywhere from 60-90 properties a year. She owns multiple properties in the area that she has renovated, leased, and more than doubled rents on. She has a takeout through an SBA loan that is working to refinance her into a long term hold to add to the borrower’s portfolio.
Seniority
The first-priority mortgage lien position is the most senior and highest priority within the capital structure. In the event that a borrower defaults, the lien priority determines the order in which lenders are repaid. Senior lenders are always repaid first. All subordinated positions, including the amount held by the Originator and its investor syndicate, act as a buffer in the event of a deterioration in the Properties’ value.
Personal Guarantee
The Loans are personally guaranteed by the borrower, spouse, and all principals in the LLC. Additionally, the Sponsor and/or Guarantor are obligated to contribute monthly payments to maintain a tax and insurance reserve. Failure to adhere to reserve contribution requirements would lead to the triggering of a debt service and operating expense/shortfall guarantee.
Upfront Reserve
The Loan is structured with interest reserve for further protection. 12 months of debt service payments will be collected at closing.What Should I Consider?
Borrower Risk
The Borrower may not have represented itself accurately. Risk Mitigation- The Originator checks the Borrower's credit history via a third-party credit reporting company. The Borrower has a 700 credit score.
- The Originator considers the underlying asset to be the primary source of security.
- If the Loans are not fully repaid after the Lender has exhausted other sources of repayment, the Borrower has provided a personal guaranty to fulfill any deficiency.
Default Risk
The Borrower may default on his financial obligations. Risk Mitigation- If the Loans are not fully repaid after the Lender has exhausted other sources of repayment, the Sponsor has provided a personal guaranty to fulfill any deficiency.
- In the event of a default, a direction letter signed at closing by the Borrower will be sent redirecting the Tenant to make rent payments into an account controlled by the Originator.
Vacancy Risk
The Tenant may vacate the leased properties. Risk Mitigation- The Tenant is an investment grade rated company with sizable financial resources.
- Under the triple-net leases, the Tenant is under multi-year contract to pay rent with no option to terminate.
- If the Tenant decides not to renew any of the leases or to vacate the leased premises, the Borrower will pay for an appraisal of the property “as vacant” and the borrower will have to provide the additional cash collateral and/or pay down the loan (or any combination in between) within ten days of receipt of the appraisal in order to bring the property back to an LTV.
Investment Summary
Investors have an opportunity to invest in borrower payment dependent notes, the cash flow of which is dependent on the payment of interest and principal repayment on the Loans. Investors are scheduled to receive an annualized monthly interest payment of over the Loans' estimated remaining term of 12 Months. Principal is expected to be returned on or before maturity through a refinancing with a traditional bank loan. It is important to note that the Loans are eligible for prepayment, and principal may be repaid prior to the 12 Months estimated remaining term. If the Loans are paid off before maturity, investors are expected to receive at least three months of interest payments in addition to return of principal.
How Do I Get Paid?
This loan had an initial term of 12 Months with an option at Yieldi's discretion to extend. As of January 12, 2024 there are 12 Months remaining. Investors will immediately receive monthly interest payments at an annualized rate of on the principal balance over the life of the loan. If you invest in this loan in the middle of a month, you will receive a prorated interest payment for your investment for your first investment month and then full monthly payments thereafter. All payments are made automatically via ACH on the 1st of each month and investors all paid by the 10th of the month.
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