Public conviction brief

Aviation equipment SPV

Northstar Aviation Income I

Northstar Aviation Income I offers attractive contracted income and tangible collateral, with modeled returns that fit an income-oriented private-markets mandate. The decision turns on one issue: the exit case relies heavily on residual engine values that are supported by the sponsor's model but not yet by an investor-controlled appraisal. Advance only after that assumption is independently bounded and the waterfall is tightened.

01Primary blocker

Terminal value carries too much of the outcome.

The underwriting model attributes 38% of projected equity profit to terminal engine sale proceeds. A 25–30% impairment to exit values compresses the modeled IRR into the mid-single digits before transaction costs.

02Normalized economics

Target IRR16.8%Sponsor case

Cash yield9.1%Before investor tax

Expected duration4.2 yrsModelled

Collateral coverage1.48×Sponsor-stated

Leverage46%Loan to value

03Permanent-loss map

01 · high

Residual value concentration

A 25–30% impairment to exit values compresses the modeled IRR into the mid-single digits before transaction costs.

Require an investor-addressed appraisal, conservative sale-cost reserve, and a cash sweep if collateral coverage falls below 1.25×.

02 · high

Two-lessee concentration

Default may create unpaid rent, repossession cost, shop work, and extended remarketing downtime simultaneously.

Add minimum liquidity and DSCR covenants, plus lender consent limits on lease amendments.

03 · medium

Utilization and shop-visit timing

Lower utilization reduces rent and can accelerate maintenance cash needs.

Maintain a funded maintenance reserve sized to the severe overlapping-shop scenario.

04 · high

Leverage and covenant headroom

A simultaneous appraisal markdown and rent interruption can trigger a cash sweep, refinancing pressure, or enforcement before asset values recover.

Require quarterly collateral tests, minimum DSCR, cure rights, and a funded liquidity reserve before equity distributions.

04Evidence ledger

sponsor

Sponsor reports 12 realized aviation investments.

Ten realizations were matched to named entities; two remain sponsor-supplied.

Corroborated

asset

SPV will obtain first-priority title and security over six engines.

Draft title opinion supplied; closing searches are not yet complete.

Sponsor-provided

financials

Maintenance reserves cover the base-case scheduled shop visits.

Coverage holds in the base case but not when two shop visits overlap.

Corroborated

financials

Terminal engine values are independently supported.

The appraisal is sponsor-addressed and uses a narrower impairment range than DealFlo's stress case.

Unresolved

structure

LP capital is fully returned before sponsor carry.

The draft waterfall permits a GP catch-up before complete LP capital return.

Contradicted

05Deterministic scenarios

Base16.8% IRR

Sponsor case with DealFlo normalization of fees and timing.

92–100% estimated capital recovery

Downside7.4% IRR

One-year interruption and lower exit values.

78–88% estimated capital recovery

Severe downside-2.6% IRR

Lessee default, repossession, and stressed sale.

67–79% estimated capital recovery

Scenario outputs are deterministic sensitivities using stated assumptions. They are not forecasts or valuations.

06Questions before another meeting

What third-party evidence supports terminal values below the sponsor's base case?
How much funded liquidity is available if both scheduled shop visits overlap?
Which entity controls lease amendment, repossession, and sale decisions?
Will the sponsor accept a European waterfall and 1.25× cash-sweep covenant?
Which track-record realizations were independently audited or investor-verified?

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