Opus Bank’s Structured Finance division provides a $7,500,000 bridge loan for the acquisition and renovation of a 112 unit apartment building located in Rancho Cordova, CA
Overview of Transaction
- The client is a professional real estate investor with experience executing value-add repositioning business plans. The client identified a property that suffered from curable exterior deferred maintenance while at the same time needing very little interior work.
- To maintain occupancy, the existing owner had kept rents below market, and our client realized that with a modest exterior renovation, significant upside potential could be unlocked. The subject and the submarket were experiencing strong occupancies, but going-in cash flow was below breakeven debt coverage based on traditional underwriting.
Significance of Transaction
- The mortgage broker was aware that Opus Bank is active in bridge lending and especially so for multi-family properties.
- The client prepared a proforma looking out 12, 24 and 36 months with a detailed renovation budget of approximately $550,000 ($4,900 per unit). The renovation plan included repairing sections of exterior siding, trim, decks and enclosures, plus replacing windows and remodeling the existing clubhouse.
Opus Bank's Role
- Opus Bank’s bridge and construction lending expertise was a perfect fit for the client’s needs. Loan proceeds were based on an as-stabilized valuation and the loan was structured with interest reserves, hard and soft cost holdbacks plus contingency amounts.
- The total loan amount of $7,500,000 was 83% of the purchase price. At closing, Opus Bank funded $6,950,000 with future fundings to be made monthly as needed. When fully funded, the total loan amount will represent 77% of total project costs.