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.