Opus Bank is pleased to announce it provided:
- Title: Bridge Loan
- Amount: $7,700,000
- Month: March
- Year: 2016
A real estate private equity firm headquartered in San Francisco identified a value-add opportunity in San Francisco’s East Bay that was 100% occupied but required interior and exterior capital improvements in order to cure deferred maintenance and maximize the property value. Due to the property’s overall condition, it lagged submarket rents. Based on traditional lender underwriting and the depressed in-place operating income, the client’s equity would not have been sufficient to complete the acquisition.
The client’s business plan was to perform the improvements, increase rents, and place the property on the market rather than hold long term. Given the client’s investment experience within the submarket, they felt confident that a $2,100,000 capital renovation budget would be sufficient to bring the subject to market. The $58,000 per unit renovation plan was split between interior and exterior renovations. Interior renovations included new millwork, countertops, appliances and flooring. Exterior renovations included a clubhouse renovation, new roof, exterior paint, landscape upgrades, and resurfacing of the parking areas.
Opus Bank’s bridge lending program was a perfect fit for the client’s needs. Loan proceeds were based on as-renovated rents, and the loan was structured with interest reserves and renovation holdbacks as well as contingency amounts. The total loan amount of $7,700,000 was 93% of the purchase price. At closing, Opus Bank funded $5,330,000 with future advances to be made monthly as costs were incurred. When fully funded the total loan amount will represent 71% of total project costs. The loan was open to prepayment at par after 12 months.