LOS ANGELES—To ensure a speedy transaction, the American Musical and Dramatic Academy secured a short-term hard-money loan for the acquisition of its new office building in Hollywood. In an earlier story, GlobeSt.com reported that AMDA purchased the 19,750-square-foot office building from Hello & Co. for $10 million. AMDA financed 50% of the purchase with a loan funded by Lone Oak Fund.

“The Hollywood market is very hot right now,” Alexa Mizrahi, a senior loan officer at Lone Oak Fund, tells GlobeSt.com. “The buyer needed a quick close to beat out the competition. A successful close of escrow was imperative for this buyer to expand its current campus.” The loan has an 18-month term with 8.3% interest only. Because the borrower was able to secure this type of short-term loan with 50% cash down, the transaction was complete in less than 30 days.

An 8.3% interest rate may sound high for a bank loan, but for a short-term interest only loan, Mizrahi explains that it is extremely competitive. “The advantages of using hard money include speed, service, and certainty of execution. Lone Oak Fund never has a prepayment penalty, so the borrower can pay us off with a less expensive bank loan as soon as interior improvements are completed,” she says.

Nicholas Roussos of Avison Young secured the funding on behalf of the borrower. AMDA plans to invest additional capital into the property for interior improvements. Once those improvements are complete, AMDA will be eligible for more traditional financing options. This property was ideal for the buyer because it is located within close proximity to its other Hollywood campuses and locations.