TMC Financing recently helped Cleveland O’Neal III, owner of Connection III Entertainment Corp., purchase a $1.22 million building in a commercial multi-use loft complex in Los Angeles, California. By utilizing the Small Business Administration’s (SBA) 504 Program, O’Neal was able to purchase the property with only a 10 percent down payment and a 20-year, below market interest rate.
Founded by O’Neal, Connection III Entertainment Corp. is an award-winning, Emmy-nominated producer/distributor of TV series, movies and specials, including four nationally syndicated weekly TV series. Its broadcast TV franchise, MADE IN HOLLYWOOD, is currently in its 15th season on nationally syndicated TV airing on major station groups, including CBS and FOX O&O’s, and is available in over 107 million U.S. homes.
As one of very few African American-owned broadcasters, the company is excited to have just launched its new 24/7 MADE IN HOLLYWOOD digital streaming network on STIRR, a free ad-supported streaming service, and its new MADE IN HOLLYWOOD app on Roku. Connection III is also a proud recipient of the 2007 Arts and Entertainment Company of the Year Award from the City of Los Angeles and the SBA.
After over a decade as a leasing tenant in a pricey Los Angeles high rise, O’Neal asked himself during a challenging lease renewal negotiation, ‘Why should I continue to pay excessively high rent each month to another property owner when I could be the property owner and lower our operating expenses?’
“I’ve always wanted the stability of owning our business facility,” explains O’Neal. “Our business model has always been to own the content of our shows, I knew we should own our facility, too. We now have a stable operating location and our mortgage is 50% less than our prior rent.”
The SBA 504 loan is a second mortgage loan that is guaranteed by the SBA. This loan is combined with a first mortgage provided by a conventional lender, representing approximately 50 percent of the total project cost. Mark Morales with City National Bank facilitated the first mortgage for O’Neal.
“It was a great experience all around in helping my long-term client find the best type of financing for his first commercial real estate purchase,” states Morales. “Now his business has a permanent home with a fixed mortgage payment for 25 years, positioning him for long term growth and success.”
John Rockwell, Business Development Officer that handles the Los Angeles territory, facilitated the deal on behalf of TMC Financing. “The 504 program was a perfect fit for O’Neal,” explains Rockwell. “He now has a sense of security and never has to worry about his rent skyrocketing or being displaced without warning. He is in full control of his occupancy costs.”
Connection III has settled into their new space fittingly. Following modest build-out construction, the new office building easily accommodated their large custom-built digital floor to ceiling green screen studio, TV control room, administrative/executive offices, production suites and post-production bays brought over from their previous space. The below-market, long term rate has stabilized and reduced Connection III’s occupancy costs, giving them the opportunity to conserve more capital.
“It feels wonderful to be able to focus on my business and not worry about our location. It truly feels like our home and I couldn’t be prouder to be the owner of the space,” declares O’Neal.