For a year in which the debt markets were very volatile, Buck Financial Advisors was able to complete thirteen financings for charter schools across the country totaling almost $600 million.
The need to better serve America’s youth has never been more apparent than coming out of the Covid-19 crisis and lockdowns of K-12 schools. And a fairly decent subset of charter schools and charter management organizations continued to step up to the challenge in 2022. Through organizations ranging from the largest CMO operator in the country, whose operations span four states, to a stand-alone school in one of the smallest states, charter schools continued to expand their educational offerings and, in some cases, refinance debt for savings, using a wide-range of funding sources facilitated by Buck Financial Advisors.
IDEA Public Schools Florida continued its expansion across Florida with four projects financed in both Tampa and Jacksonville. Sources of funding included loans from CLI Capital, bonds issued in the capital markets for a brand-new campus, and of course the School of Hope’s Revolving Debt Program from the Florida Department of Education. IDEA Florida operated two previously financed schools in Tampa in 2022 and is now operating a total of four schools, having opened two in Jacksonville for fiscal 2023 in addition to the two operating Tampa schools.
IDEA Texas also continued its Texas expansion by financing additions to numerous existing campuses across the State, issuing about $94 mil in tax-exempt bonds through the Clifton Higher Education Finance Corporation. IDEA also successfully remarketed over $170 mil of taxable FRN notes issued in 2021, with the remarketing completed on a tax-exempt, long-term fixed rate basis just at the beginning of the capital markets becoming spooked by the prospect of Fed increases in interest rates. Sometimes a little luck goes a long way!
Las Americas ASPIRA Academy in Delaware financed its expansion into high school grades with the completion of a $20.9 mil tax-exempt bond financing through the Delaware Economic Development Authority. Las Americas ASPIRA is proof that quality comes in all sizes, as their program continues to obtain quality results for Hispanic families in Newark, DE. Their bonds were also completed early in the year, before the markets began their “yield rally”.
Great Hearts America has been operating successfully in Arizona and Texas for a number of years. In 2022, it increased its reach by expanding into Baton Rouge, Louisiana, financing the acquisition and construction of its first campus with a $22.5 mil loan from its long-standing partner bank, Arizona Bank & Trust. Great Hearts Louisiana will open up Great Hearts Harveston in August 2023 serving grades K-7.
KIPP Public Schools Northern California continued its expansion into the Stockton, California area with a $34 mil loan from the Equitable Facilities Fund to fund the rehabilitation of a an existing day-care facility and acquisition of up to 15 portable classroom modulars at KIPP Conway Homes, as well as fund the construction of a permanent elementary school facility for KIPP University Park. This represents the third financing from EFF for KIPP NorCal over the last four years.
BASIS Texas Charter Schools continued its expansion plans with a $43 mil tax-exempt note issued through Arlington Higher Education Finance Corporation. The note was purchased by Morgan Stanley, is callable in 2025 and has a final maturity of 2026. The funds financed the acquisition and Phase I and Phase II construction of BASIS Cedar Park near Austin. The financing received a Ba3 rating, as BASIS Texas works to increase its rating to investment grade by 2026 in order to qualify for entry into the Texas PSF Bond Guarantee Program.
Magnolia Public Schools in California completed two financings to find permanent facilities for lease campuses in the Los Angeles area. The first was a $3.2MM acquisition of a parcel adjacent to their MS#5 campus which will be used for expansion, and the other was a $24MM construction loan for their MS#5 to provide permanent facilities for that high-performing school. Funds were provided by CLI Capital in both cases.
Partnerships to Uplift Communities, operating in the San Fernando Valley of Los Angeles, completed an advance refinancing for savings (imagine that in this market!) of their 2014 tax-exempt bonds with a taxable loan from Equitable Facilities Fund. The $22.8 mil loan refinanced PUC Valley’s 2014 bonds issued through the California School Finance Authority and was PUC’s first loan from EFF.
Great Hearts America – Texas also continued its expansion by financing Phase II of its Lakeside campus in the Ft. Worth area. The $19. 4 mil bond issue has an underlying rating of Baa3 by Moody’s and are enhanced by the TEA’s Permanent School Fund’s Bond Guarantee Program.
Green Dot Public Schools California issued its $22.9 mil bond issue in 2022 through the California School Finance Authority. The bonds were rated BBB- by S&P Global, and utilized CSFA’s credit enhancement program to fund the DSRF. The 2022 bonds refinanced construction loans for Animo Ellen Ochoa Charter Middle School, as well as refunded for savings GDCA’s 2011 tax-exempt bonds issued for its Animo Inglewood Charter High school.
The vast majority of these financings were for long-time clients. Buck Financial Advisors is very grateful for the continued trust that our clients place in our ability to source the most appropriate type of financing for the situation. Six different sources of funding, from bonds to bank loans, were utilized for these thirteen financings. In a very challenging year in the financing markets, Buck Financial Advisors’ clients were able to further their missions to serve more kids and keep more money in the classroom.
We expect 2023 to be even more challenging, as real estate costs have not quite “caught down” to the increased cost of capital across virtually all markets. As will be discussed in a separate post, Buck Financial Advisors think schools need to adjust their discount rates used in the real estate planning process for the changing conditions from those in the last five years. But, whatever their needs, Buck Financial Advisors will do its best to ensure our clients’ ability to affordably serve their families. All the best in 2023.