Buck Financial Blog

IDEA Louisiana both solidified its existing operations and set the table for further expansion in Baton Rouge, with the closing of two acquisition financings in October 2020.

IDEA Innovation Academy has been operating since the fall of 2018 in a facility owned by New Schools for Baton Rouge and leased to IDEA.  The facility is approximately 75,000 sq. ft. and sits on about 10 acres.  With a $17.5 million loan from the Equitable Facilities Fund, IPS Enterprises, Inc. has acquired (through a related entity) the facility which Louisiana will continue to lease.  This financing culminates a multi-year effort to acquire the facility with permanent financing, and will save Innovation hundreds of thousands in lease payments going forward.

Innovation is a K-9 academy serving just under 800 students in the 2020-21 school year, up f rom just under 600 in fiscal 2020.  Located in South Baton Rouge, last year Innovation was in the top 10 schools in Louisiana for growth in their academic results, along with its sister school, IDEA Bridge Academy.

Additionally, IPS Enterprises, Inc. closed on a land acquisition loan for their third campus in Baton Rouge.  This loan was provided by Home Bank, and allowed IPS to take down the land without further extending the PSA.  Home Bank and Blue Hub have both approved construction loans, but the timing of the land takedown necessitated a quicker turnaround, so Home Bank agreed to make the take down loan.  The $16 million total in construction loans should close within the next 60 days or so, and will finance the construction of an approximately 75,000 sq. ft. facility on approximately 15 acres.  This third Baton Rouge academy of IDEA’s will open in Fall 2021 in temporary facilities, and is expected to move into the new facility in January 2022.

Buck Financial Advisors LLC served as Financial Advisor on both transactions.  Hunton Andrews Kurth served as borrower’s counsel on both, and Baker Donelson served as counsel to IDEA Louisiana for both.  Thank you to the lenders on each transaction, and congratulations to the students, families and staff of IDEA Louisiana.

In October 2020, BASIS Baton Rouge completed a financing to acquire a site and construct their second school in Baton Rouge, a primary school to serve grades K-5.  The site will be called the Mid-City campus and is located on Florida Blvd.

BASIS opened its first campus in Baton Rouge in fall 2018, a K-6 school enrolling approximately 680 students in fiscal 2021 (BASIS Baton Rouge – Materra Campus).  Consistent with other BASIS network schools around the country, the Materra campus has already achieved compelling academic results, including significantly outperforming the local district even in its first year of operation, very strong student retention, and a wait list equaling enrollment.

The Mid-City campus will open in Fall 2021 and ultimately serve 720 students in grades K-5.  The facility will consist of approximately 43,000 sq. ft. with 27 classrooms, an exercise and multi-purpose rooms, administrative and other space.  BASIS Baton Rouge received support from New Schools for Baton Rouge, which has provided philanthropic and other assistance to BASIS towards this project.  East Baton Rouge Parish Public Schools authorizes the two BASIS Baton Rouge campuses as Type 1 charters.

Buck Financial Advisors LLC served as Financial Advisor to the borrower, Friends of BASIS Louisiana, who will lease the facility to BASIS Baton Rouge.  CLI Capital was the lender on the project.  Warren Charter Law served as borrower’s counsel, and Coldwater Ventures is serving as Owners Representative on the project.  Congratulations to the students and families of Baton Rouge, and the staff of BASIS Baton Rouge.

In fall 2018 IDEA Southern Louisiana opened two new campuses in Baton Rouge, IDEA Innovation (more on that in a later post), and IDEA Bridge Academy (Bridge).  The Bridge campus was financed using senior and subordinated debt to construct Phase I of two phases for what will ultimately be a K-12 campus in North Baton Rouge, and opened  in 2018 serving grades K-3, and 6.  For FY2021, Bridge is serving grades K-8 and enrolls just under 1,100 students, having expanded two grades per year since opening.  Filling up its Phase I elementary and middle school facility this year, Bridge is ready for the second phase of its expansion into the high school grades.

In October 2020, IPS Enterprises, Inc. closed on a refinance and new money financing that will fund the $7.2MM construction of the Phase II high school facility at Bridge.  IPS conducts the non-charter activities, such as real estate financing, for IDEA Public Schools’ expansion outside of Texas.  Louisiana was the first state into which IDEA expanded, back in 2018.  In securing this financing, Bridge is set to be able to open a new building on its North Baton Rouge campus into which the high school grades will expand beginning next year.  Bridge is a Type 1 charter school authorized by the East Baton Rouge Parish School System.

There are several reasons Louisiana was IDEA’s first state for expansion.  Only 1 in 6 students in Louisiana graduated “college ready” in 2017. Only one third of public school students have access to an “A” or a “B” school in Baton Rouge and New Orleans.  Rates of childhood trauma in Baton Rouge and New Orleans are 2-4 times the national average, with about 38% of students witnessing domestic violence, 40% witnessing violent crimes, and 18% witnessing murder.  IDEA worked closely with its partner, New Schools for Baton Rouge, which provides both financial support as well as real estate and site selection assistance with their knowledge of the Baton Rouge market, in deciding to come to Baton Rouge.

But despite these grim  statistics, both Bridge and Innovation ranked in the top 10 schools in the State for growth in academic results.  As new schools, absolute performance is not where it will ultimately be, given where most of these students started from upon entering Bridge or Innovation.  IDEA Southern Louisiana achieved the top growth school ranking in Baton Rouge for both Math and ELA.  Over 84% of Bridge’s students are African American, almost 80% qualify for FRL, and about 10% receive Special Education instruction.  Bridge is making a difference in the lives of students who need it most.

That is in part why IPS’s lending partners stepped up to the plate.  CIT Bank, formerly Mutual of Omaha Bank, had made the senior loan for Phase I, and increased their loan to help finance the Phase II expansion of the high school facility.  BlueHub Capital, a CDFI which lends to many low-income communities across the country, brought in subordinate debt, along with their lending partner Hope Credit Union.  The Charter School Growth Fund had been one of the Phase I subordinate lenders, and retained a portion of their initial loan in this financing.  All told, these lenders committed $21.86 million in total financing to a school only in its third year of operation, which is really something because the revenues of Bridge are the only revenues securing the financing.  Their support of, and commitment to, IDEA’s expansion in Louisiana is helping make a huge difference to the students Bridge is serving.

Buck Financial served as Financial Advisor to IPS.  Hunton Andrews Kurth served as counsel to IPS.  Kutak Rock served as counsel to CIT.  Krokidas & Bluestein LLP served as counsel to BlueHub.  Regions Bank continues its role as Custodial Bank begun with the 2017 Phase I financing.   Project Management Services, Inc. of Austin, who has worked with IDEA on over 100 construction projects, is serving as Owners Representative.  Congratulations to the students, families, and staff of IDEA Southern Louisiana and Bridge Academy.