Buck Financial Blog

Its been a busy week for IDEA and Buck Financial (among others).

In March 2021, IDEA Public Schools (TX) closed their $196 million Variable Rate Education Revenue Bond issue through the Clifton Higher Education Finance Corporation.  This issue is guaranteed under the Bond Guarantee Program of the Texas Education Agency, which uses the State’s Permanent School Fund to guarantee qualifying bond issues for school districts and charter schools.  A charter school must have an underlying rating of investment grade.

IDEA qualifies, as they remain the only charter network in the country to receive an underlying rating in the “A” category, with S&P Global reaffirming the “A-” SPUR with stable outlook, which was initially assigned in 2019.  Due to the PSF guarantee, the bonds also received a “AAA” enhanced rating.

Projects funded with the bonds include the development of campuses in the Rio Grande Valley, San Antonio, Austin, El Paso, Tarrant County, the Permian Basin, and Houston.  Proceeds will also be used to repay a line-of-credit used to begin many of these projects.  IDEA operates 111 schools as of Fall 2020, with over 62,000 students.  Despite budgeting for almost $800 million in revenues for fiscal 2021, IDEA carried almost 140 Days Cash On Hand into the fiscal year, an amazing accomplishment (and alliteration).  With this issue, IDEA will have approximately $1.2 billion (with a “B”) in debt outstanding, almost all of which is PSF guaranteed.

IDEA’s scale does not adversely impact their academic results, either.  It rates among the highest performing CMOs in Texas and the nation while its continues to serve a student base that is predominantly low-income.

Buck Financial Advisors serves as Co-Financial Advisor to IDEA (TX) along with Masterson Advisors.  Robert W. Baird & Co. Inc. served as placement agent for the offering.  Hunton Andrews Kurth served as bond counsel.  PMSI out of Austin serves as project manager for all of IDEA’s construction projects, and InSite EFS serves as real estate broker for IDEA.  Congratulations to the students, family, staff and board of IDEA Public Schools on your continued success.

In March 2021, IDEA Florida successfully closed a subordinate debt financing on its initial Tampa campus.  IPS Enterprises had closed on an acquisition and construction loan facility with CLI Capital back in November 2019.  At that time, the School of Hope subordinate debt program was yet to be finalized.  With the program now up and running and having closed several transactions, it became time to incorporate the planned subordinate debt into the capital structure of the project.

This campus will open later in 2021.  It is a single-phase construction which will entail space for all 1,500 planned students.  The $27.3 overall financing is comprised of about $19.1 million of senior debt from CLI Capital, and about $8.2 million of subordinate debt from the Florida Department of Education through a program administered by Building Hope.

IPS Enterprises Inc. is the borrower on both financings, and will lease the facility to IDEA Florida.  Buck Financial Advisors served as financial advisor to IPS Enterprises.  Hunton Andrews Kurth served as borrower’s counsel, and Shulman, Lopez, Hoffer and Adelstein served as special counsel to IDEA Florida.  PMSI of Austin serves as project manager and InSite EFS served as real estate broker.

In March 2021, IPS Enterprises Inc. closed its initial financing in the Jacksonville, Florida region.  This school will open in Fall 2022 and is located on Bassett Road.  This represents the third financing for the Florida region, with the first two financings completed in Tampa, IDEA’s other Florida market.

The $19.8 million financing will construct Phase I of two phases which will ultimately house grades K-12 and about 1,500 students.  The total overall financing need is expected to be around $25 million, with Phase II occurring in a couple of years.  The financing is comprised of $11.8 million of senior debt from PNC Bank, and $8.3MM subordinate debt from the Florida Department of Education through a program administered by Building Hope on behalf of the State.

IPS Enterprises serves as the borrower, leasing the facility to IDEA Florida.  IPS is looking to close a second Jacksonville campus acquisition later this year, as well as close on two more acquisitions in Tampa.  All projects to date have participated in the State’s Schools of Hope program, and all future projects are expected to as well.

Buck Financial Advisors served as financial advisor to IPS.  Hunton Andrews Kurth served as borrower’s counsel, and Shulman, Lopez, Hoffer & Adelstein served as special counsel to IDEA Florida.  PMSI out of Austin serves as project manager, and InSite EFS serves as real estate broker. Congratulations to the future students and families of Jacksonville, and to IDEA Florida and IPS Enterprises as they continue their expansion.