Case Study:KIPP DC

2600 Virginia Ave NW, · Suite 900 · Washington, DC 20037

KIPP DC is part of the nationally acclaimed KIPP (Knowledge is Power Program) network of schools, which has been widely hailed as one of the country’s most successful innovations in educating low-income minority youth. In 2001, a team of dedicated educators founded KIPP DC and opened with 80 fifth grade students in a church basement. At the time of their recent financing in early 2019, KIPP DC operated a network of sixteen high-performing charter schools educating over 6,200 students in grades Pre-K3 through 12 across six campuses in Washington DC.

Project Overview

Wye River has served as KIPP DC’s independent financial advisor on numerous transactions over the past decade.

In its most recent transaction in late 2019, KIPP DC financed two renovation projects – Somerset Campus Renovation ($20 million) and Benning Road Campus Expansion ($20 million) as well as refinanced the taxable bank financing secured earlier in the year.

In early 2019, KIPP DC acquired an existing charter school and campus property in Washington DC that was scheduled to close at the end of the year. KIPP DC secured a $45 million taxable term loan to fund the acquisition of certain leasehold interests in campus property and certain construction, renovation and potential future expansion costs related to the school acquisition.

In 2017, Wye River assisted KIPP DC in securing a $128.53 million refunding revenue bond issue to refinance certain of its outstanding debt and finance the construction of new high school facilities, structured in two series. The Series 2017 Bonds were rated BBB+ and were sold through a negotiated public offering.

In 2016, Wye River assisted KIPP DC in securing an $18 million taxable term loan, the proceeds of which were used to finance the acquisition of a leasehold interest on its Douglass Campus and fund transaction costs associated with the financing.

In 2015, Wye River assisted KIPP DC in securing a $20 million bond issue, structured as tax-exempt variable rate revenue bonds. The proceeds of the Series 2015 Bonds were used to finance certain capital improvements to KIPP DC’s Arts and Technology Academy.

In 2014, Wye River assisted KIPP DC in securing a $38 million bond issue, structured as tax-exempt variable rate revenue bonds. The proceeds of the bonds were used to finance the redevelopment of a former public school site for sure by KIPP DC’s College Preparatory School.

In 2013, Wye River assisted KIPP DC in securing a $63.07 million revenue bond issue. The proceeds of the bonds were used to repay all outstanding debt (except for KIPP DC’s outstanding new market tax credit obligations) and fund the acquisition and development of a new PK through 8th grade facility located on its Webb Campus. The Series 2013A Bonds were sold through a negotiated public offering, had a 35 year term and were rated BBB+ by Standard and Poor’s Corporation, placing KIPP DC among the highest rated charter schools in the nation.

In 2008, Wye River assisted KIPP DC in securing approximately $28 million of tax-exempt financing for the acquisition, construction and equipping of two school facilities on its Benning Road Campus. This was KIPP DC’s first major financing event in its corporate history. The financing was structured as a letter of credit-backed variable rate demand bond issue and made possible by a variety of related subordinate debt obligations which were secured to help address certain loan-to-value constraints of the letter of credit provider. Wye River was instrumental in crafting a system-based financing structure for the Series 2008 Bonds that enabled the issuance by KIPP DC of additional debt on a parity basis. This structure allowed for the future issuance of all of the tax-exempt and taxable financings described above and the flexibility for KIPP DC to pursue other forms of financing (e.g. New Market Tax Credit-based financing) throughout the years.

Wye River Group’s Role

Wye River Group’s Role

Wye River has had the privilege to work closely with KIPP DC management for over 10 years on several mission critical projects and financings. Our services have included:

  • Preliminary project planning including debt capacity assessments and Finance Plan development
  • Solicitation, evaluation and selection of candidates to provide banking and underwriting services for KIPP DC’s various financings
  • Negotiated key terms of the financings with the selected providers
  • Briefed organization management on the interest rate hedging mechanisms available for its financing and helped to structure and price its preferred risk management products
  • Development of credit rating presentations and analysis
  • Negotiations of key covenants and structure of the bond issues resulting in debt service savings and flexibility for the continued development of KIPP DC’s future projects
  • Organized and coordinated Finance Team activities for transactions
  • Reviewed transaction documents to assure performance of financial institutions and professional services firms in conformance with Finance Plans and commitment letters
  • Coordinated the closing of the financings and investments of bond proceeds where applicable

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