Imagine Schools Enters $44 Million Sale Leaseback of Five Charter Schools

Kansas City Business Journal - January 22, 2010

Entertainment Properties Trust has increased its investment in public charter schools by $48 million, the company said Friday.

The company (NYSE: EPR) purchased five new charter schools from Imagine Schools Inc. of Arlington, Va., at a cost of $44 million and agreed to finance expansion of two others at a cost of $4 million.

Entertainment Properties Trust, which is based in Kansas City, will lease the five new schools back to Imagine Schools, a leading operator of public charter schools.

Entertainment Properties Trust’s portfolio now includes 27 charter schools that Imagine Schools operates in nine states and the District of Columbia.

“We are excited to add to our public charter school portfolio and enthusiastic about the prospects of Imagine and this investment category,” Entertainment Properties Trust CEO David Brain said in a release.

In an interview, Brain said the Imagine Schools transaction announced Friday fulfilled Entertainment Properties’ 2007 commitment to make at least $200 million worth of acquisitions from Imagine. It also increases Entertainment Properties’ footprint in what Brain called “a huge new category” for private real estate investment.

“Public charter schools are now a 4 or 5 percent slice of a couple trillion dollar public education real estate market,” Brain said.

Heretofore, new public schools have been financed almost exclusively through school-bond issues, he said. But Brain said the move to “decentralize and debureaucratize public education” is creating an increasing number of charter schools, which aren’t as cost-efficiently financed through bond issues.

The five new charter schools purchased by Entertainment Properties contain more than 357,000 square feet of educational space and have an enrollment in excess of 2,600 students. All of the Imagine schools owned by Entertainment Properties are governed by a triple-net master lease with a 25-year primary term. Sphere: Related Content