Hello Eagle Families,
We remain very interested in purchasing the property vacated by Encore. As of 03/05/25, I have spoken with the underwriter and real estate brokers assigned to the property multiple times. The property has not been listed publicly. The bond holders are seeking to recoup the full default amount that resulted from the Encore closure which is roughly 17 million dollars. That said, this amount is higher than fair market value based on the condition, location of the property and additional funds borrowed by Encore. The monetary gap widens when considering the financial cost of the necessary deferred maintenance, which we estimate is between 1 and 1.5 million dollars in order to bring the property up to the Excelsior standard.
We have learned that the initial purchase price was 11 million with 5+ million additional funds borrowed by Encore for cash reserves, operations and upgrades. Those funds were exhausted by Encore and have inflated the recovery amount. Restated, the additional funding was not fully accretive to the property value. This leaves a difference between what is owed (and desired to be recovered) and the value. Legally, a property can be purchased above market value. In this circumstance the buyer agrees to pay that difference in cash as it cannot be borrowed by an institution and amortized. For clarity, Excelsior will not agree to do that. We desire to purchase the property at a fair price with all costs considered.
We intend to engage real professionals to get an appropriate opinion of the current value. I am scheduled to meet with the brokers and underwriter in Sacramento in the week of March 9th while attending the California Charter Schools Association conference. The assigned brokers are hoping to encourage an interested buyer to purchase the property outside of normal processes. We have shared that we remain extremely interested but will always seek fiscal prudence over speed to ensure that we not only remain solvent but financially strong. The bond holders are the same entity that hold our Excelsior Redlands bond, so they have firsthand knowledge of our ability to perform through the life of the loan. Our administrative team will be revisiting the Encore property along with our own real estate professionals prior to the end of March. We remain confident that if a fair price can be reached then we can also garner the required Material Revision from our authorizer, The San Bernardino County Board of Education to add an additional school site.
More to follow.
Dr. Derek King
Superintendent
Excelsior Charter Schools
