View University (Des Moines, Iowa)
About the U
University (“Grand View”, “GVU” or “the
University”) is a 2,300-student Lutheran
institution located in Des Moines, Iowa.
past decade GVU has transformed itself,
growing its headcount by 30% and using debt
and fundraising to invest over $60 million
in improvements to its academic and
residence hall infrastructure.
View, the last piece of the puzzle has long
been the renovation and expansion of its
‘70s-vintage Knudsen Student Center, a $13.4
million project that has been on the drawing
board for over 10 years.
the project, the University had identified
annuity revenues from the renovation that
would support $5.4 million of long-term
that left $8.0 million to be funded from a
University had pledges for $5.6 million of
this, only about $1.75 million of the
pledges were in hand.
assisted the University with residence hall
financings in 2010 and 2012, and was once
again asked to assist GVU with the
implementation of a two-tranche Series 2014
tranche of the debt would be comprised of a
$5.4 mm direct bank placement bond with a
22-year final maturity.
would be a much shorter, 6.5 year,
tax-exempt floating rate tranche, designed
to be paid down from capital campaign
pledge-based tranche would also be
structured as a line of credit-like
“drawdown” bond, so as to minimize interest
expense during the construction period.
Challenges of the
A capital campaign that was not
completed, and had less than 25% of its
goal received in cash,
The University's non-rated status
and its high degree of leverage
(approximately $63 million of pro forma
debt vs. about $30 million of cash and
A fall-off in enrollment in the
Fall prior to the expected completion of
the financing, and
The University's preference to
complete the financing without an
appraisal and using the same relatively
liberal financial covenants that it had
achieved in its fixed rate financing.
solicited 6 banks to provide indications of
interest or term sheets for the financing.
winning direct placement provider provided a
10-year credit commitment, with a non-bank
qualified, tax-exempt structure that met the
University’s two-tranche plan of finance,
including the drawdown feature for the
weighted average rate of the two tranches
was 2.89% at closing.
The bank also
agreed to Longhouse’s request that the $5.4
million long-term series be structured to
wrap around GVU’s other long-term debt so as
to provide level overall debt service.
This required the bank to
defer the beginning of principal payments on
the long-term series to 2020, and to
structure $4.0 million of the $5.4 million
in debt repayment
in the final two years of the 22 year amortization.
agreed to take the University’s mortgage
pledge on an “abundance of caution” basis
and without an appraisal.
the bank also agreed to mirror GVU’s
existing fixed rate financial covenants so
that Grand View could live with only one set
Return to Case Studies