Imagine Schools

PALM BEACH, FL—In a record low cap rate for a charter school, The Imagine School building in Boynton Beach, FL has traded hands. The building is under a long-term, triple net lease.

Michael Zimmerman, managing director with Calkain Companies, represented both parties in the transaction. The seller, a South Florida-based development company,
originally constructed the property as a build-to-suit for the tenant.

Located at 3333 High Ridge Road in Boynton Beach, FL, the net leased asset sold to a private investor for $16,381,800. The cap rate was 7.5%.

“While it may seem second nature to understand a Walgreens, charter schools however, are a bit more complex,” says Zimmerman. “I really had to do my research prior to bringing this asset to market, as understanding how charter schools work, and more importantly being able to really educate prospective buyers about the entire charter school industry as well as this property’s performance was imperative.”

Charter schools are a relatively recent innovation in the public education industry. A charter school is a privately-owned and operated school functioning within and funded by the state’s public education system. Imagine Schools is the largest manager of charter schools within the United States, operating 73 schools with enrollment in excess of 40,000 students.

This sale could prove to be a bellwether for the charter school sector. Pricing for the more commonplace net lease retail assets such as pharmacies, banks, and quick service restaurants have all seen record low cap rates of late, but the charter school sector has been long overlooked.

“It’s not that the buyer paid over-market for this asset, rather it’s a case where Michael was really able to educate an entire market,” says Patrick Nutt, managing partner of Calkain’s South Florida office. “With a long term, absolute NNN lease with annual rent increases, a mid-7% yield is a pretty solid risk adjusted return in today’s market. Frankly, I wouldn’t be surprised to see cap rate compression on the next charter school sale.”