In April, we were seeking to renew our lease agreement on the property. While in negotiation, we were surprised to find out that the owner intended to sell the property. In seeking the counsel of many, we resolved to put in an offer to purchase the property, with a strategic financing approach. Thankfully, God has given us favor in the eyes of the seller.
Our offer was then accepted by the sellers and we are now officially moving forward towards the purchase. This means we have a 70-day escrow period in which we need to complete our due diligence and obtain financing. Through Semble’s lending platform approach, St. Abraham’s has the opportunity to gather investors through our supporters and donors together to raise the needed funds of $2,828,000 for this purchase, making 1940 Bonita Drive, in Aptos, California our permanent home for future generations. To address the purchase and necessary improvements, the school will also focus on securing designated donations to reduce financing needs.
All institutions undergo pivotal moments that are critical to the future life of that institution. St. Abraham’s is now at a pivotal moment in its life. Just a few years ago, we would have never been in a place to even consider such a large investment in our future, and though we are still a young school, we now have this opportunity in front of us and a path to possibly make this location our permanent home.
St. Abraham's Classical Christian Academy ("St. Abraham's") was founded in 2009 in Santa Cruz, California by a few families who had heard of a renewal of the classical education tradition that has been sweeping the country for the last three decades. Excited to provide a Christ-focused, academically-challenging education for their own children, they invited others to join in their efforts to create this new school. What started with 19 students in the fall of 2009 has now flourished into a student population of 150. Located in beautiful coastal California, we are at the midpoint of two thriving counties, Santa Cruz and Monterey.
With a 20 percent enrollment increase on average, each year for past five years, St. Abraham’s is confident in the future. We have filled a need for those parents who are seeking a kind of Christian education that not only promotes high standards in academics and the arts, but one that also focuses on the formation of virtue in students. St. Abraham’s vision is to “be the academy of Christian discipleship and classical learning for the Monterey Bay region.” We do this by faithfully living out our mission, which is “to be a community of learners who seeks to love and know the Triune God, His Word, and His world.” The school is also blessed to have 22 experienced teachers who are talented and dedicated, whose love for learning is essential to our mission.
St. Abraham's is a member of the Association of Classical Christian Schools, a national accrediting body representing schools from every region. St. Abraham’s sees education as much more than passing tests and cramming for facts. The school was created to give students more than the status quo. We aim to have minds trained and souls formed according to that which is good, true, and beautiful. In this sense, we are partnering with families and churches to build God’s Kingdom by providing an education that forms mature Christian students who are free to make wise judgments in a fallen world. Classical Christian schools desire to, not only challenge students to reach for a higher level of success every day in the classroom, but to actually love learning. We want our children to be equipped with tools to continue learning long after high school and college are over, not simply to attain a job but rather to attain to the fullest measure of what it means to be human, made in the image of God.
As we seek God’s blessing in this next stage of St. Abraham’s journey, it’s imperative that we remember God’s faithfulness to us in the past. Scripture often calls us to remembrance for many reasons, because, among other things, remembering restores in us both thankfulness and perspective. It is hard to imagine more humble and rustic beginnings than that of St. Abraham’s—a small band of smartly dressed 3 to 8 year-olds, huddled together for school in the ramshackle mudroom of a pastor’s rental house. Here we are now, eight years later, a K-12 school with multiple teachers and students, financially operating in the black, and growing in numbers to fill the space of a beautiful school campus. The campus itself is a testimony to God’s provision. We are now seeking a way to make it our permanent home.
Even though St. Abraham's has seen significant growth in the last several years, we are still a young school and, because we weren't initially pursuing purchasing the Property, we don’t have the typical reserves to make this purchase alone, nor do we have a financial history that would position us for a traditional bank financing. The school will be directing reserves towards the purchase but we can't make it to our goal alone. We need all of our community's involvement. We are hoping to raise additional donations to increase that down payment size which will help assure we are on solid financial footing moving forward.
As it relates to the opportunity being presented on this listing, the necessary loan that we will need to address the purchase price will come through an investment that is designed to provide returns both financially and socially for our donors and investors who want to see God's Kingdom flourish in Santa Cruz through Christian education.
These donors and investors can be those from within our community as well as connections that would like to see impact realized from the way they invest. Understanding this, ultimately there are several ways you can partner with us to help us succeed:
The school is raising investment funds through the sale of Notes in which 100% of the proceeds will be used to finance a loan to St. Abraham's Classical Christian Academy ("St. Abraham's" or “Borrower”). In advance of closing on any loan funds, the Borrower will assign all Notes, in addition to the proceeds from the sale of the Notes, into the newly-formed limited liability company, Non Nobis Fund, LLC (“LLC”), in which the Borrower is the sole member. Thus, the loan to St. Abraham's will be from the LLC evidenced by a Loan Agreement, Promissory Note, and Deed of Trust on the property being purchased which is located at 1940 Bonita Dr, Aptos, CA 95003 (the “Property”). Drafts of the loan documents are provided under "Resources" for your review.
For all potential investors, it is important to review the Borrower’s plan for repayment (“Repayment Strategy”), located under the “Borrower Information” tab, which outlines the plan for reducing principal during the term of the Loan as well as how the Borrower plans to address the balance of the Loan when it matures. Note, due to the structure of the Loan and to stay current on the obligation, Borrower is only required to satisfy installment payments on the loan, and is not obligated to make additional principal repayments on the Loan until the loan comes due.
The Notes to be issued by Borrower to supporters of St. Abraham's will have a maximum interest rate return of 4% for a period of 5 years. Each investor will have the ability to further reduce the rate for their specific Note which results in greater positive impact for the Borrower.
IMPORTANT: All potential investors need to click on the blue button above titled "Offering Memorandum" to read all about the details as well as related risks of the note investment opportunity in St. Abraham's Classical Christian Academy.
Each potential investor is required to read all information provided within the listing including the supplemental documentation. This includes review of the past, current, and forward-looking financial information provided, as well as documentation on the Property. The supplemental information helps provide context as to St. Abraham's credit worthiness and the value of the Property collateralizing the loan.
In addition to the risks outlined int hte Offering Memorandum and the risk questionnaire shown under the "Borrower Information" tab, it is important to note that the current use permit for the Property places a maximum limit on the number of students of 150. This limitation is due to the current size of the septic system. While expansion with limited or no changes to the septic may be a possibility, it is more likely that a significant change to the existing septic system will be required to grow beyond 150 students. An amendment to the use permit will need to be filed and approved but he county.
Efforts are already underway in exploring this issue and, built into the minimum loan amount of $2,870,000, are funds to address the needed septic improvements. NOTE: As you will see from the financial projections and enrollment projections, there is an expectation that enrollment will grow beyond 150 students by next school year (2017-18) but this is contingent upon receiving the amended use permit from the county. If St. Abraham's were unable to amend the use permit and had to limit enrollment to 150, this would have a significant negative impact on the financial projections of the school.
Borrower has set the minimum loan need at $2,870,000 and a maximum of $3,300,000 to purchase the Property and address improvements on the Property. The minimum amount of the loan may be reduced in the event that designated gifts are realized for the purchase. Below is a list of the ways Borrower plans to use the loan proceeds:
The Loan will have a Deed of Trust recorded in the 1st position on the Property. To establish a valuation of the Property, the actual purchase price of $2,828,000 is the best estimate for current value.
Further, there are additional factors that speak to the value of the property. First, as a indication of interest in the property, there were multiple offers from different parties looking to purchase the property. Second, the price per square foot comes in at about $195 which is much less than the average commercial property square footage price and probably less than the replacement value.
Since Borrower is looking to secure a total loan of $3,300,000, the value of the property in its current state is less than the total debt on the Property (the Loan-to-Value is over 100%). As mentioned, any donations realized by St. Abraham's will reduce the need for financing. Further, while funds above the purchase price will be directed towards improvements, there are no assurances that these improvements will increase the value of the property.
In the event St. Abraham's is not able to service the loan payments, the Property as collateral would potentially need to be sold to satisfy the Loan obligation. In such an event, due to the highly leveraged nature of the Loan, the sale of the Property may not provide enough proceeds to fully cover the Loan. In such an event, investors in Notes would realize a partial loss.
“THE RETURN OF FUNDS OF THE PURCHASER IS DEPENDENT UPON THE FINANCIAL CONDITION OF THE ORGANIZATION.”
“ANY PROSPECTIVE PURCHASER IS ENTITLED TO REVIEW FINANCIAL STATEMENTS OF THE ISSUER WHICH SHALL BE FURNISHED UPON REQUEST.”
In addition to paying interest to investors on the loan, the following are some of the options for repayment of these loans. We want to be responsible with all the funds as good stewards and honest with our school finances, projections and repayment plans. In the last three years St. Abraham’s has experienced growth that is unprecedented in most schools of our size and age. And this leads us to our first way in which investors will be recompensed. With projected increased enrollment and greater net operating income, we will be able to regularly save funds that can go towards repayment of investors. These savings are not expected to repay the full loan balance in the short-term but, we are committed to saving capital that will go towards loan repayment and equity growth.
Even though we have been a young school on a relatively small budget, we have never missed a single rent payment. Furthermore, as our school grows into maturity, we are looking at projections that will demonstrate long-term financial stability that appeals to banks. As God provides, we plan to be in a position by the end of the first loan term, where we can refinance through traditional means if necessary. Of course, for those that are invested and would like to continue to stay involved because they are pleased with the return financials as well as through the fruit of our ministry, we will be open to keeping the investment option available.
Taking ownership of the Property will help drive further financial health. First, it will allow us to maximize the space we have and use it as a resource to generate income when possible. This is expected to increase income and having more sources of income will help in qualifying for a refinance. Second, both the permanence of the ownership and the growth in students and families is expected to result in seeing businesses and churches who wish to financially support us. St. Abraham’s is already in the process of partnering with several key groups whose desire is to build the kingdom of God in Santa Cruz.
In short, savings will be generated because of increased enrollment growth, mortgage vs. rent savings, and because as owners we will be able to maximize the property useage to our financial advantage. Between these savings and a capital campaign fund-raising initiative, we hope to slowly repay loans and increase equity.
With any investment there are risks involved, but we intend to mitigate those risks as much as possible by managing the school finances well, continuing to offer a quality education product, executing a plan that will continue to grow and develop our young school into maturity.
Are there any outstanding or pending litigations against the Borrower? No
Are there any material changes in revenue sources that should be disclosed or are not represented in the financial information provided? No
Are there any material changes in operating expenses that should be disclosed or are not represented in the financial information provided? No
Are there any material changes in the Borrower’s leadership (compensated or non-compensated) that should be disclosed? Yes. Corey McEachran is stepping down as Headmaster to move to Washington and Devin O'Donnell will be the new headmaster going forward.
Are there any employment issues or claims outstanding or pending? No
Are there any environmental issues on any of the real estate related to the Borrower loan? Yes. Both of the items mentioned below can effect development plans, process and costs.
Has the Borrower been in default in any obligations in the past 3 years? No
Has any of the key leadership of the Borrower (compensated or non-compensated) been involved in any pending or current litigations or judgments that could adversely impact their ability to serve the Borrower? No
Has any of the key leadership of the Borrower (compensated or non-compensated) ever been indicted or convicted of a felony? No
QUESTION: What is the next step?
ANSWER: At the point that you are ready to participate, select "Get Started" and follow the simple steps. It takes about 2 minutes to enter the basic information, including your email address, amount you want to invest, and the rate of return you would like to receive. Choosing to take this first step is not a binding commitment.
QUESTION: What if I want to get my money out before the end of the investment term?
ANSWER: If you plan to access the funds prior to the maturity of the investment, it is encouraged that you not invest since there are currently no well-defined secondary markets for the investment. In the case of hardship, best efforts will be made to see if someone else would like to take your position, although there are no guarantees.
QUESTION: Can I make an investment using retirement funds?
ANSWER: Yes, but you are not typically able to direct funds from your current employer 401(k) or 403(b). If the instructions online are not clear or if you have questions, please contact Semble.
QUESTION: Are there costs in using a retirement account (i.e. IRA) to invest?
ANSWER: Yes, all custodians will charge a fee for holding this type of investment because they are not compensated through the normal fees they realize in holding traditional investments (stocks, bonds, mutual funds, etc.). The fee varies based on the custodian. The IRA custodian that is the preferred provider through Semble has a $25 setup fee and a flat annual cost of $65/yr. This cost should be taken into consideration when making an investment. There are no costs to invest using non tax-deferred funds since there is no need for custodial involvement.
QUESTION: Can I share this opportunity with others I know that support the borrowing organization?
ANSWER: Yes! If you know friends and family that are socially minded investors who might like to realize community impact with their investment dollars, you can forward this link to them.
Ready to commit to invest in the loan needs of St. Abraham's Classical Christian Academy?
Click the blue Get Started button to enter your commitment. This is a non-binding commitment and Semble investor support is always available if you have any questions or need assistance.