Hollywood Alma Mater Harvard-Westlake Taps Munis for New Campus

(Bloomberg) -- Harvard-Westlake School, one of the country’s most exclusive private schools famous for educating generations of Hollywood stars, is tapping the public debt markets for the first time. 

The school plans to borrow nearly $90 million of municipal bonds to finance a new athletic campus in Los Angeles’ Studio City. The project, which is years in the making, will transform the former site of a neighborhood tennis and golf facility into a sprawling park that will house state-of-the-art spaces for Harvard-Westlake’s 90 sports teams, according to bond documents. The undertaking — mostly funded through donations — will feature an Olympic-sized swimming pool, eight tennis courts, a club house and putting green.

“We’re so limited with space on this campus,” Beth Slattery, head of Harvard-Westlake’s Upper School, told the school’s student newspaper earlier this year. “This really frees us up to be able to do things and I’m excited about it.”

The bond sale is one of several from elite private schools this year. The Bay Area’s storied all-girls’ Castilleja School Foundation also borrowed in the muni market for the first time last month. In total, roughly a dozen institutions sold about $458 million of debt so far in 2024, according to data compiled by Bloomberg. Private schools, like colleges and hospitals are allowed to tap tax-exempt financing because they’re not-for-profit institutions. 

The Harvard-Westlake bonds are being sold through the California Infrastructure and Economic Development Bank and they are expected to price on Oct. 30, according to investor roadshow documents. A representative for the school declined to comment.

In its current form, Harvard-Westlake was formed about 35 years ago through the merger of the Harvard School, a military boarding school for boys which was established in 1900, and Westlake School for Girls, which opened its doors in 1904. It’s educated generations of Hollywood elite including 1930s child-star Shirley Temple, Academy Award nominee sibling duo Jake and Maggie Gyllenhaal, and former Los Angeles Mayor Eric Garcetti. 

The institution educates students from grades 7 through 12 and accepted about 33% of applications for the school year that started this fall. Tuition is $49,700 and more than 250 students matriculated to Ivy League schools the last several years, according to bond documents. 

S&P Global Ratings assigned the new bonds an AA rating, the second-highest grade available. Analysts led by Robert Tu pointed to the school’s “longstanding reputation for academic excellence” in the rating decision.

“The school’s excellent market position is supported by its sizable enrollment base and healthy demand metrics, superb academic quality, well-connected and dedicated board, and highly skilled management team,” he wrote. 

The school’s plans to develop the new campus sparked local opposition because of the loss a long-time recreation club called Weddington Golf & Tennis that Harvard-Westlake purchased in 2017. 

The new 16-acre development will include park land open to the public and retain historical aspects of the former site including golf ball-shaped floodlights. 

The bonds bridge the gap between the school’s fundraising goal of $288 million and the $232 million it had brought in as of the end of September. The debt is subject to prepayment after June 1, 2026, if the school repays investors using fundraising proceeds.

The school’s cash and investment assets, including its endowment and reserve funds, totaled nearly $400 million at the end of June, bond documents show. Construction has already begun and the project is expected to be completed by the end of 2026.

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