In a major upsize from its most recent offering, Goddard Funding is preparing a whole business securitization that will sell $210 million in asset-backed securities to investors.
Goddard 2024-1 should close on July 31, according to details from Asset Securitization Report's deal database, which also notes that Barclays is on the deal as manager. Barclays is also sole structuring advisor and book runner, according to a Kroll Bond Rating Agency presale report.
Goddard provides premium childhood education and childcare through a network of 630 locations as of March 31, 2024, compared wit 611 locations as of June 30, 2023, KBRA said. Virtually the entire network of schools is franchised, according to KBRA. Aside from growing its footprint, Goddard's system-wide sales reached $1.4 billion for the 12-month period that ended March 31, 2024, up from the $1.3 billion it achieved by June 30, 2023.
The whole business transaction will repay investors from a range of revenue sources, including existing and future franchise agreements, associated royalties and fees, plus income and intellectual property. Royalty revenues, though, account for virtually all the program's incoming securitized collections, at 95.5%, with fees on initial contracts and other income accounting for 4.5%, KBRA said.
Goddard 2024-1 has a 6.1x leverage, representing its debt to securitized cash flow. Compared with peer whole business securitizations, that's slightly elevated. Primrose Funding 2024-1,2; Goddard Funding 2023-1, and ME Funding 2024-1 had leverage levels of 5.5%, 5.8% and 5.5%, respectively.
Aside from the increased leverage, there are a few potentially positive changes in this deal, compared with the series 2023-1, according to KBRA. Its securitized net cash flow (SNCF) did increase to $94 million, from the $77 million seen on the series 2023-1 transaction. Also, its breakeven day one revenue decline decreased from about 45.1% for the series 2023-1 to about 44.1% for the 2024-1 deal, which reflects both increased SNCF and slightly higher leverage.
The deal issues notes to investors through two class A tranches. KBRA assigns BBB- to both tranches, which have a legal final maturity date of October 2054.
