The Canyon-Agassi fund acquired the former warehouse and converted it into a two-story school. The property includes a main building of 30,000 square feet and a separate 3,400-square-foot space with a large multipurpose room.
"We are really excited," said Marc Mannella, chief executive officer of KIPP Philadelphia Charter Schools. "This is a really good deal for us."
Students have been attending class at the main site since the fall, but the smaller building just opened.
Mannella said the school, which has 150 pupils in kindergarten and first grade, plans to grow to 500 pupils from kindergarten through fourth grade by 2014-15.
Agassi founded the Andre Agassi College Preparatory Academy in Las Vegas in 2001 to provide a college-prep education for students in a low-income part of that city. He found that many charter schools have trouble finding and paying for suitable buildings.
His Andre Agassi Ventures L.L.C. partnered with Canyon Capital Realty Advisors, a private equity real estate company based in Los Angeles, to establish the facilities fund.
Over the next four to five years, the venture aims to help high-achieving urban charters create seats for 40,000 to 50,000 students.
Major institutional investors backing the fund include Citi, Intel Capital, and the Ewing Marion Kauffman Foundation in Kansas City, Mo.
The fund learned about KIPP Philadelphia's building need from the national KIPP Foundation in San Francisco. KIPP Philadelphia Charter Schools are part of a national network of charters affiliated with the nonprofit Knowledge Is Power Program, which focuses on college preparation.
Agassi said that by financing quality school facilities, the fund aims to break down one of the biggest barriers facing charter school operators and help them expand to reach more students looking for alternatives to traditional public schools.
"The greatest impediment to those in the charter school space is the facilities themselves," Agassi said.
"We provide a long-term lease with the best-in-class to incubate and grow their student body," said Bobby Turner, Canyon's chairman and CEO and the fund's comanaging partner.
Turner, a 1984 graduate of the Wharton School, said the fund plans to help charter operators obtain permanent financing to buy their buildings through New Market Tax Credits and tax-exempt bonds.
A spokesman for Canyon-Agassi declined to reveal the size of its investment in Philadelphia.
The fund's next school project is slated for Milwaukee.
Mannella said that under the terms of the agreement with Canyon-Agassi, KIPP Philadelphia has a favorable lease arrangement on the property on Westmoreland Street and will have the chance to buy it once the school reaches full enrollment.
Mannella said the elementary charter was paying rent of $12.50 per square foot. He said it was the least expensive rate that KIPP Philadelphia is paying to lease commercial real estate for any of its schools in the city.
"We know it will be affordable for us long-term," he said Monday. "And we have the opportunity to put roots down in a community, which is great."
KIPP's elementary academy opened in fall 2010 with kindergarten in a rented space at 12th and Vine Streets. KIPP DuBois Collegiate Academy, a high school program, remains at that site.
KIPP Philadelphia also operates charter middle schools at 2709 N. Broad St. and at 5900 Baltimore Ave.
Contact staff writer Martha Woodall at 215-854-2789 or martha.woodall@phillynews.com.
