Longwood Gardens Inc., the late DuPont Co. chief Pierre S. du Pont’s intensively planted Chester County estate that has become a top Pennsylvania tourist attraction, is planning a major expansion, bond documents show.
As a first step, Longwood plans to sell $49 million of bonds to cover “design and engineering costs for future construction of a new conservatory” on the site of greenhouses next to its main building. “Morgan Stanley is marketing the bonds,” which are expected to sell by the end of 2019, confirmed Dennis Fisher, Longwood’s chief financial officer.
This initial step would also include repairs and renovations to the Orchid, Banana, and Nuttery buildings, relocating administrative offices, replacing oil tanks, and adding a storage facility. Longwood, which receives more than 1.5 million visitors a year, is also studying ways to expand parking and access to its 1,100-acre property.
The planned bonds, to be issued like other large private projects nearby through the Chester County Industrial Development Authority, would not include funding for building the new conservatory.
That would become the target of a second, larger borrowing: Moody’s estimates “up to $150 million of potential additional new debt,” which would bring total new financing, at near record-low interest rates, to more than twice the size of Longwood’s last major initiative, the $90 million renovation, replacement, and expansion of hundreds of fountains in the space between the main conservatory building and the Chimes Tower at the southern end of the property.
The current conservatory, which covers four acres, is home to high-rise orchid, palm, lily, jungle, desert, fruit, rose, and other themed spaces, and to seasonal and rotating collections and special exhibits.
The nearly two-square-mile Longwood property also includes formal outdoor gardens, fountains and ponds, and curated woods and meadows of native plants, accessed by an arched stone bridge north of U.S. Route 1 near Kennett Square.
From 2015 to 2017, Longwood rebuilt the fountain area, adding new sound, light, and synchronization systems, water cannons to project spray high in the air, and other improvements. Gardens managers say the fountains boosted attendance, encouraging further expansion.
Moody’s Investor Service last week rated the planned $49 million bond issue Aa2, among its highest ratings. A high rating shows that analysts expect that the bonds will be paid on schedule, suggesting that salespeople can convince investors to buy the bonds at low interest rates, reducing their cost to the borrowers.
Including the fountain project, which drew new crowds and expanded annual membership to 69,000 (starting at $90 a year), Longwood’s “$115 million of capital investment over the past five years” has proven that its managers, headed by president Paul B. Redman, have the “ability to successfully execute major capital projects,” wrote Moody’s lead analyst Susan Shaffer in a report to clients.
Redman heads Longwood Gardens Inc., an operating foundation supported by the $700 million asset Longwood Foundation set up by Gardens founder Pierre S. du Pont, who led the DuPont Co. from 1915 to 1919 and reorganized General Motors Corp. in the early 1920s.
The Longwood Foundation, which also supports dozens of charities in the Wilmington and Chester County areas, has pledged $8 million a year to the gardens through 2023. It is headed by du Pont’s grandnephew Eleuthère “Thère” du Pont, who previously was a top executive of his mother Elise du Pont Wood’s family business, Wawa Inc.
Bond buyers, especially Pennsylvania investors who can buy municipal bonds such as Longwood’s through the development authority and collect interest payments free of state and federal income tax, “will be extremely receptive for an Aa2 credit with solid cash and growth history,” said Eric Kazatsky, bond analyst at Bloomberg. Longwood bonds will also diversify investors’ portfolios beyond municipal bonds from indebted state and local governments and school districts,
“Unlike most cultural organizations, Longwood does not actively fund raise for operating or capital support,” Shaffer noted in her report.
The board gained a new potential supporter for its initiatives last week when James C. Collins Jr., a Brandywine Valley native and chief executive of Corteva Agriscience, the giant Wilmington-based pesticide company, joined Longwood’s board of trustees, effective January. Corteva was formed from the farm chemical units of DuPont Co. and Dow Chemical Co. in June.
“As a public garden, Longwood has heightened exposure to environmental” risk, including changing weather, analyst Shaffer noted. But “Longwood’s sophisticated visitor management and planning systems and contingency planning” have reduced those risks, she added.