Published: July 07, 2010
Fitch Affirms Florida Atlantic University's Housing Revs at 'A+'; Outlook Stable
NEW YORK - (BUSINESS WIRE) - Fitch Ratings affirms its 'A+' rating on approximately $78 million of
outstanding housing and dormitory revenue bonds issued by the Florida
Board of Education and Florida Board of Governors, on behalf of Florida
Atlantic University (FAU).
The Rating Outlook is Stable.
RATING RATIONALE:
--The rating reflects the housing system's track record of positive
operating performance and adequate debt service coverage, supported by
consistently high occupancy rates.
--Continued strong demand for on-campus housing, driven by FAU's
increased enrollment trends, anticipates future debt issuance.
--The housing system has a high debt burden which is expected to remain
high due to ongoing additional student housing need.
KEY RATING DRIVERS:
--Continued high occupancy of the housing system, yielding consistently
strong operating margins and adequate debt service coverage.
--Issuance of additional housing system obligations commensurate with
resources available for repayment.
SECURITY:
The bonds are secured by pledged net revenues derived from the
operations of the housing system.
CREDIT SUMMARY:
The FAU housing facilities include four resident halls and an apartment
complex. There are approximately 2,446 units on the main campus at Boca
Raton. The housing system serves 20% of the students at the main campus.
FAU experiences close to full occupancy levels historically and had a
waiting list of 600 students for the fall 2009 semester.
The housing system's historically strong operating margin, averaging
19.7% for four of the past five fiscal years declined to 9.8% in fiscal
2009 due to capital projects funded out of operations. FAU renovated a
residence hall and refurbished the apartment complexes during the year.
For fiscal 2009, pledged revenues totaled $6.78 million, resulting in an
adequate 1.18 times (x) maximum annual debt service (MADS) coverage
ratio.
Liquidity is typical for a university auxiliary housing system.
Available funds, defined by Fitch as cash and investments not
permanently restricted totaled $10.6 million for fiscal 2009, covering
operating expenses of $12.7 million and total outstanding debt of $77.7
million by 83.7% and 13.7%, respectively. The debt burden is high, with
MADS comprising 41% of unrestricted revenues for fiscal 2009.
Positive enrollment growth trends at FAU are evidenced by a five-year
headcount increase of 9% and 22% for undergraduate and graduate
students, respectively. FAU is currently undertaking an expansion of
student housing facilities, financed through the Financing Corporation
(FAUFC issuance February 2010, rated 'A' by Fitch) to accommodate upper
classmen. Fitch expects that debt incurred to finance such facilities,
will be largely self supporting, offset with an increase in resources
available for its repayment.
Established in 1961, FAU is one of 11 institutions of public higher
education in the State University System of Florida (rated 'AA' by
Fitch). FAU offers over 170 bachelor and advanced degree programs
through nine campuses and distance learning, serving nearly 28,000
students.
Applicable criteria available on Fitch's web site at 'www.fitchratings.com':
--'College and University Rating Criteria', Dec. 29, 2009;
--'Revenue-Supported Rating Criteria', Dec. 29, 2009.
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
Fitch Ratings, New York
James George, +1-212-908-0652
Colin
Walsh, +1-212-908-0767
Media Relations:
Cindy Stoller,
+1-212-908-0526
cindy.stoller@fitchratings.com
Copyright © 2012, Business Wire, Inc., All rights reserved.
Copyright © 2012, NewsBlaze,
Daily News
Search News
