The Rating Outlook is Stable.
The series 2010A tax-exempt and series 2010A Build America Bonds (the bonds) are secured by pledged revenues generated by
KEY RATING DRIVERS
STABLE CREDIT CHARACTERISTICS: The 'A+' rating reflects a history of strong demand for housing on FAU's campus, timely completion of this and other housing projects, and the historical sufficiency of excess revenues generated by the housing system.
INTEGRATION WITH FAU: The project is being managed as part of FAU's overall housing system. FAU sets rates for this project, the 2012 project (Parliament Hall) and the system. In addition, FAU no longer has the ability to issue senior lien system debt, as the lien has been closed.
CONSTRAINED FLEXIBILITY: Counterbalancing rating factors include the project's sole reliance upon demand-driven revenues to pay debt service, offset somewhat by access to excess cash flows generated by the housing system.
FAU'S SOUND FINANCIAL PROFILE: FAU continues to exhibit good enrollment trends, a growing level of financial resources, and has historically generated positive operating margins on a GAAP basis, except for the past two years when there were large state appropriation cuts. While FAU's financial resources are not pledged to the bonds, the university's ability to maintain healthy operations with stable enrollment trends affects demand for student housing.
FAU and a private manager jointly manage the project, which is located on the main campus. According to management, the project opened on budget and in time for the fall 2011 semester, with a 98% occupancy rate. The stand-alone nature of the project is mitigated by a number of attributes. At issuance, FAUFC essentially consolidated the project into its existing housing system by using a portion of bond proceeds to pre-pay ground rent on the land where the project and existing housing facilities reside. FAU sets rates and charges for all housing options on campus, and there is a freshmen residency requirement.
While the occupancy rate declined in 2013 (89% rate in Innovation Village North and 86% in Innovation Village South), debt service coverage was still an acceptable 1.42x (without requiring any financial support from the housing system). Management has cited the discontinuation of the living learning program and an increased number of waivers to the freshmen residency requirement as contributing to this decline. Subsequently, management has reinstated the living learning experience and is now more closely enforcing the freshmen residency requirement. Management reports that overall housing applications (including
Other Campus Housing Options
In addition to
FAU's housing system consists of six housing facilities, with differing price points. Coverage of housing system revenue bonds remains stable, with maximum annual debt service coverage averaging 1.53x over the past five years. There is approximately
Collectively, all facilities, including Parliament Hall and
FAU continues to exhibit good enrollment growth. Fall 2013 showed total full-time enrollment at the main
FAU's revenue base is fairly diverse, with revenues generated from tuition and fees accounting for 44% of the total, up from 34% in 2009. In 2011, appropriations totaled approximately
Additional information is available at 'www.fitchratings.com'
--'Revenue-Supported Rating Criteria' (
--'U.S. College and University Rating Criteria' (
--'Fitch Affirms FAU Finance Corporation's Capital Improvement Rev Bonds 'A+', Outlook Stable' (
Revenue-Supported Rating Criteria
Source: Fitch Ratings
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