Fitch Affirms University of Tampa, Florida Revs at 'BBB'

2008-11-10 08:19:00 -

- Fitch Ratings affirms the 'BBB' rating on approximately $69 million of the city of Tampa, Florida's revenue bonds issued on behalf of the University of Tampa (the university). The bonds are a general obligation of the university. The Rating Outlook is Stable.

The 'BBB' rating and Stable Rating Outlook reflect UT's stable and growing enrollment, positive financial operations, and strong demand for student housing. Primary credit concerns include the university's significant long-term debt burden, lack of revenue diversity, and limited liquidity.

Student demand has shown consistent growth over the past five academic years. Headcount enrollment for fall 2008 increased 3.4% to 5,790 students; total FTE's increased 4.0% to 5,569 students. While enrollment increases have created a critical need for additional housing which the university has attempted to meet with the consequence of increased leverage, it has also contributed to the consistent operating performance of the university as demonstrated by a positive operating margin for the past three fiscal years. The operating margin for fiscal 2008 was 1.5%.

While debt service on the bonds of $7.8 million would consume a moderate 7.7% of fiscal 2008 unrestricted revenues, the addition of the university's capital leases and contingent liabilities increases its total debt burden to 13.6% of unrestricted revenues for the same period. Fitch regards the debt burden for the university as high. However, it believes the annual payments are manageable, given that most of the facilities financed are revenue-generating enterprises, such as housing and parking. The university has no plans for additional debt before 2010.

With 97% of revenues derived from tuition, fees, and auxiliary sources, any significant or prolonged decline in enrollment could adversely affect the university's ability to meet its obligations should the related decline in revenues not be offset by expense reductions. Likewise, the university's acceptable but limited liquidity continues to constrain its financial flexibility. In fiscal 2008, available funds were $45.9 million, representing 32.2% of total long-term debt and 46.3% of unrestricted operating expenses, or 5.5 months of operations.

Founded in 1931 by the Chamber of Commerce of Tampa, Florida, the University of Tampa is a private, four-year liberal arts university. The university's campus is located on 80 acres in downtown Tampa.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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
Mary Catherine Messner, CFA, FRM, 212-908-0738
Douglas J. Kilcommons, 212-908-0740
Cindy Stoller, 212-908-0526 (Media Relations)
cindy.stoller@fitchratings.com