DASNY Sells $140 Million For Columbia University

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The Dormitory Authority of the State of New York sold $140 million of new-money and refunding revenue bonds for triple-A rated Columbia University on Wednesday, after retail priced the same day.

About half of the proceeds will be used to refund outstanding bonds and the other half will go toward financing various renovation projects located on the Morningside campus in Manhattan, the university’s Medical Center and the Manhattanville campus in West Harlem.

JPMorgan was lead underwriter. Bond counsel was Nixon Peabody LLP and financial advisor was the Yuba Group LLC.

Bonds maturing in 2022 priced at 1.92% with 3% and 5% coupons.

The refunding bonds will refinance the university’s Series 2008A five-year term bonds and extend maturity of the debt 10 years, according to Beau Duffy, DASNY’s public information officer.

“No savings expected, other than from the extension of maturity in a favorable market,” Duffy said.

The new bonds will mature in 2018 through 2022 and will be subject to redemption.

Among the projects eligible for funding from bond proceeds is construction of the Jerome L. Greene Science Center on the Manhattanville campus.

The science center will be a 10-story, 350,000-square-foot research building for the study of mind, brain and behavior.

The new research building is part of Columbia’s expansion in west Manhattanville, just north of the university’s Morningside Heights campus.

The 17-acre site that the university will develop consists primarily of four large blocks from 129th to 133rd Streets between Broadway and 12th Avenue.

The bonds have received triple-A ratings from Moody’s Investors Service and Standard & Poor’s. Both assign stable outlooks.

Moody’s analysts cited the university’s “superior market position” as an Ivy League institution located in New York City, excellent fundraising results, a well-diversified revenue base and a solid management team.

Challenges include a significant long-term expansion plan, the high cost of construction in New York City and a dependence on patient care revenues.

Standard & Poor’s cited “impressive demand” as well as a strong endowment and a diverse revenue stream.

Freshman applications are up 71% since 2006 and total student charges of $56,310 for the 2011-2012 academic year are comparable to peer institutions.

“The stable outlook reflects Standard & Poor’s expectation that the university’s strong demand and financial performance will continue,” analysts said.

Columbia University’s long-term debt as of June 30, 2011, totaled $1.5 billion, according to the preliminary official statement.

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