NEW YORK – Standard & Poor's Ratings Services said it has revised the outlook to positive from stable on its issuer credit rating (ICR) on University at Albany Foundation Student Housing Corp., N.Y., and on its underlying rating (SPUR) on Albany Industrial Development Agency, N.Y.'s series 2001 civic facility revenue bonds, issued on behalf of the corporation.
Standard & Poor's also affirmed its A-minus ICR on the corporation and its A-minus long-term rating on the series 2001 bonds. The outlook revision reflects debt service coverage that has consistently exceeded expectations and a trend of strong occupancy at the Empire Commons.
The positive outlook reflects Standard & Poor's expectation that, during the two-year outlook period, demand and enrollment at the university will remain stable, current occupancy levels at the commons will be maintained, and financial operations of the facility will continue to be healthy.
"We would consider a positive rating action during the outlook period if operating surpluses continue to increase, high occupancy levels are maintained, and demand characteristics, including selectivity and matriculation rates, continue to improve," said Standard & Poor's credit analyst Jonathan Volkmann. "In our opinion, it is unlikely that financial operations or occupancy levels would deteriorate substantially to warrant a negative rating action during the outlook period," he added.
Positive credit factors include Standard & Poor's view of the corporation's: high level of connectivity with the university, demonstrated by the project's on-campus location and the university's freshman and sophomore residency requirements as well its requirement to fill the commons on a first priority basis; consistently positive operations that have resulted in strong debt service coverage, which totaled 1.73x in fiscal 2011; historically strong occupancy at the commons, with an average occupancy rate of 99% over the past five years; and steady enrollment at the university, coupled with strong demand for the university housing system.
Standard & Poor's believes the following credit factors partially offset the credits strengths: significant $56.6 million debt load (as of June 30, 2011) for a small nonprofit corporation that acts as a supporting organization to the university; and a narrow revenue stream, as rental income from the commons accounted for 99.9% of the corporation's fiscal 2011 total operating revenue.
The University at Albany Foundation Student Housing Corp. is the owner of the Empire Commons, which consists of 1,200-bed apartment-style housing units, located on the university's main campus.
