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Posted: Mon Feb 22, 2016 6:08 pm

bethlehempardView user's profile






Joined: 28 Sep 2011
Posts: 2127







Holy Cross got Aa3 on up to $62 million of fixed-rate debt maturing through 2047.

"Approximately $30 million of the Series 2016A bonds will be used to fund
renovations to the college's athletic center ($95 million total project
cost), and up to $32 million of Series 2016A bond proceeds will be used
to refund a portion of the outstanding Series 2008B bonds."

The Moody's report is not exceptional and generally positive but does note high debt relative to operations.

"The Aa3 rating reflects the college's consistently positive operations
and very good reputation as a private, Jesuit liberal arts college. The
rating also incorporates growth of cash and investments due to strong
cash flow, generous donor support, and past positive investment returns,
as well as healthy liquidity. Key credit challenges include high
leverage, a competitive student market, and slowed growth of net tuition
revenue."


Last edited by bethlehempard on Wed Feb 24, 2016 10:06 am; edited 1 time in total

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Posted: Mon Feb 22, 2016 10:55 pm

ed65View user's profile






Joined: 04 Sep 2013
Posts: 884


Location: New York City





Good information. Good for the Crusaders.  

And we are allocating a paltry $15 million of the Capital Campaign for athletics (remember the $5 million swimming pool non fix is included in the $20 million athletics slice).

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Posted: Tue Feb 23, 2016 12:57 pm

Bogus MegapardusView user's profile






Joined: 13 Oct 2009
Posts: 5880


Location: The Psphere of Pardsvillian Punditry





ed65 wrote:
Good information. Good for the Crusaders.

And we are allocating a paltry $15 million of the Capital Campaign for athletics (remember the $5 million swimming pool non fix is included in the $20 million athletics slice).


ed65 - why is the swimming pool renovation a "non fix?"

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Posted: Wed Feb 24, 2016 10:10 am

bethlehempardView user's profile






Joined: 28 Sep 2011
Posts: 2127







S&P on the Crusaders: outlook revised to stable from positive and assigned an AA- on 2016 bonds and affirmed AA- long-term and underlying ratings.
The outlook revision is based on the additional debt.
No imminent change to the outlook is suggested.

Meanwhile as of yesterday Princeton's S&P AAA rolls on, and they have an
A-1+ on CP. The Tigers will carry about $3.4 billion in total debt after new issues. Once again, they're playing in a different league.

Moody's Aaa. Moody's also noted the university's fiscal 2015 $1.7 billion in operating revenue.

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Posted: Wed Feb 24, 2016 1:03 pm

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







Bogus Megapardus wrote:
ed65 wrote:
Good information. Good for the Crusaders.

And we are allocating a paltry $15 million of the Capital Campaign for athletics (remember the $5 million swimming pool non fix is included in the $20 million athletics slice).


ed65 - why is the swimming pool renovation a "non fix?"


It doesn't meet NCAA standards.

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Posted: Mon Mar 07, 2016 5:34 pm

bethlehempardView user's profile






Joined: 28 Sep 2011
Posts: 2127







St. John's -- Annapolis -- S&P BBB+ with a negative outlook. It's not much like Lafayette, much smaller and susceptible to swings, but an excellent niche school.

St. John's College's strong enterprise profile in our view is characterized by
its recently improved management and governance, a declining and rather small
enrollment at its two campuses in Annapolis, Maryland, and Santa Fe, N.M. that
provide a liberal arts education based on the Great Books curriculum and a
history of strong fundraising. Our view of the college's adequate financial
profile is largely based on the strength of the college's balance sheet
reflecting past success in fundraising, a good sized endowment for a small
college-although most funds are restricted thereby limiting financial
flexibility, and low debt burden that all support recurring generally accepted
accounting principles (full accrual)-based financial operating deficits while
cash based operations are positive in most years. In addition, St. John's
College in our view has both a high tuition discount level and average age of
plant with the latter suggesting a growing deferred maintenance backlog.
Because of the smaller enrollment size of the college, which makes it more
vulnerable to competitive and enrollment shifts, we expect St. John's College
to maintain higher liquidity and balance-sheet metrics than similarly rated
'BBB' category median ratios for private institutions.

That last sentence supports Lafayette's planned growth. Also I don't think Lafayette has the issue of growing deferred maintenance.

More on St. John's:
On a consolidated basis, the college had $21.4 million in long-term debt
outstanding as of June 30, 2015. All debt is structured as fixed rate.

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Posted: Thu Mar 24, 2016 6:26 am

bethlehempardView user's profile






Joined: 28 Sep 2011
Posts: 2127







Moody's gives an A2 to $150 million in fixed-rate debt from Fordham.

"The A2 rating reflects Fordham's very good market position as a
prominent Jesuit institution located in New York City, consistent modest
growth in net tuition revenue, and strong fundraising to support capital
investment and operations. Offsetting factors include thinning operating
margins, high leverage, heavy dependence on student charge revenue in a
competitive market, and variable rate debt-related credit risk."

The bonds will refund other debt and pay for building renovations. The outlook is stable.

FY 2015 operating revenue: $578 million.

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Posted: Thu Mar 24, 2016 7:17 am

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







Most people don't realize that at about 177 million in debt, in the last several years our capacity to increase borrowing was severely restrained. We had no ability to raise tuition extensively and our attempts to step up giving had fallen flat under the Weiss regime. Noted is the fact that the new dorm off Cattell was financed using a sale leaseback.
We have also now reduced our discount rate from above 40 to near 36 pct which has improved our situation. As I have said earlier the case for increasing enrollment is compelling.....however a need blind posture must be done carefully and over a long period of time or the discount rate could start rising again. Byerly has done good work in improving our fiscal situation.
Athletic scholarships are not an issue since it just replaced need based scholarships of the same amount! Raising the number of scholarships will be difficult without additional funding!

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Posted: Thu Mar 24, 2016 9:25 pm

BPardView user's profile






Joined: 23 Sep 2014
Posts: 208







Lafalum wrote:
Noted is the fact that the new dorm off Cattell was financed using a sale leaseback.
I'm under the impression that this non-profit/private partnership (public/private partnership when it is a public or state school instead of a private college like ours) is a model with increasing popularity nationwide. What is noteworthy about it with regards to the College's financial status? That was was only $3 million in debt from the College btw.

The College has had more like $195 million in debt (just under $200) for the past several years, not $177. With $11 million debt (2006) from the football field and Metzgar debt staying on the books until the '30s, which I mention because of the athletics focus of this forum. The largest slugs are $90 million (2008) from real estate and $48 million (2013) from capital projects/debt refinancing and $22 million (2010) from debt refinancing. According to the College's financial statements at least. There are smaller bonds, but these are the heavy hitters.

In addition to need blind admissions, she's also leading an initiative for more competitive faculty compensation. Hopefully this will *finally* improve our student:faculty ratio, which lags almost all of our peers.

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Posted: Fri Mar 25, 2016 2:56 am

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







BPard wrote:
Lafalum wrote:
Noted is the fact that the new dorm off Cattell was financed using a sale leaseback.
I'm under the impression that this non-profit/private partnership (public/private partnership when it is a public or state school instead of a private college like ours) is a model with increasing popularity nationwide. What is noteworthy about it with regards to the College's financial status? That was was only $3 million in debt from the College btw.

The College has had more like $195 million in debt (just under $200) for the past several years, not $177. With $11 million debt (2006) from the football field and Metzgar debt staying on the books until the '30s, which I mention because of the athletics focus of this forum. The largest slugs are $90 million (2008) from real estate and $48 million (2013) from capital projects/debt refinancing and $22 million (2010) from debt refinancing. According to the College's financial statements at least. There are smaller bonds, but these are the heavy hitters.

In addition to need blind admissions, she's also leading an initiative for more competitive faculty compensation. Hopefully this will *finally* improve our student:faculty ratio, which lags almost all of our peers.


I stand corrected on the more current debt number. I do know the last college CFO was concerned that the college had reached its maximum level of debt. I do not know the feeling of the current occupant of the office. Dorms are basically self financing and the sale leaseback model has been in use for at least a decade and half. The public university use has been popular just because there is no debt issue on the books.
The issuance of tax free debt at the beginning was popular for its arbitrage possibilities even  if the projects were funded by donations. At the time tax free debt was cheap and endowment returns were plentiful, not the case now.

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Posted: Fri Mar 25, 2016 9:38 am

RichHView user's profile






Joined: 24 Feb 2007
Posts: 1211







Question

Any idea of the startup costs for increasing student population?  Facilities,faculty and staff.

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Posted: Fri Mar 25, 2016 9:35 pm

PardsfriendView user's profile






Joined: 06 Oct 2014
Posts: 120







BPard wrote:
Lafalum wrote:
Noted is the fact that the new dorm off Cattell was financed using a sale leaseback.
I'm under the impression that this non-profit/private partnership (public/private partnership when it is a public or state school instead of a private college like ours) is a model with increasing popularity nationwide. What is noteworthy about it with regards to the College's financial status? That was was only $3 million in debt from the College btw.

The College has had more like $195 million in debt (just under $200) for the past several years, not $177. With $11 million debt (2006) from the football field and Metzgar debt staying on the books until the '30s, which I mention because of the athletics focus of this forum. The largest slugs are $90 million (2008) from real estate and $48 million (2013) from capital projects/debt refinancing and $22 million (2010) from debt refinancing. According to the College's financial statements at least. There are smaller bonds, but these are the heavy hitters.

In addition to need blind admissions, she's also leading an initiative for more competitive faculty compensation. Hopefully this will *finally* improve our student:faculty ratio, which lags almost all of our peers.


So Bpard, are you stating the college has 90 million $ in mortgages on current property holdings?  If so, which parcels and buildings?  Given the size of our endowment, that doesn't make sense to me.....

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Posted: Sat Mar 26, 2016 10:59 am

BPardView user's profile






Joined: 23 Sep 2014
Posts: 208







It is a bond, not a mortgage. Read page 20 which describes the 2008 bond as for real estate purchases and capital.

http://finadmin.lafayette.edu/fil...10/Financial-Audit-FY-2014-15.pdf

This statement does not tie to specific holdings for the 2008 bond. You'd need to read historical statements to figure that out. As previously noted, the 2006 bond cites the football field and Metzger expansion and another bond references residence construction at 512 March St, so these statements do sometimes tie debt to specific holdings.

I believe the 2006 bond for $96 million doesn't reference specific holdings because it was a debt consolidation bond to refinance earlier bonds. This my suggestion to read previous statements.

I believe your surprise is lafalums point. Most don't know the College has $195 million in debt. See the bottom of page 18 for where I get this number.

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Posted: Sat Mar 26, 2016 11:53 am

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







With regard to athletic facilities most if not all are fully funded with donations ( a requirement for naming). But payments occur over a 5 year period hence the financing. The "arts" campus was not funded by donations ( though there were some donations not fully covering the cost). There was a significant short fall for that project. Dorms are required only to have 1/3 funding for naming rights and bonding occurs usually through a higher education tax free authority ( Northhampton County). Also it is the practice to get a AA bank to put it's guarantee on it ( for a fee). All in. the cost had been less than returns on the investment portfolio creating an arbitrage in any case. In the last several years that arbitrage has gone away. In addition, as I mentioned there was some concern that we had reached our limits in borrowing. Bpard is correct most people don't realize the college has 195 mil borrowing. In addition we used to have significant commitments to private underwriters for new issues ( it was about 75 to 100 million I believe) that could have been been called already and show up as as 51 mio in private equity in the investment portfolio. I did not see it in contingent liabilities . We earned a commitment fee for that but it was a call on resources. So in calculating our real liquidity we must take into account all the above factors.
Yes we own real estate east of the campus. The college has been acquiring houses as they become available. ( who can forget the gas station east of the campus which we paid 750,000 for which still is to be remediated).

One interesting note is the rise in tuition engenders a rise in aid and that net increase in revenue has diminished as the years have gone by. That is the concern that many people on this board have expressed with being need blind.

Not displayed is the difference in disciplines with regard to cost. It is significantly more expensive to educate someone in the performing arts and STEM courses so if the increase in student population is weighted to those areas any gain in revenue is diminished.

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Posted: Sat Mar 26, 2016 5:20 pm

Interested PardeeView user's profile






Joined: 13 May 2015
Posts: 99







Lafalum wrote:
...One interesting note is the rise in tuition engenders a rise in aid and that net increase in revenue has diminished as the years have gone by. That is the concern that many people on this board have expressed with being need blind.

I didn't know if you were talking present tense, but I just got my letter from Byerly stating a 4% increase for AY 16/17, bringing tuition to $48,450.  I just hope the athletic awards can keep up with this.

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Posted: Sat Mar 26, 2016 9:04 pm

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







Interested Pardee wrote:
Lafalum wrote:
...One interesting note is the rise in tuition engenders a rise in aid and that net increase in revenue has diminished as the years have gone by. That is the concern that many people on this board have expressed with being need blind.

I didn't know if you were talking present tense, but I just got my letter from Byerly stating a 4% increase for AY 16/17, bringing tuition to $48,450. I just hope the athletic awards can keep up with this.


There will not be a 4 pct net increase in revenue. Raising tuition faster than inflation just is not right..... besides  !!!!

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Posted: Mon Mar 28, 2016 11:05 am

bethlehempardView user's profile






Joined: 28 Sep 2011
Posts: 2127







Cornell's chief investment officer, AJ Edwards, is leaving. Cornell's fiscal 2015 return was 3.4 percent, lowest among Ivies (average 7.8 percent).
Penn got AA+ from S&P on refunding bonds. AA+ on all fixed-rate debt, outlook stable. Not quite AAA based on cash-investments to debt. Also a note on reliance on health-care revenue but overall a glowing report.

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Posted: Mon Mar 28, 2016 12:42 pm

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







bethlehempard wrote:
Cornell's chief investment officer, AJ Edwards, is leaving. Cornell's fiscal 2015 return was 3.4 percent, lowest among Ivies (average 7.8 percent).
Penn got AA+ from S&P on refunding bonds. AA+ on all fixed-rate debt, outlook stable. Not quite AAA based on cash-investments to debt. Also a note on reliance on health-care revenue but overall a glowing report.


The 2015 audited report for Lafayette shows a non operating investment loss of 26 million dollars.

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Posted: Mon Mar 28, 2016 8:34 pm

BPardView user's profile






Joined: 23 Sep 2014
Posts: 208







What does a non operating investment loss for 2015 mean? Does that metric matter for practical purposes?

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Posted: Tue Mar 29, 2016 2:40 am

LafalumView user's profile






Joined: 06 Mar 2007
Posts: 3916







It means that the value of investment portfolio has declined. The college draws about 5.5 pct of the portfolio every year on a rolling average to use for operating expenses. So in those years that they earn less than 5.5 pct there must be additional revenue ( donations, tuition etc.) to cover the shortfall eventually. Conversely, in years in excess of 5.5 percent it adds to resources that can applied to ongoing expenses. One bad year is not that crucial but a string of years can have an effect.

It's a little more complicated, in that there is some endowment dedicated to certain things like scholarships, building projects and maintenance not available for general expenses. But that is the general idea. Schools with small endowments are characterized as more tuition dependent and in an era where raising tuition is difficult it raises there is risk. It is thought smaller private liberal arts schools ( not the size of Lafayette) are at risk in this environment and some have failed in recent years. Lafayette's endowment is about 800 mil.

Simply put tuition alone does not cover the  school's operating expenses which is why raising money is important.



Last edited by Lafalum on Tue Mar 29, 2016 8:43 am; edited 2 times in total

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