NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Project Financing at U.S. Universities
and Colleges (Opportunities and Credit Considerations for Expanding
Social Infrastructure Needs)
Increasingly hard pressed to find funds to update aging campuses and attract new students, U.S. colleges and universities are turning to public private partnerships (P3s) more frequently for their funding needs, according to Fitch Ratings in a new report.
Fitch expects use of the P3 model to become more widespread among colleges and universities because the model provides several benefits, according to Senior Director Seth Lehman. 'Recent P3s by some colleges have been able to procure funds more quickly and efficiently than traditional sources while offloading risk to the private sector and preserving colleges' balance sheets,' said Lehman.
Like transportation P3s, completion and operating risks are important in evaluating the risk profile of higher ed P3s. If project revenues are derived from contractually defined availability payments, Fitch will examine the underlying credit quality of the payment source, in this case the college or university itself. An area of increased focus with respect to higher ed P3s is student housing projects. In this instance, many factors are critical to understanding facility demand for student housing projects. Among them include campus location, student residency requirements, historical number of beds, and occupancy rates of university-owned housing and off-campus alternatives.
From a ratings perspective, higher ed P3s are likely to fall within the 'BBB' category. That said, higher ratings are possible for P3s with robust coverage and low levels of cost risk. Strong contractors and sufficient third-party security packages can also result in a higher rating for higher P3s.
'Project Financing at U.S. Universities and Colleges' is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at www.fitchratings.com.