Fitch Affirms 'BBB+' on University of Tampa, Florida Rev Bonds.

NEW YORK -- Fitch Ratings affirms the 'BBB+' rating on approximately $27 million of outstanding City of Tampa, Florida revenue bonds (University of Tampa Project), series 2002, issued on behalf of the University of Tampa (UT). The Rating Outlook is Stable.

The 'BBB+' rating is based on UT's credit strengths including strong enrollment growth and continued positive operating performance. The university's main credit risk is its significant debt burden. Fitch believes that UT's enrollment growth and positive operating performance will continue and that the school's debt burden, while high, will remain manageable. However, further increases in debt beyond what is currently anticipated, including off-balance sheet activity, could pressure the rating.

UT's strong enrollment growth contributes to the consistent and positive operating performance of the university. Enrollment for fall 2003 was 4,662 students and reflects a 54% increase over the last five years. The university is expecting to surpass its enrollment projection of 5,000 students almost two years ahead of schedule, and plans to increase enrollment to 6,000-7,000 students by 2010. Operating margins have been above 3.5% each year for the past seven years. Approximately 70% of UT's unrestricted revenues are derived from tuition and fees, so any decline in enrollment could impact the university's financial position. However, based on UT's past and projected enrollment growth, Fitch believes that enrollment declines are not likely. The university's level of liquidity is modest and has increased slightly over the last several years. Available funds to operating expenses were 55% in fiscal 2003, above the 'BBB' category median of 40% but below the 'A' median of 110%. UT is on target to reach its capital campaign goal of $80 million, and expects to begin a larger capital campaign in the near future.

The university's debt burden is above average. Fiscal 2003 unrestricted revenues available for debt service would cover maximum annual debt service (MADS) by 1.6 times (x), and MADS on outstanding bonds and capital leases would represent the use of approximately 9.5% of unrestricted revenues. The university plans to issue about $30 million of additional debt in the spring of 2006 to fund the construction of a housing facility. In addition to the debt reported on the balance sheet, Fitch also considered two projects that could have an impact on the existing and future debt burden. The first is an annual $1.8 million lease payment for 15 years that is anticipated to be covered through an offsetting annual cash inflow from a donor. If the donor fails to make the scheduled payments, it is likely that the university would still fund the lease payment to maintain use of its student center. As a result, Fitch reviewed the debt burden with the additional $1.8 million and MADS increased to a high 12.4% of fiscal 2003 unrestricted revenues. For the second project, UT is contemplating an off-balance sheet housing project, which Fitch believes will not have a material effect on the university's financials because of the corresponding reduction of a current expense for housing students in a local hotel, the strong student demand for housing, and the self-supporting nature of UT's existing housing facilities.

Founded in 1930, UT is located on 80 acres in downtown Tampa. Approximately 48% of its undergraduates are from the state of Florida. Over the past years UT has become more selective. For fall 2003, the undergraduate acceptance rate was 56%, a lower rate than most private universities in the 'BBB' category, which affords UT with additional flexibility.