A drop in student housing populations at the University of Oklahoma has prompted the Fitch bond rating service to revise its rating outlook on OU's student housing revenue bonds to "negative.”
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While Fitch affirmed its "A+” rating on the $80 million, series 2004 bond issue, it said it revised its ratings outlook downward in part because student residency hall occupancy rate has dropped from 91.7 percent in fiscal 2003 to 76 percent in fiscal 2007.
"The negative outlook reflects significant concerns with respect to the multi-year trend of declining occupancy in OU's four residence halls and two apartment housing centers, which, when combined with the concurrent rise in debt service, has resulted in a significant drop in debt service coverage,” Fitch wrote in its report.
"OU attributed a 6.6 percent residence hall occupancy decline in fiscal 2006 to a 10.2 percent decline in the fall 2005 freshman class,” Fitch said. "The fall 2007 freshman class is approximately 16.2 percent larger than in the fall 2006 class, which should translate into a slightly higher occupancy level.”
The downward revision in the Fitch outlook disappointed OU officials, said Chris Kuwitzky, associate vice president for administrative affairs and chief financial officer. The decline in student population was expected because of ongoing building projects.
"The housing system has been in the midst of an anticipated transitional period and is on the upswing,” Kuwitzky said. "Fall 2007 residence hall occupancy is the best since fall 2004 and apartment occupancy is the best since fall 2003, a trend we expect to continue based on the high number of applications for admission for next year's incoming freshman class.”
The rating applies only to OU's housing facilities revenue bonds, Kuwitzky said. Fitch Ratings and Standard & Poor's Corp. rate the University of Oklahoma as a whole "AA” and "AA-,” respectively, which is the highest credit ratings ever for an Oklahoma higher education institution, he said.
OU recently opened the Tradition Square apartments on its campus while closing the old Parkview apartment complex. OU is also renovating its dormitories, Kuwitzky said.
Fitch will change its outlook when it sees historical trends improving, Kuwitzky said.
Fitch bond analyst Mary Catherine Messner said the ratings service will consider OU's improving housing trends in its next ratings review.
"In this instance because it is a negative outlook we will be reviewing the credit rating of these bonds next year, 2008,” Messner said. "(We) will be looking at the information the university provides to us.”
Its always so funny to see the " boosterism" that Okies try to argue with against cold hard facts from reputable organizations.This is just another example. I guess it began back in land run days tho when it was all about " $%#@ your buddy" ...
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