July 16 - Fitch Ratings has assigned an ‘A+’ rating to approximately $46,205,000 of capital improvement revenue bonds, series 2012A issued by The FAU Finance Corporation (FAUFC). The fixed rate series 2012A bonds (the bonds) sold via negotiation on June 29, 2012. Proceeds of the bonds will finance construction a 614-bed student housing facility (the project) on the Boca Raton Campus of Florida Atlantic University (FAU) and pay various costs of issuance. The Rating Outlook is Stable. SECURITY The bonds are secured by pledged revenues. Pledged revenues include a first lien on revenues generated from the project, following the payment of operating expenses. Excess revenues generated by FAUFC’s Innovation Village project (the 2010 project) and FAU’s housing system (the system) also secure the bonds. Other covenants include a debt service reserve, an additional bonds test, and rate covenant. KEY RATING DRIVERS STABLE CREDIT CHARACTERISTICS: The ‘A+’ rating reflects robust demand for housing on FAU’s campus; track record of timely completion and strong occupancy of campus housing projects; and the historical sufficiency of excess revenues generated by the 2010 project and the system. INTEGRATION WITH FAU: The project is being managed as part of FAU’s overall housing system. FAU sets rates for the 2010 project and the system. FAU no longer has the ability to issue senior lien system debt as the lien has been closed. CONSTRAINED FLEXIBILITY: Counterbalancing rating factors include sole reliance upon demand driven revenues to pay debt service and the system’s high debt burden and limited financial cushion, both of which are characteristic of a standalone university auxiliary enterprise. CONSTRUCTION RISK: Concerns related to a relatively short construction window (14 months) are partially mitigated by FAU’s successful history in working with the project’s contractor; to date all housing stock has been delivered on time and within budget. WHAT COULD TRIGGER A RATING ACTION SUCCESSFUL EXPANSION OF HOUSING: To the extent the planned expansion of FAU’s housing stock does not compromise currently solid occupancy levels and debt service coverage, upward rating action may be warranted.