GSU gets good credit report as closing nears on Turner FieldTurner Field part of redevelopment proposal by Georgia State University and Carter (Photo by Maria Saporta)
By David Pendered
Georgia State University has received good news about its credit rating as the university comes closer to needing about $100 million to pay for its share of buying and redeveloping Turner Field and its environs.
Moody’s Investors Service revised its rating of GSU upward to the top tier. The rating covers a $71.8 million bond package that’s to close this week. Moody’s raised the school’s rating from an investment grade A1 to Aa3.
The May 9 rating action did not mention the Turner Field deal.
GSU officials haven’t provided details of how they intend to find the school’s share of the nearly $300 million proposal on the table. GSU has partnered with Carter and Oakwood Development to buy and redevelop the ballpark and its 70-acre site. GSU’s partners are to provide about $200 million for the deal.
GSU President Mark Becker said in May 2014 that tax dollars could help pay the school’s share of costs, according to a report by WABE. Since then, public attention has focused on issues other than how the public university would come up with the money.
If GSU does issue bonds, the recent credit upgrade is a positive sign.
Moody’s analysts reported that GSU has:
- ”[E]xcellent strategic positioning as a growing urban research university closely aligned with state educational attainment goals. Other strengths include sizeable wealth with approximately $400 million of total cash and investments, healthy state funding, and low financial leverage.
- “Challenges include funding ongoing capital needs for a growing university and limited flexible reserves relative to large expense base.”
If the school chooses to issue bonds through the Georgia State University Foundation, the ratings are virtually as positive. GSUF has assets of more than $200 million cash and investments, according to Moody’s.
Just last year, GSUF raised $43.5 million in gifts, according to the annual report for the fiscal year that ended June 30, 2015. Total research funding broke the $100 million mark for the first time, according to the report.
Looking at just one GSUF bond rating, Moody’s has ranked it at Aaa, which is an investment grade rating.
This particular bond financed GSU’s campus in Alpharetta. GSU funded the project via bonds issued in 1998 by the Alpharetta Development Authority, according to records maintained by Electronic Municipal Market Access.
The initial bond issue of $10.6 million paid for 22 acres, on Brookside Parkway, and construction of a 50,000 square foot building to accommodate about 820 students and provide about 800 parking spaces, according to emma.
GSUF refinanced the package in 2009 with a $5.9 million bond issuance, and that package was rated Aaa by Moody’s.
The May 9 rating action said the upgrade reflects the reality that GSU is reliant on the space provided by the old SunTrust Tower, located adjacent to Woodruff Park. GSU now occupies more than three-quarters of the tower’s 26 floors. Some proceeds of the new bond will be used to finance the development of this building.
GSU used its private foundation, GSUF, to fund the $52 million transaction that included the SunTrust tower, three smaller buildings and an eight-story parking lot, according to a report in daltondailycitizen.com.